Not so long ago, if you wanted to use a piece of software, watch a specific movie or listen to a certain song, you were likely to buy it (or perhaps rent the movie from your local video store or get a mix tape or burned CD from a friend).
But as our economy moves away from the ownership of physical goods and evolves more toward the sharing of digital ones, that’s all changing.
Consumers now have the option to buy Microsoft Office as a one-time purchase or pay a monthly subscription to use Office 365. They can still buy or rent movies (physically or digitally) or stream virtually unlimited movies through services like Netflix or Amazon Video. Ditto for music (with services like Pandora, Songza or Spotify) or even books (with services like Scribd and the Amazon Kindle Lending Library, which is available to Amazon Prime members).
But what makes more sense? Is it more financially savvy to simply buy the software and media you want to consume or pay an ongoing monthly subscription fee for access to lots of different media options?
That depends. Here are some questions to consider.
1. Do I have the money to buy it outright?
Items like individual books, MP3s or movies may not be cost-prohibitive to buy, but software like Microsoft Office can easily cost $100 or more. “For some people who don’t have that money on hand, [a monthly subscription] might make more sense,” says consumer savings expert Andrea Woroch.
Over time, though, that monthly subscription fee adds up. Say you pay $10 a month for Office 365. “How long does it take to return your investment?” asks Shannon McLay, founder and president of The Financial Gym, a financial planning company helping Gen X and Gen Y clients. “After two years, [a Microsoft Office annual subscription] has already paid for itself.”
That said, the Office 365 subscription does have some additional features not available to those who buy the software, so if features like using the software across multiple devices are important to you, that may justify a higher cost over time. (Note: Be sure to save the product key if you plan on transferring the license to a new machine.)
2. How often will I use it?
If you’re a student or someone with an ongoing need for Office, then it might make sense to buy it. But if you suspect your kids will quickly outgrow the Disney movie they want, watching through Netflix might be a better bet. “I personally am not someone who wants to spend money on [buying] music,” Woroch says. “I like different songs for running. That’s why I stream Pandora, but there are those classic songs that I love to listen to so I would buy those.”
Tracie Fobes, owner of the money-saving blog PennyPinchinMom.com, encourages consumers to look at their entertainment spending over the past six months or a year. “People have to really analyze their own entertainment patterns,” she says. “How much music do you listen to? How many movies do you watch? How much money have you spent on those subscription services? Break it down on a per month basis.”
That said, many people sign up for trial subscriptions and don’t even realize that they’ve started paying for them. If you find that you’re just not using a subscription, make sure you cancel it rather than let it go on autopay. “Read that fine print to find out about cancellations,” Fobes says. “That can really get you tied up if you realize you’re not utilizing it.”
3. Will I run up against data caps or slow Wi-Fi speeds?
Streaming movies or music may not be an option if your Internet or cellphone provider has data caps, or you have painfully slow download speeds. If that’s the case, you may be better off buying your music or movies (or getting them from the library) rather than streaming through a subscription service.
4. How quickly will this format become obsolete?
As technology evolves, older formats of music and movies may become obsolete, and some formats such as cassette tapes and videotapes can get mangled. Along those same lines, one potential selling point for an Office 365 subscription is that you won’t have to pay again to upgrade to the newest version. However, you may not need the latest version for basic word processing or spreadsheet needs. “I know people who use Excel 97, and I could still open the file,” McLay says.
Under a subscription service like Netflix or Amazon Video, the selection isn’t guaranteed as your own movie or music library would be. These services sometimes remove movies from streaming as licensing and permissions change over time. “It’s more of a risk that you’re going to have it on streaming, but at least you’ll have other options as well,” McLay says.
5. Can I get value out of reselling the item?
Nowadays, physical books, CDs and movies have limited resale value, but you may be able to get a few dollars back when you’re done by selling the items online or sharing them with a friend. Digital media or media through a subscription has little to no resale value, so keep that in mind if resale is important to you.
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Should You Buy or Subscribe to Software and Media? originally appeared on usnews.com
