The growing role of software and Internet-enabled services in the functioning of automobiles has generally been a good thing. After all, features like OnStar and other crash detection systems have saved lives. Accident avoidance features in late model cars will - once ubiquitous - greatly reduce injury and death on the roads. Finally, realtime monitoring of vehicle performance could enable “preventative maintenance” of vehicle components that could save drivers (and society) money and hassle, versus the current system which often sees parts fail catastrophically before underlying problems are identified and addressed.
But software and cloud based services also enable a whole host of behaviors that are downright troubling. At the top of that list is what automakers are referring to as vehicle “micro-transactions” which is kind of a euphemistic way of referring to “charging monthly subscriptions to use features that used to be included in the purchase of the vehicle.” This trend got headlines recently with news that BMW has begun charging owners in the UK, Germany, New Zealand, South Africa and other countries $18 monthly subscriptions to use seat warmers. Owners have a number of subscription options - from an annual subscription for $180 to an unlimited subscription costing around $450.
BMW is charging $18 a month in the UK, Germany and other countries to enable seat warmers in its vehicles.
BMW has been saying for a while that “micro transactions” are a part of its plans going forward. In the past it has floated subscriptions for features like automatic high beams or adaptive cruise control features. Automakers like Tesla have long offered premium “connectivity” packages as an add-on after drivers purchase their vehicle and many other car makers are looking to pad their top lines with subscriptions enabled by next-generation operating systems, app stores and connectivity features.
While I’m OK with the idea of paying to enable mostly software-enabled features like “adaptive cruise control,” I’m less OK with the notion that drivers pay simply to turn on hardware that, in theory, they’ve already paid to have placed in the vehicle. Seat warmers, after all, figure into the bill of materials for the car which, of course, figures into the purchase price of the car.
That’s OK when seat warmers were an optional feature that you could elect (and pay extra for) at the time of purchase. Then the transaction was straight-forward: “BMW is going to charge me an extra $500 to warm my bum while I own this vehicle. How much is a warm bum worth to me?”
But if the warmers are installed by default then they’re “standard” - you’re paying for them whether you like it or not, just like the windshield wipers and the automatic transmission. And, therefore, you should be able to use them.
By gating the feature with software, companies like BMW seem to me to be engaging in a kind of technology-enabled (vs. regulatory enabled) “rent seeking” in which car makers are extracting wealth from their customers without any reciprocal benefit to them. Again: the seat warmers are already installed in the car and ready to go. Car makers are just putting tolls for their operation to extract additional value from the owner. This recalls the classic example of rent seeking of the land owner who erects tolls and a toll collector on a river that runs adjacent to his property - the tolls (as opposed to, say, a lock) do nothing to improve the river - they just impose an extra cost on those who would use an otherwise free resource - a cost that is then passed on to others.
While $180 a year bum warming may seem like a drop in the bucket, BMW’s move (and the move of other automakers) sets a dangerous precedent. Economists have long written about the deleterious effects of rent seeking on economies. I worry that this type of technology enabled rent seeking may become more common - and more costly - for all of us. Discuss!
Cant we make this illegal somehow? I mean, the hardware adds weight to the car. Ergo you need more fuel for the same distance for a Feature you cant use. That is very scummy. How this is legal is beyond me.
Cant we make this illegal somehow? I mean, the hardware adds weight to the car. Ergo you need more fuel for the same distance for a Feature you cant use. That is very scummy. How this is legal is beyond me.