You're right, I skipped a step/was unclear. Features will degrade over time for _non-subscribers_. They'll eventually wall it off so that you have to have a subscription. Then they'll start degrading the features for everyone (who has to be subscribed). Then they'll have a new tier and the process begins anew.

Start with a subsidized product and delight users -> step 1. Prioritize the business by charging extra -> step 2. Degrade what people get for their price and extract revenue at the expense of the users -> step 3.

Classic enshittification.