Once upon a time, if you wanted to see a movie, you got in your car and went to the movie theater.
Now, you can hit Video on Demand to watch the latest movies in the comfort of your own home. But that’s not all. There’s Netflix, Apple, Amazon, Hulu, Vudu and more vying for your dollar as well. All offer products and services via subscriptions, including Silicon Valley giant, Zuora, which has coined — and even trademarked — the idea as the “Subscription Economy.”
[lz_ndn video= 29821486]
It’s a new model of commerce in which goods are repackaged as services, with consumers valuing access and ease of use over the accumulation of stuff. The technology is already used heavily in the business-to-business market, but consumers are embracing the model due to their consumption of media and products. It’s not exactly anti-shopping, but it’s definitely a new way of looking at the world.
In considering the subscription model, most people naturally think of their access to media. People go to Netflix for films, Hulu for up-to-date television, Spotify to get their jams, and iTunes or Amazon for everything else. But the subscription-driven world is quickly becoming vastly diversified.
Companies are redefining their relationships with their customers. The sale isn’t the end of a transaction, only the beginning of a commitment.
Some millennials in urban hubs like Seattle and San Francisco have given up owning cars in favor of Zipcars, Uber and Lyft. In the publishing world, subscription services like Scribd, Audible and Comixology offer readers instantaneous access to the latest books, magazines, audiobooks and comics. Through these types of subscription services, companies are redefining their relationships with customers. The sale isn’t the end of a transaction, only the beginning of a commitment.
This model has also allowed some forward-thinking companies to redefine the customization of their offerings. Initiatives like Loot Crate, Geek Fuel and other online retail services sell customized boxes of geeky toys to thousands of subscribers each month, which can make an actual economic difference to creators. When Loot Crate put a copy of Ernest Cline’s novel “Ready Player One” in a subscription box earlier this year, the author was startled by the response.
“It was like mail-bombing a copy of my book to every tech-minded person in the country,” Cline said. “Two weeks later, Steven Spielberg was announced as the director for a movie based on the book that’s already sitting in everybody’s living rooms.”
What is truly fascinating about these particular subscription boxes is that their contents are usually unknown to the subscriber until they receive their shipment. This means the subscription-based economy has created a demand for products that consumers didn’t even know they wanted in the first place. Subscribers even celebrate the experience in public, creating elaborate “unboxing videos,” that celebrate the month’s booty.
[lz_ndn video= 28994468]
Other companies have also jumped on the bandwagon to offer consumers handmade crafts, stylish accessories, men’s grooming accoutrements, food, wine and many other products. The model has even started to invade the brick-and-mortar stores. New companies are working with existing stores to offer subscription boxes to their customers based on their brand and style.
Are there potential downsides to the subscription-based lifestyle? You bet. The companies behind products like Microsoft Office 365 are counting on you to pony up your subscription fee each time it’s due. That means the model relies on a certain amount of inertia from consumers who are either too busy or too idle to shop around for similar services, or even cancel their membership. Hulu offers up a “pause” feature in its subscriptions for the explicit purpose of keeping customers on board.
The model has even started to invade the brick-and-mortar stores.
There is a degree to which subscription providers can choke off a market, leaving less room for innovation and competition because the audience is already saturated. Artists, musicians and other creators often tell tales of media companies that don’t compensate them fairly for using their work. It’s also probably worth some healthy skepticism about a model that Wall Street loves because of its ongoing return on investment.
Yet this new economy based on subscription access isn’t going away, and consumers, especially open-minded millennials, are flocking to these services. For consumers who use media or services heavily, value time and convenience over accumulating physical possessions, and are willing to make the mental leap required by the lifestyle change, living in a subscription-driven world can be a fascinating experience.
A new idea that makes the world easier and more entertaining has to be worth considering.