The Subscription Model for Social Media (2022)

Hello all! Remember when I said in my last post that I would post every 10 days? Yeah...I already fumbled that goal a bit. BUT, I've reframed my goal to write for 4 out of the 5 weekdays (anything on weekends is extra) to build momentum and to focus more on writing as opposed to publishing. This past week went well (hence, this blog post), and I'm now crossing my fingers for the weeks to come.

I hope you enjoy this one, and as always, share it with a friend if it gets you thinking!

In 2019, the Netflix documentary, The Great Hack, unveiled the Cambridge Analytica-Facebook data scandal. The documentary reveals how data, through influencing elections and instigating social dilemmas, can be weaponized for political gain.

The following year, Netflix released The Social Dilemma, the documentary/docudrama alarming viewers of the deleterious impacts of social media platforms on public health. In the film, tech experts reveal that these social media platforms are designed to fragment our attention and manipulate our biological reward systems.

There is obvious thematic overlap between these two pieces. Big Tech has weaved itself in the fabric of our reality, and we must consider the repercussions of allowing these forces to operate unencumbered and in such ubiquity. The two films not only expose many of Tech’s pernicious activities, but their box score success also highlight a growing public dissatisfaction and distrust for these companies.

A 2021 Washington Post-Schar School survey found that across a random sample of 1,122 adults in the United States, the majority did not trust social media platforms such as Facebook, Instagram, TikTok, WhatsApp and YouTube (72% distrust to 20% trust, 60% distrust to 19% trust, 63% distrust to 12% trust, 53% distrust to 15% trust, and 53% distrust to 35% trust, respectively).

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This distrust has resulted in most Americans thinking that the government should do more to regulate how Internet companies handle privacy issues (from 38% in a 2012 Pew survey, to 64% in 2021). Unsurprisingly, 64% of Americans also believe that social media has a negative effect on the country.

(Video) The Best Examples of Subscription Business Models

Of this 64%, roughly 3 in 10 believe misinformation is the main reason they think social media has a negative effect on the country. This has lead to many discussions of social media censorship and fact checking, a topic which I attempted to unbiasedly address in a previous blog post.

Other main contributors to social media’s negative effect that users identified include extremism, negativity, polarization, and privacy. On face value, these issues may appear disparate, but like how nausea, fever and shortness of breath can all be symptoms to a single illness, these societal issues are indicative of pervasive social media incentives.

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The Attention Economy and the Ad Revenue Model

While Americans have a wide range of reasons to distrust social media platforms, these issues can be grouped as a byproduct of the attention economy. The attention economy defines the market competition for tech user’s dwindling attention. More attention guarantees more advertisement views which equals more money. The unfortunate reality is that maximizing attention leads to detrimental social outcomes: addiction, psychological harm, and virtual echo-chambers that fuel polarization. As companies deploy techniques to keep us engaged in their services—endless recommended content, alerts of a friend’s activity and auto-playing videos— we inevitably become the product of these platforms.

Social media usage has proliferated since the early 2000s with the ubiquity of personal mobile device and ease of access. The ad revenue model has allowed social media platforms to provide their services for “free”, further promoting frictionless product use. As social media becomes more inseparable with daily life, the platforms benefit from the social repercussions of opting out and the few barriers that exist for social media usage. We’ve accepted that the cost of addicting and temporary entertainment is our time and attention. But it’s not a transaction, it’s a robbery. The ad revenue model promotes platforms to exploit our reward systems to bring us back to apps, and once we’re there, takes hold of us with environments that value engagement time more than user wellbeing. It’s a flawlessly wicked system that racks in billions in revenue.

Facebook, the most widely used social media platform worldwide, boasted 87 billion dollars in revenue in 2020, 97.9% of which was generated from advertisement revenues. Twitter, one of the smaller major social media platforms, generated 86.3% of its 3.7 billion dollars in revenue from advertisement in 2020. With advertisements as the overwhelming source of revenue, it’s no surprise that platforms have devolved into greedily maximizing activity and engagement at our cost.

Shifting Platform Incentives with the Subscription Model

A daunting, but possible solution would be for social media platforms to shift away from advertisements and adopt a subscription-based business model. Adopting a subscription revenue model alone will not immediately temper our social media distrust, however, doing so will remove platforms’ incentive to maximize views and clicks. Rather than appeasing advertisers, social media platforms will operate to increase user satisfaction.

Subscription based platforms like Patreon and Substack have demonstrated success in this field by creating a more personal experience between the audience and the content creators. Monetary investment allows for direct feedback between the users, and the platform and creators. If a Patreon patron is unhappy with a creator’s content they will be less inclined to pay. Similarly, if an audiophile is unsatisfied with a music streaming app, they’ll switch to another. Contrast this with the popular social media platforms where users are unlikely to ditch the medium altogether since it’s “free”. For us all, the damage to public discourse and health is intangible, so we accept these detrimental incentives and scroll on.

(Video) NYT CEO: See subscription model grow faster than digital advertising

In a subscription model, the control is brought back to the users and market dynamics can help steer platforms to optimize for happiness rather than ad clicks. But this isn’t a decision that can be made overnight. It requires the cooperation of Tech giants who are far too comfortable to take a revenue hit. Adopting a new model also introduces big questions. Is this transition even feasible? Should we expect everyone to pay for a previously free service? And even if they should, can everyone afford to?

The Price

Of course, many people would be against paying for a service that has always been free, even if it may provide a solution to our dissatisfactions and distrust of social media platforms. YouTube is a prime example of this. Out of the average 2 billion daily users, only 10% (20 million) subscribe to the ad free YouTube Premium option. Even Patreon’s relative success of 3 million patrons is miniscule compared to Instagram’s 1.4 billion users and Twitters 330 million.

These statistics can be spun as a population wide disinterest in ad-free and subscription-based models or an incipient desire for them. Twitter recently launched the Twitter Blue subscription in the United States and New Zealand, after initial testing in Canada and Australia. The subscription promises ad-free articles and handful of new features like bookmarks and undoing.

If we entertain the idea that users would consider paying for social media, what would that price look like? There’s a metric called average revenue per user (ARPU) that is used as an indicator of the profitability of a product based on the amount of revenue it has generated from each of its users. Although ARPU is not a generally accepted accounting principles (the common set of accounting principles, standards, and procedures issued by the Financial Accounting Standards Board), it can be used to predict what a new social media subscription would cost.

Facebook’s ARPU in 2020 was $32.03, which was up from 29.25 in 2019. It’s therefore possible for a new Facebook subscription to cost less than $3 a month per user (but realistically around $7-$12). Granted, this is cheaper than realistically possible (even Hulu with ads is $6.99 a month), it does suggest that a reasonable transition cost is not improbable.

With social media such an integral part of our lives, I wouldn’t discount an avenue for national governments to help cover these costs. Former Presidential and New York City Mayoral candidate Andrew Yang proposes a government subsidized budget for social media. Like his take on democracy dollars (where US citizens are allotted a fixed amount of an arbitrary currency to support presidential candidate to diminish the influence of lobbying and mega donors in presidential races), each individual would be awarded $X by the government to spend on social media subscriptions. This social media transition campaign would run for a few years to alleviate the transition and allow current social media users to be grandfathered in to an ad-revenue free social media world.

Unchartered Territory

As promising as current subscription models such as Twitter Blue, YouTube Premium, Netflix, and Patreon are, they are inherently different than big social media platforms like Facebook, Instagram, and TikTok. Currently, the subscription model works best for the creator/content-audience relationship and/or when there are special features users can’t resist.

(Video) Tien Tzuo and the Subscription Model

For Netflix and Patreon the subscription model relies on the creator/content-audience relationship. Users pay to support their favorite creators on Patreon and similarly pay to support their favorite content on Netflix. YouTube Premium is close to this model too as they provide exclusive YouTube premium movies and TV shows.

The other approach that successful subscription model platforms deploy is luring users with special features. Twitter Blue is advertised more as a pseudo-news subscription, like the New York Times or the Washington Post. If you want to digest news unrestricted, or undo your last tweet (amazing!), you must pay the extra subscription cost. Dating apps, quasi-social media platforms, wave premium features too. Bumble Premium gives you advanced filters and the ability to undo left swipes and Tinder Gold (the second of three subscription tiers) grants you unlimited likes and new top picks every day.

In Facebook, there are no obvious creators and audiences, everyone is a user. The same loosely, but still mostly, applies to Instagram and TikTok. Although users can follow trending accounts, the app thrives when all users engage socially by consuming and creating content. Unless these platforms adopt new shiny features to reel in potential subscribers, there is little incentive for a shift in revenue models.

It’s possible that Twitter Blue is one of the many social media shifts we’ll see in the coming years, but until more follow, it’s difficult predict what changes can be made by the remaining Tech giants, especially when the overwhelming majority of their business stems from advertisements. However, even if all social media platforms agreed to shift away from the ad revenue model tomorrow, we still must consider how this transition impacts all their users.

Disproportionate Impact

Transitioning social media platforms to a subscription model pertains to more than whether users would pay for social media services, it also concerns whether they can. The percentage of adults who use social media is relatively similar across income groups in the United States . The great thing about the current ad revenue model is that it doesn’t discriminate on income. This and given that social media is now nearly a cultural necessity, brings forth questions of equity with transitioning to a subscription-based model.

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Requiring users to pay for previously free services impacts lower income populations disproportionately. The demographics of Netflix’s users versus traditional TV watchers support this point. According to a Pew Research Center survey, households with an annual income of less than $30,000 rely on traditional TV for their news and entertainment while those earning a median income of $50,000 are more likely to have a Netflix subscription. If consumers with incomes under $30,000 are unwilling to subscribe to Netflix it wouldn’t be surprising to learn that the 44% of Instagram users in that same income group would be against subscribing too.

And if somehow the U.S. government subsidized this transition, what does this mean for other countries? For the 350 million Facebook users from India (compared to 193 million in the United States), who should the companies expect to pay for these services? The people? The government? And what about for the 150 million total users in the Philippines, Argentina, and Nigeria?

(Video) "Why the subscription model is the future" 💸 with Tien Tzuo, CEO of Zuora

A Way Forward

There is always something appealing about targeting an immovable force as a universal enemy. Some days it’s CEOs and other days it’s oil companies. Recently, this dissatisfaction and anger has been directed at Tech companies. Yet, despite the growing resentment, social media usage continues to climb as newer generations develop their social lives on platforms like Instagram and TikTok, while even the older one’s participate on Facebook. As a society, we’re locked into the digital world. Like an address or a phone number, a social media presence is expected in modern life. The subscription model may help combat the social media incentives that damage our public health and happiness, but as we’ve seen, such transition is hyper nuanced.

Nonetheless, that doesn’t mean hope is lost. I see a path forward similar to that of Google Photos and Twitter Blue. Google Photos, a cloud photo service, previously provided free unlimited compressed storage prior to 2021. Now, there is a 15 GB cap to the free service. A key point, however, is that this cap does not apply to photos already stored prior to the rule change.

I imagine social media platforms undergoing a similar strategy by providing a subscription package that gives users perks like viewed posts per day (like Tinder swipes) or total followings. Current users would still maintain the accounts they follow, but any additional would count towards the free amount. Current users could receive unlimited viewable posts, but new users would only receive the fixed amounts. And ideally, to mitigate the disproportionate impact and temper public backlash maybe even federal governments could financially support this grandfathering process.

I know what you may be thinking, “This ideal case isn’t great. I don’t want to pay “. And I hear you, I’m still on my student discounted Apple Music. But at some point, we must reconcile the design decisions made in the past. While there are numerous concerns with social media, one of the most pressing is the incentives the platforms operate on, thanks to the ad revenue model. The individual cost for a free service may be unquantifiable, but the societal damage is undeniable. The ad revenue model skews the incentives for tech platforms to optimize for engagement, even if it’s at the cost of public health.

We all recognize that social media incentives are broken, and this damages our culture. We live now in the digital world where social media platforms aren’t part of culture, they steer culture. If we don’t amend the broken incentives of the ad revenue model, we may lose traction and spiral out of control.

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(Video) S5E261 Final Cast- Bonafide P127 Review

A subscription model would come at a deeper cost.

As far as I can tell, there are three alternatives to the current ad-based model used by major social media platforms—subscription, tax-funded, and premium models.. Broadly speaking, social media can be divided into two categories—social media for creating and social media for connecting .. Social media for creating—like YouTube and Medium—can more easily persuade users to a subscription model than can social media for connecting (Instagram, Facebook, and Twitter).. While these platforms might profit gloriously off a subscription model should they be able to convince users to pay, they would ultimately become platforms strictly for society’s elite.. This reason, coupled with the unlikelihood that social media companies would even be able to convince users to pay via a subscription model, begs other alternatives to the current ad-based system to be considered.. Just like with the subscription model, a tax-funded social media would become a network only for a certain group of people, thereby constricting the marketplace of ideas.. In other words, social media platforms would carry on with their current model and simply introduce a premium option for users if they are willing to pay a monthly or yearly fee.. In addition, premium models include both the benefits social media for connecting ought to have—no ads (for those willing to pay) and accessibility to members of all people groups.. For these reasons, I think that a premium model is not only the best alternative to the current ad-based model used by Facebook, Instagram, Twitter, and the like but also one that these platforms will likely adopt within the next few years.

We’ve compiled a comprehensive list of pros and cons to help you decide if the Subscription Business model is a route that might work for you.

Unlike a site that sells hundreds or thousands of items that have ebbs and flows of popularity depending on a variety of factors, subscription services sell a single product that is guaranteed to the buyer, and in return, the buyer guarantees their payment.. There is an upfront cost of trying to reach and win over new customers (as with all businesses), but once those customers are in and have signed up for your service, you can predict revenue for months in advance and breathe a little sigh of relief.. Because of the monthly nature of subscription services, you have an extended period of time to develop a relationship with your customer.. Subscription services like Birchbox, Graze, or Stitch Fix send you a single box each month, but in reality they are sending you a variety of ever changing products that come pre-packaged in that single box.. For the company offering the subscription, there is the good publicity of the vendor selling their product through that company, as well as the potential for an ongoing relationship with an ever-changing stream of products to offer.. Because a subscription service is based on the idea of selling one idea, and getting that idea to stick on a month-to-month basis, the initial budget for reaching and procuring new customers can be somewhat larger than it would be with more traditional business model.. Where you might normally be looking to spend funds on product marketing and building complex systems for all of the various aspects of your business, you can be a little more singularly focused on targeting certain audiences and building customer base as you begin your subscription service.. Because of this, it can be hard to sell customers on subscription service.. To look at the cable service example again, we’ve all been in that place of looking at our cable bill and thinking, “I don’t even watch any of these channels!” This, of course, is one of the attitudes that has contributed to the success of such subscription services as Netflix and Hulu .. Services like Birchbox or FabFitFun keep customers excited by including new products every month.. Even if you offer a single product, you can take any number of approaches to making sure that service remains unique, and worth a customer’s investment.. With a monthly subscription service, all of your customers are getting the same thing, every month, at about the same time.. Lastly, subscription services are susceptible to gaining and losing interest from customers if they aren’t careful to avoid embracing a fad.

New users are still flocking to social media, but advertising headwinds are placing pressure on some platforms’ revenue. We take a look at the challenges and responses from Twitter, Snap and Microsoft.

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Social 2.0 is all about control - users have more control over their data and privacy, and creators have more creative flexibility and how they make their monies

To make a living as a craftsperson, photographer, musician, designer, author, animator, app maker, entrepreneur, or inventor you need only thousands of true fans.” In a world where we hear about influencers, celebrities and millions of followers, views and likes, earning a living off a 1000 fans seems far-fetched.. In Social 1.0, the various social media platforms enabled users to earn social influence.. Sure, a few did a good job of upselling content and courses through platforms like Gumroad to their followers on Twitter, while influencers on Instagram and YouTube monetised their followers by promoting various brands to them.. Patreon, Twitch and most recently Substack changed all that.. Simply put, these are subscription-based social media platforms which are changing the dynamics of how creators use and perceive the social media platforms.. And this, is Social 2.0. Historically, amongst the largest social media platforms, only YouTube had a program to share their ad revenues with the people who created YouTube channels.. The key differentiator of Social 2.0 is a transparent and direct business model between creators and its patrons, typically built around a subscriptions model.1.. Creative independence: The creator is free to create what they truly believe in and what their fan base is looking for.. Direct control: The creator is free to price his creations what he deems best; and can allow the market discovery for the best price.. With no algorithms between the creator and the patrons, creators have a direct access to the people who matter the most.. Some of the top writers on Substack have built a paying-base of 5000 subscribers – that translates to a yearly income of approx $500K for them!. With the users paying for the content, most of the Social 2.0 companies don’t have to worry about monetisation via ads and therefore, storing and sharing data with advertisers.. The platform is ad-free, troll-free, enabling creators to establish a direct connection with their patrons.. With the power of the Internet and now, the proliferation of Social 2.0 platforms, a creator can easily discover those 1000 true fans from across the globe, and build a sound business.

There are numerous ways to develop a strong media subscription model strategy, and you’ll do it much easier if you follow the tips that we’ll outline in this article.

For digital publishers throughout the industry, user revenue is one of the biggest priorities!. When people agree to pay to read quality content, persuading them to pay for it is not necessary.. It’s a win-win situation for both users and digital publishers.. Still, in lots of cases, quality content is just not good enough to make the readers commit to a subscription.. For example, lots of users that consume high-quality industry content are experts in the niche themselves .. If you’re considering a paywall model, you need to understand the different models in the marketplace.. This is the most straightforward paywall subscription model!. The premium subscriptions model can work for you if you have a niche portion of your audience that’s zealous enough about a certain type of content, and that’s why they’re willing to pay for it.. According to a study done by the Lenfest Institute , in only one year, publishers with the biggest churn will end up with half as many subscribers as those with the least churn.. That’s why some of your members will unsubscribe from your paid membership content.. By experimenting with a wide variety of approaches for your media subscription model, and demonstrating gratitude plus value for your subscribers/members, you’ll be able to reach the readers that are most likely to enjoy your content and convert them to regular members of your premium club.

Twitter and other social networks want people to pay for content. But they’ll need a marquee feature to convince users to subscribe.

But to entice people to pay to use Twitter, experts say the company — as well as other social media platforms that offer subscriptions — needs to figure out the one feature people would actually pay for, then slowly add in other perks.. Will Aldrich, a director of Product Management at YouTube who focuses on Premium, said the platform isn’t ready to share the latest subscriber count, but the service continues to grow “at an amazing rate.” “We've been thrilled at the continued growth rate, for both our ad-supported business and our premium subscription offerings,” Aldrich told Protocol.. The company has gotten to a size where there's a lot of stuff that I don't enjoy doing as CEO of a 3,000-plus-person company.. The balance of where my time was going was just increasingly less on the product stuff that I enjoy and more on sort of the bureaucratic parts of running a big business, especially a financial services company that's heavily regulated.. Snowflake’s technology is primarily used for cloud-based data analytics and data science, but it is now looking to prove it has a lot to offer when it comes to cybersecurity, which is increasingly being recognized as a data problem at its core.. In security, you want to store a lot of data for potential review later on, he said, but you probably won't need to have access to all of your data all of the time.. By contrast, customers that try to store security data using a system that predated the cloud — which doesn't separate storage from compute, and doesn't leverage cloud-native storage architecture — will be forced to get choosy about what data they collect and how long they keep it, Singer said.. Snowflake executives said that the company is encouraging third-party software vendors to provide the security features around its data platform.. The company’s primary focus for Project Caviar is YouTube, which does not currently support Dolby Atmos or Dolby Vision.. Instead, the project focuses on 3D audio and HDR video formats that make use of existing codecs but allow for more rich and immersive media playback experiences, much like Dolby Atmos and Dolby Vision do.. That’s in part because of Dolby’s strong existing brand, as well as its licensing strategy: Instead of charging streaming services for the use of Dolby Vision, the company has been using these distributors as evangelists for the format, allowing them to market it as a premium feature.. The company still makes most of its money with its legacy codecs, but Dolby Atmos and Dolby Vision have been the fastest-growing parts of its business.

Patreon and Substack provide an alternative to social media's ad model with subscriptions. It's a healthy, sustainable option for creators and users.

For digital creators, Patreon and Substack provide an alternative model to making money on the internet.. Both platforms allow users to pay monthly fees to support their favorite artists, writers, podcasters, and gamers through subscriptions and membership — as opposed to relying on the ad-based revenue model from larger social media platforms.. As larger platforms become overrun with toxicity and spam, and because ad revenue is dependent on engagement and virality, some creators and users are turning to Patreon and Substack for a healthier, more sustainable internet experience.. But free isn't always better.. Patreon and Substack are not discovery platforms.. Patreon is looking to offer creators a sustainable business model.. But is there a limit to how many subscriptions users are willing to pay for?. The free, ad-based model has been able to support an enormous amount of content, making social media an unparalleled platform for discovering creators and engaging with other users.

Want to learn more about the subscription business model? We illustrate some of the best strategies through the most successful brand examples!

Before the advent of subscription business models, customers bought goods outright, and businesses just needed to be nice to the customer before the sale.. Each and every customer wants to have a better customer experience, and subscription business models can guarantee this, as everyone can cancel a subscription if they don’t get the quality they expected.. So, it’s definitely relevant to talk about the “subscription economy”, as Tien Tzuo, a 1998 graduate from Stanford’s Graduate School of Business calls it – as more and more businesses will start exploring the subscription based business model.. In a nutshell, a subscription pricing model is a payment structure that allows a customer to purchase a product or service for a specific period of time for a set price, most typically, on a monthly, quarterly, or annual basis.. The logic behind the subscription business model is actually fairly simple: instead of merely hoping that your leads will hit that “add to cart” button to make a one-time purchase and become customers, you’re going for the bigger prize at the very start – both attracting and retaining that customer for a long period of time.. It marks a sub-type of the subscription business model where customers get additional access to your products or services if they subscribe to your brand.. The JustFab Recurring Revenue Model Example Give Your Customers VIP Access Through Your Subscription Business Model. Pricing will affect customer acquisition costs, revenue, and customer relationships, as well as your ability to draw in new customers, increase the value of your current customers and reduce customer churn.. Freemium strategies work best in subscription business models that offer software services, aka the SaaS model (software as a service), which can include other types of digital products and services besides software, such as plugins, themes, etc.. Helping your business out when it comes to MRR (monthly recurring revenue), one of the most important metrics in the subscription business model; Helping you balance out your CAC (customer acquisition cost).. Customer service is an important element of almost every business venture, and subscription businesses are no exception.. Obviously, beyond ensuring a better customer experience, businesses themselves view implementing subscription models as bringing huge advantages, including predictable revenue, lower customer acquisition costs, flexible monetization models (the ability to match your subscription pricing model to the value you deliver), and finally, less sales friction.

Think social media and conversational marketing might be the next train to heaven for your brand but don’t know where to board? Well, here’s three social media marketing models that will make sure you’ll find your station. If you wanna get moving into the social...

How your brand makes good use these three models is entirely up to you.. The Social Staircase consists out of 4 steps that guides your brand into the conversation landscape called Social Media I have outlined 4 steps that make up the Social Staircase.. Move over to the conversation step, create a set of social viral spirals and get down to business.. Let’s move on and a have a look at the Social Tool Matrix.. It’s all about structure, planning, organization and control (once you have something to say) Don’t pick any tool out there for the fun of it and definitely don’t let one person in your organization handle them all.. Once you’ve passed the strategy and presence step in the Social Staircase it’s time to map which tools can do the work for you.. It’s now time to create a Social Tool Matrix.. Publish, interact, spread, buzz, images, video etc.. Can we measure the return of investment (ROI) If success was hard this is pretty darn impossible when it comes to social media.. This post is inspirational – not an actual guide.. Once you got the social matrix mapped you and everyone in your organization is prepared to start the conversation it’s time for one last thing – the Social Viral Spirals.. Choose your tools wisely and start a conversation Many of you have of course seen Brian Solis Social Conversation Prism.I love it too but it’s more of a wonderful image that maps all the possibilities with the social web than help for brands who are trying to figure out what to do and where to do it.. I’ve created the The Social Viral Spiral for exactly that purpose.. Once you’ve got an idea on what kind of content and activities should be matched with a certain spiral you will surely have better chances in succeeding and most importantly you will have moved the knowledge about conversation from a specific employee to your organization!. Type of content Timezones Time of actual publishing Internet behavioral patterns Where did you act the last time Number of followers on Twitter Number of friends in social networks Amount of social networks where you intend to interact How unique is the content you intend to promote What brand do you represent?

The easiest way to understand a subscription business model is by examining the magazine business model where the companies instead of selling the product as a one time purchase, offer the customers to purchase a periodic subscription of the magazine which ranges from few months to few years.

Subscription commerce refers to trading activities where the customer receives the product periodically or have periodic access to the services by paying a subscription fee.. The easiest way to understand how subscription business model works is by examining the magazine business model where the companies instead of selling the product as a one time purchase, offer the customers to purchase a periodic subscription of the magazine which ranges from few months to few years.. The offer is crafted in such a way that it is a win-win situation for both the parties as the customer gets a discount on purchasing a longer-term subscription and the company gets a loyal customer who’ll not go anywhere till his subscription lasts.. This makes the working model of a subscription business different from the traditional trading model as there are many new costs and revenue streams added to the system.. SAC: SACis the subscriber acquisition cost which is the aggregate cost (marketing costs + outsourcing cost + other costs like sales commissions, installation, etc.). MRC: Monthly recurring costs are the cost incurred to earn the monthly revenue.. LTV = (Monthly Recurring Rev – Monthly Recurring Cost) x (1/Churn) – Subscriber Acquisition Costs. LTV = Monthly Cash Flow x Customer Months – SAC. The economics of subscription business model is not much different from other business models.. You don’t recover most of your costs in the initial months of the service, which requires you to invest a lot in the initial months of your business.

Subscriptions and identify verification are just two of the ways social media companies could stem the tide of inflammatory and inaccurate content.

The business models of social media platforms like Facebook and Twitter are at the heart of the issue.. In an “attention economy,” platforms are free but sell user attention to brands, governments, and non-governmental organizations, according to MIT Sloan professorSinan Aral, director of the MIT Initiative on the Digital Economy and host of the recent Social Media Summit @ MIT .. Changing to a subscription-based model is a potential solution that would allow businesses to own the relationship with consumers, Aral noted, and could reduce addiction to engagement and reverse toxic behavior such as hate speech and spreading misinformation and disinformation.. He noted that that it’s hard to talk about potential inequities when it’s unclear how much social media platforms would charge for a subscription — and either way, small businesses using Facebook for things like advertising would be harmed.. Galloway, who said he doesn’t think Facebook will move to a subscription model, said social media companies could learn from Neeva , an ad-free, subscription-based search engine.. Models such as newsletter subscription platform Substack , in which users pay content creators , are promising but don’t address concerns like disinformation.. It’s also unlikely that people will share personal content like baby photos — the draw for many social media platforms — on Substack, she said.. While this puts some control back in the hands of users, people give away their data for free all the time, Mason noted, and it is unlikely paying users a small fee would cause significant changes.. She noted that the company also isn’t focused on large-scale growth, unlike many social media platforms.. Voluntary business model changes are one place to start, but social media companies might eventually be required to make significant changes.. Galloway said this could be spurred on by antitrust actions , regulation of social media platforms like public utilities , and taxes on companies that use algorithms to amplify content.. “We have effectively said to these folks: ‘The smart shareholder-driven thing to do is to break the law.’” He advocated criminal charges for social media executives who knowingly lie to Congress or engage in business models that lead to criminal activity and things like disinformation and mental health problems.. Misinformation or disinformation shared on Facebook reaches far more people than something aired on television news, Galloway said, and social media companies should be held to account like broadcast companies, which often issue apologies if they’ve shared false information, and banking companies, which face strict regulations and have robust, well-paid compliance departments.. Galloway noted companies also have financial incentives to rid their platforms of people who spread inaccurate content and hate speech, noting that Pinterest, which sees fewer problems with content, has seen its stock outperform Google and Facebook in the last year.

The business world is waking up to a new reality: People want to rent rather than own. Find out why subscription-based business models are the future.

This is directly affecting car ownership, home purchasing and business building construction, forcing them to shift their focus from selling things to delivering services people use occasionally or regularly.. The cloud-based subscription management company helps businesses across different industries build models for the growing Subscription Economy .. Zuora’s End of Ownership Report shows 79% of U.S. adults have a subscription service right now, and 76% believe that in the future people will subscribe to more services and own fewer physical goods.. In his book, Subscribed , the subscription business model expert explains how companies need to pivot into service and away from just making widgets.. The company’s Subscription Economy Index reveals that subscription businesses grew revenues about 5x faster than S&P 500 company revenues and U.S. retail sales from January 1, 2012, to June 30, 2019.. As Nutanix evolved from an IT hardware and software company to focus on software in 2018, company leaders also moved the company from traditional software licensing to a subscription business model.. Pandey sees subscription business models becoming the norm across the enterprise software industry, especially as more companies rely on a mix of owning and renting computing technologies.. Shift to Subscription is a series by The Forecast exploring the rise of subscription business models.

A subscription model would come at a deeper cost.

While most of the concern surrounds political ads, it’s worth considering what social media would look like without any ads at all, for politics or products.. As far as I can tell, there are three alternatives to the current ad-based model used by major social media platforms—subscription, tax-funded, and premium models.. Social media for creating—like YouTube and Medium—can more easily persuade users to a subscription model than can social media for connecting (Instagram, Facebook, and Twitter).. Why do Medium members pay $5 a month or $50 a year?. Thus, when you pay for these latter services, you support both the platform and the creators, not just the platform.. In addition, premium models include both the benefits social media for connecting ought to have—no ads (for those willing to pay) and accessibility to members of all people groups.. For these reasons, I think that a premium model is not only the best alternative to the current ad-based model used by Facebook, Instagram, Twitter, and the like but also one that these platforms will likely adopt within the next few years.

The subscription based business model is conquering the modern ecommerce market. Here, we explore the benefits for your business and your customers.

But why is the subscription based business model so popular?. We’ll take a look at some of the biggest benefits of subscription ecommerce, for both your business and your customers.. Subscription ecommerce is a business model in which customers make regular payments to receive products or services at recurring intervals .. Subscribers receive a selection of unique and interesting items on a regular basis, usually tailored to their personal tastes.. Repeat purchases / replenishment – With this type of subscription service, consumers can automate the purchase of commodity items such as razors or feminine products, thereby saving them time and money.. Subscribers who are committed to regular payments are less likely to churn , which means you don’t have to eat away at your budget with retention marketing.. However, when it comes to subscription ecommerce, inventory management is a whole new ballgame.. Find out more about the benefits of personalisation in our recent blog post .. For subscribers, receiving their regular product or service is something they look forward to every month.. Subscribers receive something they need or want on a regular basis, direct to their door – it just turns up without having to place repeat orders.. Increasingly, shoppers are demanding personalised ecommerce experiences tailored to their individual needs.. Here, leading beauty subscription service Birchbox neatly summarises the customer benefits we’ve been discussing in our post: personalisation, convenience and product discovery.. Luckily, modern subscription platforms like ReCharge allow customer credit cards to be updated automatically.. Get in touch with our friendly team of Shopify Plus Experts today to find out more about how we can help you unlock your ecommerce potential!

We've seen quite a few ecommerce sites built around subscription models in the past few years. Netflix and LoveFilm are the obvious examples, while MyGlassesClub and PeriodBox are two we'

It depends on your point of view, but for the business, one of the big advantages of ‘subscription’ ecommerce is that acquiring a transaction means you acquire a customer over the longer term, rather than just that single one-off purchase.. Higher margin: It usually means higher margin, which also means you can afford to ‘pay more’ for a customer, and often to grow faster by ‘buying’ customers more quickly than your one-off-transaction competitors, or spreading to new territories in the knowledge you’ll have the future income to pay for it.. If customers buy every month, they soon tell you of the issues, which means you remove problems quicker and in turn create a better product that may both attract more customers, and mean your existing customers stick around longer.. If customers unsubscribe after six months, do you have the ability to trace back to the original marketing channel and understand that customers from that source are more fickle than others?. Whereas transaction-by-transaction retailers can cross-sell, up-sell, increase the frequency with which customers buy, it’s sometimes harder for subscription businesses to expand the value of each customer.. Subscription fatigue: Some customers love subscription buying; some don’t like it at all, for most it’s somewhere in the middle – they’re happy to sign up for a handful of subscriptions in categories they really love, but if they don’t love what you sell, or they already buy from their max number of retailers on a subscription basis, you’re not going to sell to them.. Discount entry points: e.g. ‘first month free’, a cheaper first month, ‘money back’ trials etc (these are particularly popular with SaaS tools, which you could argue are subscription ecommerce businesses).. Selling through other subscription services: Often you’ll find ads for subscription ecommerce businesses inserted in the delivery boxes of other subscription services.. That’s great from the point of view that customers don’t have to go through the physical transaction process, and you don’t have to worry too much about discounts and the like, but it also means your customers have a greater expectation that you’ll deliver: you are a trusted supplier rather than just a shop; they are backing you not just buying from you.. Some sites can sell one-off products, and subscription products alongside each other quite happily.

When your business model revolves around reoccurring subscriptions — which is a popular model for software as a service (SaaS) products like Basecamp, FreshBooks and CampaignMonitor — the most difficult part of generating revenue becomes getting users to sign up. That’s where pricing plans — different subscription options with variations in price and features — play a pivotal role. In this article, I will discuss a few tips and best practices for creating and testing pricing plans for web-based subscription services and apps.

In this article, I will discuss a few tips and best practices for creating and testing pricing plans for web-based subscription services and apps.. How do you test the efficacy of a pricing plan?. You can test several components of your pricing plan.. Price What are the effects of increasing or decreasing the price of your software?. Test the validity of pricing ideas such as whether increasing your price leads to more sign-ups or if having the price end in a 9 (such as $49 or $19.99) increases, decreases or has no effect on revenue generation.. As a starting point for your price testing, you can read this short PDF guide on software pricing for inspiration.. Number of Subscription Plans There are ways in which you can create smart pricing plans that help your end-users choose an appropriate plan.. One of the ideas we tested was to have a mid-range plan that could lead more users to purchase our more expensive subscription plan.. When people see different options, they start comparing them with each other.. The hypothesis we tested was that people choose things relative to their neighboring options, and not in absolute terms.. We have largely talked about paid plans, so let us briefly discuss the topic of providing free plans along with paid subscriptions: the freemium business model.. The Forever Free Plan from MailChimp is a great example of using free plans to get sign-ups that can later on be converted to revenue through subscription upgrades.. How do you differentiate between free and paid plans?. An effective free plan lets users use all (or most) of the features of the app.. For example, the popular file-syncing tool, DropBox, gives you every feature of the paid subscription plan, however, your resource is limited to 2GB of files instead of 50GB of files.

You have set up your subscription commerce website and now you need customers. Here are 12 marketing strategies for your subscription box product.

How to make your subscription box get new subscribers?. Here are 12 marketing strategies you should apply after you set up your subscription box business.. Obviously, subscription box marketing is all about good content.. So, look at social media as ‘making friends’ with your customers.. As we mentioned above, social media is often used as an inbound marketing strategy to pull in customers to your subscription box business by creating a relationship with them and offering something of value.. Creating a blog that will appeal and resonate with your target audience, and then sharing posts across your social media networks is exactly how you will organically build a loyal community around your subscription box business.. While you are creating killer content for your own blog, you also need to create it for other blogs too.

We’ve compiled a comprehensive list of pros and cons to help you decide if the Subscription Business model is a route that might work for you.

There is an upfront cost of trying to reach and win over new customers (as with all businesses), but once those customers are in and have signed up for your service, you can predict revenue for months in advance and breathe a little sigh of relief.. Because of the monthly nature of subscription services, you have an extended period of time to develop a relationship with your customer.. Subscription services like Birchbox, Graze, or Stitch Fix send you a single box each month, but in reality they are sending you a variety of ever changing products that come pre-packaged in that single box.. Because a subscription service is based on the idea of selling one idea, and getting that idea to stick on a month-to-month basis, the initial budget for reaching and procuring new customers can be somewhat larger than it would be with more traditional business model.. Where you might normally be looking to spend funds on product marketing and building complex systems for all of the various aspects of your business, you can be a little more singularly focused on targeting certain audiences and building customer base as you begin your subscription service.. With a monthly subscription service, all of your customers are getting the same thing, every month, at about the same time.

Find out why so many publishers and B2B media organizations are using the subscription model.

The perks of the subscription model for media businesses For publishers with a vast array of content at their disposal, the subscription model guarantees a steady revenue flow and provides customers with access to that content without forcing them to fork out in large sums.. And if all that doesn’t sound like reason enough to be offering a subscription service, try this on for size: offering your audience the opportunity to take their business elsewhere is actually a great way to build brand loyalty.. Give your audience value for money; and, more importantly, don’t make them pay yet more for services on top of their subscription fee unless they’re truly worth it.. Prior to the pay-per-view fiasco, Sky’s model was a fairly successful one too; offering the main Sky channels in their basic package and charging more to add features such as sports and movies means that customers can pick and choose what they want, rather than being forced to pay for channels they have no interest in using.. Giving customers a feeling of control over the content they’re paying to access will ultimately be more rewarding for all parties.Done properly, the subscription model can be the best way to ensure a steady revenue flow and build brand loyalty.. You must treat your subscribers with respect and make them feel important so they know where their money is going; offering exclusive content and tailoring your work to the interests of your subscription base are good ways to do this.

A business model is the set of rules that govern how a company makes money. It defines what activities are necessary to reach success and when it will happen. The most successful subscription models have complex business models, including many different revenue streams.

A subscription business model or service allows users to use an online platform for a certain amount of time and at a set fee.. While subscription models are becoming more popular among software and eCommerce companies, there are many distinct approaches to service and pricing.. What can you do to make your SaaS product a long-term subscription model?. Then, in order to set up an updated pipeline for your company, you must actively predict how your clients’ problems will develop over time.. Perhaps it has something to do with the product itself and the features that are offered.. There may be several subscription levels or membership options for this product.. It’s up to you to figure out who these people are, what they’re searching for, and how you can improve your product to better serve them.. The most important aspect of creating a subscription business is product price and offers.. After all, this is a subscription service, and you’ll need to make changes on a regular basis to remain competitive.. You should also inform people why they would need to subscribe in the first place and what benefits they get from subscribing.”}},{“@type”:”Question”,”name”:”How do I set up a subscription model?”,”acceptedAnswer”:{“@type”:”Answer”,”text”:”A: Subscriptions are an important part of any business, and if youre looking to create a subscription model for your company there are many different ways to do so.

Here are 11 recently published statistics about the subscription business model and the impact it’s having on the global economy.

And rental car business Enterprise announced its own automobile subscription service soon after.. International Data Corporation , a global market intelligence firm, recently released a report looking at how consumer preferences for cloud services are shaping the software industry.. According to the report, while the subscription business model isn't applicable for all software companies, most will make the transition to enable new cloud service offerings while leveraging existing delivered software.. In agreement with other recently-published research, a report by Gartner, a global research and advisory firm, argues that the Software-as-a-Service (SaaS) model has not killed the software market.. Replacing traditional TV subscriptions are video streaming subscription services, according to Deloitte’s 13 th edition of their digital media trends survey.. Additionally, 43% of U.S. consumers have both pay TV and streaming subscriptions.. According to the results, music streaming service adoption saw an increase of 58% from last year.. Manifesto Growth Architect, a growth strategy consultancy, surveyed 504 senior business leaders across the retail, finance, leisure, automotive, and utility industries for their ‘How to Make Money from Membership Economics’ report.. While many leaders saw the value of the subscription model, only 24% were currently implementing it, and a mere 7% were generating significant revenue via membership.. Additionally, 17% of C-suites and boards are planning to launch a new or additional recurring revenue business in the near future.. The rise of the subscription business model has led to a corresponding increase in the necessity for subscription billing management platforms.

Videos

1. Unboxing Scentbox Fragrance Subscription & Revealing Secret Giveaway
(Haute Modesty)
2. No, the #TrudeauMustGo Twitter trend isn’t bot-motivated, it’s freedom-motivated
(Rebel News)
3. Digital Media Subscription Master Class 1: Acquisition
(FIPP - Connecting Global Media)
4. Webinar: Subscription Models in Digital Media
(Quintype)
5. An Indie Bookstore's Subscription Model
(Subscriptions for Authors)
6. Subscription Based Social Media Platform Animated Video
(Black Project Studios)

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