by Joe Adragna and Brennen Herr
The subscription model has been used for many different types of goods for a long time. Our interest in it is sparked by the recent growth of this model in use around the world for items that did not traditionally utilize it. Since 2007, over 35,000 new companies have appeared using this model.
The subscription system has roots in old-time record and magazine sales in the early 20th century. The questions we have are centered around the impact these programs have on consumers, and why they’re so alluring to them. More recently with newspapers and magazines, the idea of taking a product or a service and charging you a recurring fee has exploded in recent years. Visits to the websites of these subscription-based companies increased by 3,000% between 2013 and 2016. There is an almost unlimited number of products that are now being offered this way, from clothes and groceries to things like underwear and dog toys.
Many software companies are also beginning to switch from giving customers one-time products, to giving them “services” that have recurring costs but are continuously supported. Both Adobe Suite and Microsoft 365 are good examples of companies doing this. However, switching to this business model can be dangerous if not handled correctly. The inclusion of recurring costs can drive some customers away. It is important for companies to do market research to increase their profits even with customers leaving. By 2016 13% of companies that had started up with a subscription-based business plan had closed their doors due to this miscalculation.
Questions:
1. Are you subscribed to any physical subscription services?
2. Are you subscribed to any software subscription services?
3. Do you have any thoughts on the subscription-based business model?
Great post Joe and Brennan!
ReplyDelete1) I'm subscribed to a monthly shave club :)
2) I am currently subscribed to the usual music subscriptions, on top of my Office and Adobe subscriptions (luckily those are free for students). Other than that, I try to buy outright any sort of software if it's available. I miss the days of buying Office Suite for $120 and outright owning it.
3) I really hate the way companies are gearing towards the subscription model. I'm especially terrified with the way Microsoft may be headed since their leadership sucks, and I've heard they may start charging a monthly fee for Windows. If they do head that route, I think it'll be time to finally image my devices with Ubuntu or another flavor of Linux.
Wow!! The growth is staggering. Personally, I hate that we have to continually subscribe annually to businesses, no matter what services or products they offer. Plus, there are so many open source options that is it any wonder subscriptions are not as successful as they hoped?
ReplyDeleteI subscribe to various news sources and magazines because I like them. I hate having to have both physical and digital versions, as I mostly read the digital. Of course, some that only offer digital (mostly newspapers) do not offer both without paying more for both.
I think if you follow these sources on Twitter (it would take too long, but may pass the paywall). I also hate having to read Washington Post articles and then having to subscribe to read further. As a student, you can get these subscriptions for free? Why can't I read the links students post on it. Hmm. Who owns this, anyway? ;)
1. I am subscribed to Orange Theory Fitness where I can attend a specified number of workout classes per month.
ReplyDelete2. I am subscribed to the student premium access of Spotify and Hulu where I can enjoy music as well as binge some TV shows for a monthly fee.
3. I think that the subscription-based business model is smart for companies to use. With Spotify for example, it can call itself a free music service as it has many members who do not pay for premium access, but those users have limited capabilities. The members who then pay a subscription price have higher accesses and privileges to features on the software. I also think that subscriptions have become more and more common and as they do consumers are more used to and willing to join in on them.