An industrial estate in the Melbourne suburb of Dingley, about 23 kilometres south-east of the CBD, doesn’t scream yoga central. Still, with more young families moving to the area, Autumn Shearer thought it would be the perfect location for her yoga studio, State of Soul.

To help spread the word, Shearer joined ClassPass, an app that helps fitness studios fill empty slots with casual users. The app uses dynamic pricing, based on the number of spots available, to price each class, from which it takes a cut.

But what may seem like a simple service for studios is far more complicated. In interviews with yoga and Pilates studio owners across Melbourne, Sydney and overseas, this masthead learnt how ClassPass has radically altered the fitness industry by eroding a culture of loyalty and community that underpins many businesses.

Owners say their studios have been devalued because of the way ClassPass allocates spots, and what it pays for them. Some studios that have closed down have cited ClassPass as a factor privately, but none were willing to do so publicly, such is the fear of retribution. Several want to leave the app but fear the hit to their revenue. All of them want consumers to know more about where their money goes.

When Shearer opened State of Soul in early 2024, ClassPass seemed a no-brainer. “I was a little bit naive, being a new business owner,” she says.

But she soon came to the view ClassPass’ owners, United States-based fitness-tech giant MindBody, didn’t have her interests at heart. “The first red flag for me was I couldn’t figure out how much I was getting paid per student,” she says.

At one point, 90 per cent of State of Soul’s spots were taken by ClassPass clients. She has since left the app, but it’s taken months to recover her losses and grow her business.

“You have this company worth a billion dollars that has essentially taken the subscription model off studios and pushed them onto ClassPass,” she says. “People don’t realise. They see a popular studio doing well. [But] studios are suffering. It’s really concerning.”

At least one Melbourne studio that was on ClassPass has shut this year. Humming Puppy, which still has studios in Sydney, New York and New Jersey, closed its Prahran studio in May, blaming post-pandemic instability in the industry, the end of its lease and a “lack of financial resources”. When contacted, the business would not comment on its experience with ClassPass.

Despite several attempts over three months, ClassPass’ head office in the US did not respond to a list of detailed questions from this masthead.

‘Uber Eats of the wellness industry’

The reliance that some studios have on ClassPass can be easily tabled. One Melbourne wellness studio, whose owners did not want to be identified because it could jeopardise their agreement with ClassPass, joined the app at a rate of $15 a spot.

In 2018, the proportion of ClassPass users attending the studio was about 5 per cent. Today, it’s 35 per cent. Over the same period, the studio’s earnings per spot also declined. At its lowest, ClassPass paid the studio just $10 a spot, compared to the $35 it charges for a casual class.

“There needs to be education,” the owner says. “[Consumers] probably think they are supporting the studio, which they are to some extent, but it’s a bit like Uber Eats in the wellness industry.”

By this, the owner refers to past accusations from restaurant owners that their relationships with food delivery apps, like Uber Eats, were unsustainable due to the platforms’ high commission rates.

A Sydney operator, who spoke on condition of anonymity fearing commercial or legal repercussions, says it’s difficult to leave ClassPass when it can account for one-quarter of revenue. “[By speaking out], they could discontinue our partnership, and we wouldn’t be able to pay our wages or inventory,” he says.

Studios have also seen the drift of members to ClassPass, which is staffed in Australia by a handful of sales representatives. Once that happens, says the Melbourne studio owner, it’s difficult to get them back.

“It feels good when classes are filling up … but the overall revenue and performance of the business is not improving,” he says. “It re-emphasises the power they have, and the reliance studios have on them.”

Winners and losers

ClassPass, formerly Classtivity, was founded in 2010 by former music industry executive Payal Kadakia. It came to Australia in 2015. Kadakia left ClassPass in 2022 after selling it to Mindbody for an undisclosed price. Users pay a monthly fee, from $19 to $299, for credits towards classes and wellness services, such as massages. A Pilates class can range from three credits (roughly $7.50) to as much as $30.

Gail Asbel is co-founder of Upstate, which has 11 studios in Melbourne and Geelong. She says ClassPass is critical to Upstate’s success. “Melbourne is a really competitive fitness market. That’s where partnerships like this become important. You need a diverse customer base, and you need a mix of casuals and members.”

Asbel, whose business was named among ClassPass’ best studios in 2023, can’t understand the negativity around the app. “Our philosophy is meet the customer where they’re at,” she says.

Most of the studios that spoke to this masthead agree that at its best, ClassPass attracts prospective new members, and gives travellers a way to keep fit away from home. But, at its worst, they liken ClassPass to a competitor within their own business. The Sydney operator says ClassPass worked best before 2018, when consumers hadn’t yet adopted a “penny-pinching mindset” to group exercise.

Sally Murchie and Shelley Armstrong, owners of Grass Roots Yoga in Melbourne’s St Kilda, say ClassPass has altered the public’s perception of what a fitness class is worth. They hope that by speaking out, they can negotiate a fairer deal. “Stop giving away our classes for free,” Armstrong says. “That is not helping anyone.”

Adds Murchie: “They are a big player in the wellness industry, but they are going against what it means to have wellbeing – community, sense of belonging. It’s more than coming and doing these yoga shapes.”

Murchie is also critical of ClassPass’ trial period, which offers several free classes to new users. During this period, studios receive zero revenue, and their only way to contact clients is through the app, which she claims creates a barrier to converting them to members.

“What hope have you got of being able to convert [visitors] to members when they have no sense of belonging to a studio?” she says. “It’s just killing the industry.”

‘Free’ to leave

Of course, studios can leave ClassPass anytime, subject to their contract. In reality, it’s not always so simple.

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“It’s like they bait you,” says one studio owner with 10 years’ experience of the app.

The Sydney fitness executive echoes the complex relationship studios have with ClassPass: “They’re our greatest friend, but they are starting to become our enemy.”

After her “divorce” from ClassPass, Shearer has made it her mission to convert as many app users to members, be it at her studio or elsewhere.

“ClassPass has taken over the industry and made a lot of studios feel like they have to be on the platform,” she says. “But there is a lot of power in standing your ground … in stating your value and what your classes are worth.”

Armstrong believes ClassPass users are too motivated by price. She despairs at seeing people in the car park, glued to the app, waiting for prices to drop as a class draws closer. “As a teacher, it’s so offensive to have someone waiting outside to save $3,” she says.

A question of ethical app use

In a 2015 piece, New York Times writer Jenna Wortham explored the “joy and guilt” of the “digital middleman” economy. “Just as I try to be a conscientious consumer who buys organic food and recycles, I’m working on being mindful of the larger economic and environmental impact of the software and apps that I use,” she wrote.

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Wortham’s message is still relevant today. Perhaps what has changed is a claim by ClassPass’ founder Kadakia in the same article that the company sees no benefit in targeting studios’ existing members. But, according to studio owners, the incentives ClassPass provides effectively encourage many people to leave them for the app.

Armstrong hopes consumers become more aware of the impact third-party apps have on small business. After Grass Roots posted to Instagram about ClassPass giving away a month of classes to new users, the studio’s DMs lit up. “Whether [that support] turns into dollars, is yet to be seen,” she says. “The guy who is standing outside, waiting for the price to [drop], is still loyal to ClassPass, not to us.”

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