"Words have value" is a saying I strongly agree with. But whether that is simply empty talk or a real fact of the market depends on what a company actually does. Shouting "words have value" does not magically make words valuable; making words genuinely valuable takes careful, meticulous planning. If you have been paying attention to Treehole, I trust you will also have noticed that we are a company that keeps trying to make words valuable.
Naturally, then, I pay close attention to businesses that make clever use of the value of words. Apple Daily recently went through a transition, turning from a free online outlet into a paid one. From the standpoint of commercial psychology, several of its moves strike me as exemplary. Let me jot them down and share them with you.
The "Sa Sa incident" x the anti-extradition protests: widening the customer base
I am not sure whether everyone still remembers when Apple began heavily promoting its (then free) membership scheme — it was right around the time of the city-shaking "Sa Sa incident". Although I have no inside knowledge to go on, I am inclined to think the two events were no coincidence: that Apple deliberately used the episode to grow its subscriber numbers. Apple knew very well that this very "explosive" piece of paparazzi footage would become the talk of the town, and it also knew that people have a need to fit in socially — to share common topics with the friends around them — and therefore feel a pull to watch the footage. That is a clever play on the human desire to fit the norm. And since signing up for free membership at the time took next to no effort, plenty of people happily registered yet another online account. To keep up with the conversation, registering one more was no great trouble at all.
The second factor behind Apple's rapid membership growth, I believe, was the anti-extradition protests, the scale of which Apple surely could not have forecast. But not being able to forecast something is not the same as not being able to make good use of an unexpected event. Apple's positioning is very clear: it is the one and only mainstream outlet opposing the bill. In responding to events, it also showed that Apple fully understands its own value and strengths, and so it kept rolling out a series of advertisements (see the image below). It presented Apple's value from a completely different angle each time — last time it was "we dig up the gossip and never lag behind"; this time it was "with the nation in crisis, we step up for what is right".
I expect the vast majority of Hong Kong people take an interest in either the gossip or the big news stories of the city. In that way, Apple could draw in a huge crowd of members from the public, laying the groundwork for the next step: paving the way to a paid subscription.
Making good use of the foot-in-the-door technique: leading readers step by step towards a paid subscription
I wonder whether you have ever asked yourself: why does Apple charge $3? Why set up free membership first, rather than charging the full subscription fee straight away? According to Braintree, Apple's payment service provider, processing each $3 transaction incurs a handling fee of $2.36, and on top of that $1 is donated to the anti-extradition humanitarian fund, which means that every time someone subscribes to Apple, Apple actually loses roughly $0.6 — and by now it is likely down by some HK$250,000. You might think this is an unwise decision? On the contrary! This step shows that the Apple team understands two things extremely well: 1) human psychology and 2) its own commercial strengths.
In psychology, there is something called the foot-in-the-door technique. The idea is that if someone has agreed to a small request, they become more likely to agree to a larger request afterwards — the reason behind it being people's motivation to maintain a consistent self-image. Registering for free membership and paying the $3 handling fee are the small requests, used to build members up into the self-image of an "Apple supporter", so that when formal charging arrives later, it is harder to refuse. Asking for the full monthly fee in one go is a very high psychological threshold (psychological fraction); splitting it into three steps (free membership, $3, full-price membership) makes the psychological threshold at each step much lower, and far easier to clear.
What is more, doing it this way carries a notable commercial advantage: from the data on how many subscribers it has, plus an estimate of how many people would stay on at different price points, Apple can forecast its own revenue. It could even run experiments — first charging a randomly chosen 100 people a relatively high price (say $180), learning the approximate retention rate, and then gradually adjusting the price to match the company's expenses (handled carefully, of course, or it could easily provoke public displeasure).
This pricing model also shows that Apple understands its own strengths. For the vast majority of businesses, a "subscribe first, set the price later" model simply does not work, because customers do not trust you enough. Daring to adopt this kind of charging model shows that Apple knows how to leverage its own extremely high public credibility, rather than blindly following the usual pricing models — and that is something other businesses can only look on at from afar. A successful business is one that understands what it has that others find hard to imitate, and Apple has done just that.
Default bias plus emotion — would you still cancel your subscription?
The final clever touch is the use of default bias and emotion. Default bias points out that people do not like to change the status quo, because if changing the status quo leads to a problem, they feel the responsibility lies with themselves, whereas if a problem arises without changing the status quo, they tend to feel the problem is simply how things were meant to be. For example, switching organ-donation to an "opt-in by default, opt out if unwilling" arrangement can raise the donation rate by 80%, even though the options are exactly the same: either you donate or you do not.
Apple's subscription system also makes use of this mechanism: it first draws in a large crowd of subscribers at the extremely low $3 threshold, then sets the full-price subscription as the default option, so that anyone unwilling to pay has to actively cancel. That is enough to trigger the default-bias mechanism, leading more people to stay on. Furthermore, Apple has successfully tied "subscribing to Apple" to "defending freedom of speech and resisting injustice", so that members who support Apple's stance feel even more emotional pressure when cancelling. All in all, under a commercial strategy where subscribing is easy (the foot-in-the-door technique) and cancelling is hard (default bias and emotional cost), I would estimate that Apple's transition will be very successful.
Is it right to manipulate people's minds?
I have analysed how Apple uses psychology to influence consumer behaviour. But in substance, I strongly support Apple doing this. As a social-enterprise founder, I have seen far too many well-meaning people fail and shut down because they did not understand the ways of business, while unscrupulous traders soar by running operations that exploit commerce and human nature at the expense of the public interest. We need to recognise that being good and being capable bear no necessary relation to each other — otherwise the world would not have so many problems. So, if you tell yourself you are a good company, you must work harder to learn than others do, rather than holding the attitude that "because I have ideals, you have a duty to listen to me".
This is why I admire Apple. So be it — my own default bias is about to kick in, and I will keep paying my dues to support Jimmy Lai in opposing chaos in our city.
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