Cancel Culture: What Happens When AI Agents Do Your Admin?
Many Happy Returns
The episode explores the potential for AI agents to disrupt business models built on 'friction,' such as forgotten subscriptions and loyalty
Key takeaways
- Meta's Muse app has reached the top of US app stores by promising to manage and cancel unwanted subscriptions.
- The 'lazative tax' is a significant revenue driver for firms, with some studies suggesting adding cancellation friction can double subscription revenue.
Main topics
- AI Agents and Subscription Management
- Meta's Muse and Consumer Behavior
Notable quotes
Are we about to see subscription-based moats collapse?
Conclusion
While AI agents offer unprecedented efficiency and cost savings for co
Transcript preview
Speaker 1 (0:00) Today's episode is brought to you by Lightyear, the investment platform I use for my stocks and shares ISA. Speaker 1 (0:09) Welcome to Many Happy Returns, where we aim to make you a better investor. Many companies make their money from friction, the cancellation maze, the forgotten subscription, the loyalty penalty. Now, AI agents promise to do all the tedious admin and save you money. So is this the end of Speaker 2 (0:30) the laziness tax? Are we about to see subscription-based moats collapse? And why might your bank be more nervous than Netflix? Speaker 2 (0:41) Alright, let's get into it. So there are many quirks of human behaviour, inefficiencies if you like, which businesses have learned to exploit to make money. One of the key ones is we're very bad at remembering to cancel subscriptions, request refunds and get rid of products that we don't really use. Now we're starting to see the launch of AI agents and they promise to rectify this flaw, which might be good for consumers, but bad for some of those stocks we own. Speaker 1 (1:10) And I think all of us feel this. If we've got subscriptions, we forget about them. I do it as well. And sometimes I'm thinking, you know, should I carry on that ancestry subscription, even though I haven't looked at my family tree for about two months? But I might do. So it's less, it's just so much bother, isn't it, to cancel it and then restart it. Ramin, your ancestors are not going to change. They're locked in. Speaker 1 (1:35) Well, that's what you learn from doing the family tree. They do change because you realise you've made mistakes. But yeah, I think this whole kind of rigmarole of cancelling, restarting, if that could be automated, I can see that there's a niche for that. I do Speaker 2 (1:49) feel that AI is just now starting to have an impact on consumer preferences and the choices we make. Speaker 1 (1:56) Yeah, for example, we've just been on a long weekend to Paris, Laura and I, and... Oh yeah, clarify that it wasn't me. Speaker 1 (2:09) And it was great. We had a great time. But one of the things I noticed was that I was looking up stuff to do that was near to our hotel. And when I turned up, there were all these kind of young people clustered around the places that had been recommended. Because clearly, if AI recommends something, it's going to do that for everyone who asks. And a lot of these little niche cafes were packed and had huge queues outside. Already we're seeing consumer behavior being affected by these agents which plan our holidays. Yeah, it's hard to know if that's being Speaker 2 (2:42) driven by AI quite yet. Like it might be those things are recommended by TripAdvisor and stuff, and the AI is also pulling from that same source. But increasingly over time, they're going to become the same thing, aren't they? Speaker 1 (2:53) And it can make your business. If you get recommended by ChatGPT or Claude, well, that's it, you're done. Even if you're a tiny company. you could get that all critical attention and it could boost your revenue massively. So why are we talking about this Speaker 2 (3:09) now? Well, the big news in AI recently is that Meta, formerly Facebook, has launched Muse. Now this is their first AI agent product and it immediately topped the app stores in the US. It's just for Americans so far. And it promises to be able to plug into all your services, read your bank accounts, look at your emails and say, hey, you haven't logged into this account in ages. You're paying them $20 a month and it can go and cancel it for you. Now, obviously, we haven't had a chance to use it being in the UK. But from what I've seen online, the initial response to Muse has been very positive. People can see the use case here. And Speaker 1 (3:53) look, I'm a nerd. I love these kind of things. I'm an early adopter of this technology. And if it comes down to caution versus trying out a shiny new Red Bull, I'm afraid the shiny new Red Bull usually wins. Even though I know it's not such a good idea to let an AI see everything about me financially. I was going to say, I would be pretty sceptical Speaker 2 (4:14) of logging Facebook into all my bank accounts. Mark Zuckerberg is going to be hoovering Speaker 1 (4:20) up everything he knows about us. Yeah, I can see why you're wary, but maybe that's our age, Michael. Maybe people who are younger see it on TikTok, they see it on Instagram, and they think, yeah, I want to try it. That sounds great. Probably. I mean, Speaker 2 (4:34) people seem to have few compunctions about sharing their whole lives on Instagram or TikTok or whatever. Mark Zuckerberg already knows quite a lot about us, and he's about to know a lot more. So shall we put some numbers on the laziness tax? this thing that could be disrupted. I think it's fair to say in terms of the overall economy, it's a modest thing. But for some particular firms, it accounts for a big part of their revenue. So let's look at the US where this is launched. The average US consumer spends almost $2,000 a year on recurring subscriptions. And over half of the firms they're subscribed to say that 10 % or more of their subscribers are inactive. So there's a fair chunk of money here, which is just being wasted. Speaker 1 (5:23) But it's not just a US thing. And if you look at the UK, you can see that there's about £4 billion a year across mobile, broadband, home insurance, mortgages and savings. That was for 2018, of course, quite a long time ago. And it's based on data from the Competitions and Markets Authority. Speaker 2 (5:42) I've seen some data, I think it was from Citizens Advice, which says that around 3 % of consumer spending is wasted in this way on subscriptions or auto renewals of subscriptions at higher prices. And it's kind of wasted, which Speaker 1 (5:54) is a Speaker 2 (5:54) lot Speaker 1 (5:55) of money. But as a proportion, I'm surprised how low it is. So, you know, if I was looking at tweaking my finances, this isn't going to make a huge change to my overall wealth. But look, 3 % over a long period of time could make a big difference. Speaker 2 (6:11) I think in the UK, we have had various regulations come in over the years, which have put pressure on some of the unfair practices around subscriptions. And it's going to ramp up again, I believe, in 2027. Whereas part of the Digital Markets Competition and Consumers Act, there's like a subscriptions part of that which is coming into effect. And basically, that means more clarity over the terms before you sign a contract, enforcing reminders that businesses must send you around renewals. and allowing a couple of cooling off periods, one at the start of the contract, and then one when the free period or trial period ends, which I think is a key one, because at the moment you get a little trial period, you have to give your credit card details often. And then when the trial ends, oh, they just billed me a huge amount. And crucially, the legislation is designed to make cancellation easier. It's got to be simple and straightforward. Because of course, that's what agents are promising to do for Speaker 1 (7:07) you. Now, I should say we run on a subscription model for the membership. And weirdly, I actually think this is a positive. So I like the fact that if we don't earn the subscription fee, that people should be able to cancel. And if we're not adding value, then it's absolutely fine, I think, for them to cancel. So I say that now before our business model collapses, but... That's the way I feel about it. You know, I don't feel bad about this. I think it's a huge positive. And it seemed to me for a long time that a lot of companies were on borrowed time because if your business model does depend on these recurring transactions, where you just assume people will just forget about it and you're not really adding value to their daily lives, if that's the case, then I think your business model is deceptive and not helpful for your customers, which is not good. I mean, the cliche Speaker 2 (8:02) has always been a gym membership, right? Everyone has one and people go in January and then barely at all for the rest of the year. Speaker 1 (8:10) But from personal experience, for things like broadband, which is just a nightmare because it's so complicated deciding which company to go with, I just find it very stressful calling the company and trying to negotiate a different price. So if I could get AI to do that for me, that would be just fabulous. But there are whole industries around this optimization, aren't there? So for example, Martin Lewis, who is the money-saving expert, his website's called Money Saving Expert, he's built an entire career on this. And I think it's great because I love that website because it gives me the confidence to call the company and I know what to say. I've tried it. It didn't work. But still, you Speaker 2 (8:51) love them Speaker 1 (8:52) anyway. Speaker 2 (8:53) But I think you're right, though. There's a whole industry built around this with, you know, price comparison websites and switching websites. But it is a faff, even if you're active and aware of all this stuff. And companies know how valuable this is, this inertia that consumers have. So adding in some cancellation friction can double subscription