Bait & Switch: Buy A Lifetime Account For As Long As We Exist Or Until We Get Tired Of You

from the not-so-nice dept

Fri, Aug 17th 2012 3:01pm — Mike Masnick

Via Slashdot, we learn about how Joyent offered early customers a "lifetime account," (via TextDrive, a web hosting company it acquired) in which they promised the account would exist "as long as we exist." Well, the company still exists, but it's now sent notices to those lifetime customers telling them that their "lifetime" is apparently up on October 31:

We appreciate and value you as one of Joyent's lifetime Shared Hosting customers. As this service is one of our earliest offerings, and has now run its course, your lifetime service will end on October 31, 2012

One would imagine that the FTC might have some questions for Joyent's management on the nature of living up to the promises of what was offered. Jason Hoffman, who apparently co-founded both TextDrive and Joyent, seemed to make things worse with his defense of the decision, basically admitting that this is screwing over their earliest supporters and biggest advocates:

Having co-founded two companies that ultimately became Joyent, growing from a tiny startup to where we are today has had its ups and downs, and this is one of the toughest decisions I’ve made. In particular because I've always been the biggest advocate for pushing a shared hosting product forward, and then here I am, the only remaining "founder" that is active.

It's ironic that our biggest advocates are the ones most affected by this and I know many of you are disappointed in me. I’ve received many questions and comments about why the service is being discontinued and I'm listening and will continue to listen. And like the past, this response won't be my last.

Making the decision to discontinue the service was extremely difficult. It was driven by some simple things: the hardware is simply old (6-8 years old), it's failing, there isn't an upgrade path from it, there's more than many of you likely realize and oddly enough it's more expensive with time (while not being used much). The rest of the Joyent's business has been paying for that, and I can't make the argument as to why it can continue.

Yet, we're only here because of the initial community that trusted us, and I'm genuinely grateful for the support. I’m sorry that I've lost that trust and I've upset you. You have a right to be upset. This was a tough decision with some nuance to it and none of this is lost on me.

This seems to go back and forth. First off, it's not "ironic" that you're screwing over your early supporters and not giving them what was promised. It's a highly questionable business practice. As for not being able to make an argument for why the service can continue, one would think keeping Joyent's name and reputation from being dragged through the mud would be a potential argument. Also, avoiding possible smackdowns from government officials for selling one thing and delivering another.

I recognize that things change and businesses change over times. But the company did make the promise that these were lifetime accounts and that they'd stay up for as long as the company was around. It seems only reasonable that it should not just cut off those accounts without any sort of recompense.

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Filed Under: bait and switch, ftc, lifetime account
Companies: joyent, textdrive

47 Comments

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Dionaea (profile), 17 Aug 2012 @ 3:06pm

Well... The world is supposed to end somewhere this year, isn't it?
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Anonymous Coward, 17 Aug 2012 @ 3:16pm

?
Why don't they just refund the money people paid for the lifetime account?
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PilotFred, 17 Aug 2012 @ 3:21pm

Nothing New...
Startup companies have quite often "miscalculated" their business models to include free or discounted services as a way to promote themselves.

Two that come to mind are OpenDNS and phoneFactor.

OpenDNS is/has removed features from their free offering and phoneFactor used to make the service much more freely available.. but is now limited to 25 users.
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Anonymous Coward, 17 Aug 2012 @ 3:22pm

Here's the thing I don't understand. They switched from cheap linux ?OpenVPS? to hosting VMs on a more secure platform. (I've never purchased anything from Joyent.) Why can't they just assign a virtual within the virtual environment and keep the accounts around? I know this wouldn't be an issue in most enterprise platforms. Actually, I do this a bit now with VMWare to test out little HyperV situations.
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John Fenderson (profile), 17 Aug 2012 @ 3:23pm

The msot insulting line
The rest of the Joyent's business has been paying for that, and I can't make the argument as to why it can continue.

I can't even believe that he wrote that.

The argument for continuing it is, of course, "because we promised to."
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Disgusted, 17 Aug 2012 @ 3:24pm

So, what's new?
How does this differ from the pensions that the airlines and many others have abandoned because "They couldn't afford it"? That hurts a lot worse than a web host renegging on promises.
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vilain (profile), 17 Aug 2012 @ 3:27pm

Some companies keep their promises
An aunt was a 'lifetime' subscriber to the New Yorker until she died at 89. That subscription lasted 70+ years. Someone else down the block was a lifetime subscriber of The Reader's Digest (they were from the Midwest--not their fault) and had a similar run.

I'd love to see the early customers band together to launch a class action lawsuit against these clowns. No one really wins in those things except the lawyers, but if it makes the company keep their promises, great. Otherwise, they deserve to go out of business.
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Get off my cyber-lawn! (profile), 17 Aug 2012 @ 3:33pm

Yes, you are getting hosed over
sorry about that & have a nice day.

Now THERE is a business model that sounds familiar.
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That One Guy (profile), 17 Aug 2012 @ 3:36pm

Uhh, self-fulfilling prophesy anyone?
So I can't help but think, given that the 'lifetime' subscriptions here are supposed to last as long as the company does, and this action both stabs in the back their earliest supporters as well as doing some serious damage to their trustworthiness as a business... perhaps the 'as long as we're around' bit might end up being true after all, and the people getting hosed here are just the ones finding out soonest.
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Alex hagen, 17 Aug 2012 @ 3:43pm

Uh...Bait & Switch?
This has nothing to do with "Bait & Switch":

"denoting a deceptive method of selling, by which customers, attracted to a store by sale items, are told either that the advertised bargain item is out of stock or is inferior to a higher-priced item that is available."

This is just straight up fraud.
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Adam, 17 Aug 2012 @ 3:45pm

They're not all like that...
Many years ago I was an early paying subscriber to dynDNS.org, now DYN.com, a DNS organization on the promise that by subscribing, I would become a lifetime member. That was more than 10 years ago and I'm still listed as a VIP member, a status that now costs $20/year.
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Lorpius Prime (profile), 17 Aug 2012 @ 3:50pm

Re: So, what's new?
Usually companies have to go through bankruptcy filings to get out of agreements like that. This seems to be just a plain old breach of contract.
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Anonymous Coward, 17 Aug 2012 @ 3:53pm

Re: ?
Because this is about money. Business freaks out that they are supporting more users without a massive influx of income. The issue here is probably that since its a lifetime account they can't charge you again and again or change the terms of the deal.
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Spaceman Spiff (profile), 17 Aug 2012 @ 4:22pm

Major bogosity!
Saying that there is "no upgrade path" is just so bogus as to defy consideration! There should not be an issue with migrating user data from old to newer systems, and if there are software issues, then it should be their users who are responsible for upgrading/replacing their apps. To shaft their oldest and I would think most valuable customers (at least from the good karma / good press perspective) like this is just unconscionable. If they decided that their "lifetime account" customers should pay a fee to migrate their data to the new hardware, then that may be something that people can understand and possibly live with.

So, I say to Jason Hoffman this: don't expect to keep many of these customers around, and expect that the back-blow from this to seriously and negatively impact your company's sales and profitability. Personally, I think you just kissed your company goodbye...
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Anonymous Coward, 17 Aug 2012 @ 4:25pm

Um... I can't make an argument as to why anyone would do business with Joyent now.
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Anonymous Coward, 17 Aug 2012 @ 4:30pm

A form of self-fulling prophecy
Personally, I think you just kissed your company goodbye...

The net result is that those lifetime accounts in question lasted approximately "as long as [the company] exist".
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Christopher (profile), 17 Aug 2012 @ 4:56pm

Typical, sadly.
Remember Winamp?

Winamp was a tiny little MP3 player application. The nerd that created it sold tiny little licenses. Basically, it didn't do much more than help defray some costs but at least you got a regcode and the satisfaction of helping Nullsoft succeed.

Then AOL bought them. And, the thing that *really* burned me, aside from the bloated software and higher pricing, was the loss of my regcode. My cachet, so to speak, of being an early adopter. I was there. I helped. My brick is in that wall. And Justin sold the building and threw the brick in the garbage.

It's these kinds of things that stay with you.

-C
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Digitalistically Speaking (profile), 17 Aug 2012 @ 4:56pm

The Road to Hell
I've been involved in a couple of startups that didn't make it.I lost a lot of time, money and opportunities.

Promises made, money collected, bankruptcy filed.This happens all the time...thousand of businesses fail every day.

The Road to hell is paved with good intentions...

You move on.Nothing else you can do.
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liar, 17 Aug 2012 @ 5:01pm

Anyone here old enough to remember Quantum Link and the lifetime subscriptions that took a very short time to turn into 'sorry, but we no longer believe that the future exists for C64/128 computers, so, to use your lifetime subscriptions, get an IBM compatible and come over to our new home at America On Line...' ?
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The Mighty Buzzard (profile), 17 Aug 2012 @ 5:13pm

Re: The msot insulting line
Careful, if they're really serious about cancelling lifetime subscriptions but don't want to break their promise... Well... The only viable solution is to cancel the subscribers' lifetimes.
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J.B. Nicholson-Owens (profile), 17 Aug 2012 @ 5:27pm

We can't tell which businesses keep their promises until the business ends.
We can't actually tell if these businesses keep their promises until these businesses go out of business. If another New York Times reader had a lifetime subscription and saw their subscription cancelled next week as Joyent recently cancelled lifetime subscriptions, we would not conclude that the New York Times kept their promise.

In this way, it's like losing weight and keeping the weight off�the implication is that the dieter kept the weight off for the rest of their life. Hence, a dieter can never make this claim about themself because this claim can't be made until after the dieter dies.

But some responsibility should go to the would-be customer too: it's not reasonable to expect that any business can last by devaluing their goods/services for a one-time payment.

Magnatune.com offers a "lifetime" membership for a one-time payment of at least $240 (you're free to pay more if you wish). Given that "50% of membership fees go directly to the artists who are listened and downloaded", I still don't quite understand how lifetime membership payments are doled out to artists since Magnatune can't really compute how much to give an artist until the lifetime membership ends (only then would Magnatune know the complete download list for lifetime member). But I bought into this account figuring that when it ends I think I'll have downloaded at least $240 worth of music, and I enjoy supporting art that is licensed to share. I can only guess that Magnatune pays the bills based on licensing music, and ongoing-payment customers (like $15/month members). If they ever discontinue a lifetime membership like Joyent did, I'll consider them to be a disreputable organization with which to do business; as others have noted here the business chose to offer this deal with these terms. But for now I have no evidence things will go that way.
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Anonymous Coward, 17 Aug 2012 @ 5:49pm

Re: The Road to Hell
Here's the thing, the company isn't going out of business. They were selling cheap linux vm's that can be purchased today at 100/yr USD. I don't know the subscriber amount, but I bet it's minimal to the business that they do now with more expensive and fault tolerant VMs that they are selling today. I personally wouldn't of sold lifetime VMs, but the company did. It's not the end of the world though, as they can still minimally support those customers, and focus on the main business with little expense if the subscriber amount is minimal. So the main focus is on the amount of subscribers, I do believe that they stated about 200 customers, so they could simply oversubscribe the hell out of one instance for them and still the agreement. Sure performance would suck, memory issues would increase, but the agreement would still hold. I guess I would offer up both a rebate on a new VM or degraded performance and let the customer decide.
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Beta (profile), 17 Aug 2012 @ 5:54pm

Re: The most insulting line
Another is "because those early subscribers got Joyent off the ground, and we're paying dividends on that investment as agreed." (Note that a few lines down he says "we're only here because of the initial community that trusted us...")

My pick for most infuriating line:

"I�m sorry that I've lost that trust and I've upset you."

For "upset" read "cheated", and for "lost" read "betrayed".
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Anonymous Coward, 17 Aug 2012 @ 5:56pm

Re: Re: The Road to Hell
Sorry, It's friday and drunk talk is taking over...
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JustSomeGuy, 17 Aug 2012 @ 6:19pm

Seems simple to me...
If money changed hands in exchange for these lifetime accounts, then the sales contract is null and void and Joyent needs to hand the money back.

I'd be looking at a nice class action for this. Even if you lost, you'd at least drive this 'Dodgy Brothers' company into the ground. Since you're going to lose anyway, might as well take the scumbags with you :-)
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Beech, 17 Aug 2012 @ 6:30pm

Re: Re: The most insulting line
You forgot that for "sorry" you should read "not really that sorry, else i wouldnt be doing it"
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Scote, 17 Aug 2012 @ 7:13pm

Blatant fraud?
Exactly. The CEO is just saying that he's going to default on creditors because, well, it is convenient. This is literally no different than accepting a flat fee for a year long service contract and then sending out an email a month later saying that the "year" is up and that he's going to keep the money.

If he wants to default on creditors he needs to declare bankruptcy. Whining that old customers lured in at a low price are subsidized by new customers then he has only his ponzi-scheme business model to blame. Just defaulting on his contractual obligations isn't, AFIK, a legal option.
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DogBreath, 17 Aug 2012 @ 7:13pm

Re: Seems simple to me...
I'd be looking at a nice class action for this. Even if you lost, you'd at least drive this 'Dodgy Brothers' company into the ground. Since you're going to lose anyway, might as well take the scumbags with you :-)

Thus allowing the shafted customers bring final justice to the end of the bargain.

The company said it was a "lifetime account", and since they are cutting everyone off who purchased one, it's only logical for those "everyones" to make sure that it's because the company is actually gone.

Fair is fair, balance of power, revenge is a dish best served cold, Mutually Assured Destruction (the company launched it's nukes, time to launch ours), etc... and all the fallout that comes with it. Goodbye, business that I used to know.
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Rekrul, 17 Aug 2012 @ 9:29pm

Re: Some companies keep their promises
They've probably banned users from filing class action lawsuits, like many other internet related companies.
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WysiWyg (profile), 18 Aug 2012 @ 1:52am

Re: Nothing New...
But did they promise to ALWAYS (well, as long as the company existed) offer those things free?

'Cause I don't think so.

Plus, I would think that the transaction of money means you are far more "on the hook" for original promises.
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WysiWyg (profile), 18 Aug 2012 @ 1:58am

Re: We can't tell which businesses keep their promises until the business ends.
Sure you can tell which one is keeping their promise. We won't know until the end which one kept their promise ALL THE WAY, but we can know who has kept their promise SO FAR.

It's just like with the dieter; no one (may except for you) actually think that they mean that they will keep the weight off for the rest of their lives, just that they have done so so far.
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WysiWyg (profile), 18 Aug 2012 @ 1:58am

Re: Re: Some companies keep their promises
Then again; they threw out the agreement, not the users.
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Anonymous Coward, 18 Aug 2012 @ 2:48am

Re:
Because money.

It's a poor excuse when you made a promise to a customer.
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btr1701 (profile), 18 Aug 2012 @ 10:11am

Re: Re: Some companies keep their promises
> They've probably banned users from filing class action lawsuits,
> like many other internet related companies.

Well, if the company can change the contract at their whim, so can the users. That sword cuts both ways.
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Anonymous Coward, 18 Aug 2012 @ 6:29pm

Re: Re: So, what's new?
Agreed, it is breach of contract not bait and switch. Bait and switch is where the potential customer is told that the advertised deal (the bait) is no longer available, but the supplier has an alternative deal (the switch). No contract has been entered into at that point. Customers have the opportunity to simply withdraw, so bait and switch is a minor matter.

Breach of contract is where one party unilaterally changes the deal (nearly always to the disadvantage of the other party). The contract has already been entered into at that point. Breach of contract is much more serious because there is no easy way for the victim to avoid being victimized. They have to take legal action, which many victims are very reluctant to do.
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tqk (profile), 18 Aug 2012 @ 6:40pm

The "why".
I'm surprised to see no-one's picked up on this:

It was driven by some simple things: the hardware is simply old (6-8 years old), it's failing, there isn't an upgrade path from it, there's more than many of you likely realize and oddly enough it's more expensive with time (while not being used much).

In other words, they cheaped out on technical support, maintenance, and upgrades. Now where have I heard that before? Well, pretty much everywhere I've worked in IT. After all, it's much more important for the execs to maximize their salaries and for the shareholders to get their dividends and ever rising share prices than it is to ensure the damned Rube Goldberg contraption continues to do what "Sales" said it would do.

"Ah, but IT is a cost centre, don't you know?"

I don't often find myself in the "Sue!" camp, but in this case, I am. People like this are a blot on the industry and it would be better if it were rid of them. Joyent doesn't deserve to live. I'm a bit surprised that some cracker/hacker/Anonymous hasn't ripped 'em a new one if this's how they do things.
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Anonymous Coward, 18 Aug 2012 @ 8:48pm

Re: Nothing New...
Startup companies have quite often "miscalculated" their business models to include free or discounted services as a way to promote themselves.

Two that come to mind are OpenDNS and phoneFactor.
iName too. They were an email forwarder that promised free service for life, in the mid-90s. But after a few years, they disabled forwarding, and people had to use webmail if they wanted to keep their address. (Now they're dead and the domain name is controlled by a web-spammer.)
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Anonymous Coward, 18 Aug 2012 @ 9:04pm

Re: Typical, sadly.
Then AOL bought them. And, the thing that *really* burned me, aside from the bloated software and higher pricing, was the loss of my regcode.
AOL also tried to revoke the open-source license of WASTE after it was published. It seems AOL still exists, but at least they're not selling anything to end-users these days (just advertisers).

(I do remember the regcodes�there was some debugging tutorial which, as an example, showed how to set a breakpoint and read a valid code from RAM.)
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Anonymous Coward, 19 Aug 2012 @ 7:37am

You got it all wrong... they're murdering everyone on that day.
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Anonymous Coward, 19 Aug 2012 @ 3:22pm

Re: Re: Re: So, what's new?
nearly always to the disadvantage of the other party)

This is a unilateral contract; any changes made by the 'writer' of the contract that benefit the other party (non-writer) are considered liberalization of the contract -- not breach.

Further to the whole situation:

A standard form contract drafted by one party (usually a business with stronger bargaining power) and signed by the weaker party (usually a consumer in need of goods or services), who must adhere to the contract and therefore does not have the power to negotiate or modify the terms of the contract. Adhesion contracts are commonly used for matters involving insurance, leases, deeds, mortgages, automobile purchases, and other forms of consumer credit. Also known as adhesive contract; adhesory contract; adhesionary contract; take-it-or-leave-it contract; leonine contract.

Courts carefully scrutinize adhesion contracts and sometimes void certain provisions because of the possibility of unequal bargaining power, unfairness, and unconscionability. Factoring into such decisions include the nature of the assent, the possibility of unfair surprise, lack of notice, unequal bargaining power, and substantive unfairness. Courts often use the �doctrine of reasonable expectations� as a justification for invalidating parts or all of an adhesion contract: the weaker party will not be held to adhere to contract terms that are beyond what the weaker party would have reasonably expected from the contract, even if what he or she reasonably expected was outside the strict letter of agreement.(source)
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aikiwolfie (profile), 19 Aug 2012 @ 4:47pm

Life Sucks, Move On!
I know 6 to 8 years isn't exactly a lifetime, but so far as free offers or discounted hosting deals go it's a damn good run.

The company could probably phase this out more gradually. If the hardware's failing and it's going to cost them too much to virtualise then what else can they do? Sticking to the line "we promised" isn't a viable business model.

Techdirt is always ready to criticize companies and organizations for sticking belligerently to failing business models. Well when things change there are often casualties. You can't have it both ways.
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tqk (profile), 19 Aug 2012 @ 8:17pm

Techdirt is always ready to criticize companies and organizations for sticking belligerently to failing business models.

Shallow as a pane of glass. You don't see any difference between the MafiAA's way of sticking to an obsolete business plan, and some jerk promising the moon and then yanking it out from under paid customers whenever they feel like it? Promises mean nothing in your Universe? I'm glad I'm not your customer.

If Joyent can't honour its deal, its only recourse is to go out of business with apologies for failing, not to screw over its paid customers.

You must be a manager, yes? MBA?
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zenith (profile), 19 Aug 2012 @ 9:27pm

You cruel people - have you no souls?
What is wrong with you people? Can't you see this was a difficult decision. He even says; "Making the decision ... was extremely difficult."

See?! Not just difficult, but *extremely* difficult. All that money his company saves for simply ignoring the contracts with their long standing customers... sure, that is a abhorrent behaviour generally, but not if its difficult decision or even extremely difficult decision.

I mean, put yourself in his shoes for a minute. Can you image having to receive questions and comments? Do you know how difficult it is to listen? He's promised to make sure that he isn't even going to cease responding...

What more do you want from him? Blood?
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Anonymous Coward, 20 Aug 2012 @ 12:06am

Re:
Yeah, good old QLink. I still have one of their coffee mugs. I knew when they offered that lifetime subscription the jig was up.
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WysiWyg (profile), 20 Aug 2012 @ 12:06am

Re: Life Sucks, Move On!
"Sticking to the line "we promised" isn't a viable business model."

If "we promised" means "we signed this contract", then yes; sticking to it is a viable business model. Or more correctly; breaking the contract because you miscalculated is NOT a viable business model - it's breaking the law.
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Ninja (profile), 20 Aug 2012 @ 4:24am

Re: Re: The msot insulting line
Call the Motherfucking Eagles for that. You just have to accuse the customers that have lifetime accounts with copyright infringement and you can throw them in jail without due process. Jailed customers will not notice their subscriptions were canceled ;D
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Frono, 13 Feb 2014 @ 7:09am

Re: They're not all like that...
+1 for dyn.com. Those guys keep their word. Was an early donator to dyndns.org and have had free lifetime membership to their awesome service ever since.
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