Subscription Economy – Gartner
“The “subscription economy” is a market reaction to a growing range of media offerings (newspapers, magazines, books, music and movies) and technology products (applications, services and related content) that can be delivered digitally to devices ranging from tablets, such as the iPad, Xoom and PlayBook, to smartphones and mobile devices.
Subscription management business models are most common in companies that provide products that can be delivered electronically, including media and software, and, in some industries, add-on services that can be delivered digitally.
Companies that are not offering or building strategies around subscription management may miss the opportunity.
Key Findings:
- By 2015, more than 40% of companies selling media and digital products, such as software, services and content, will rely entirely on software as a service (SaaS) or hosted subscription management services to manage their fulfillment, entitlement, billing, renewal and customer loyalty requirements.
- By 2015, 35% of Global 2000 companies with non-media digital products will generate incremental revenue of 5% to 10% through subscription-based services and revenue models.
- Subscription revenue streams can help to smooth out seasonal revenue peaks, generate incremental revenue from add-on services, and strengthen the customer experience and customer loyalty.
- Subscription management raises new concerns, including subscriber churn; management of unprofitable or low-profit subscribers; and privacy, security and payment-processing challenges”.
Zuora Blueprint for the Subscription Economy.
The Dawn of the Subscription Economy.
Tien Tzuo – founder and CEO of Zuora on the topic of the rising Subscription Economy. As companies move away from a manufacturing or product way of thinking they’re confronted with the critical need to handle customer loyalty, pricing and selling in a whole new way. Tzuo asserts, that in the Subscription Economy, legacy systems are holding businesses back from finding success in this new business model.
Gartner : Subscription Management Market Adoption
Gartner : The potential business benefits of subscription business models include:
- Enhance the customer experience through new or evolving business/product models.
- Manage revenue (ensure appropriate billing for usage and entitlements).
- Generate incremental revenue from add-on or cross-selling services.
- Ensure revenue consistency and predictability; reduce spikes.
- Manage customer experience through subscription management and related areas, such as billing and entitlement.
- Encourage customer loyalty through renewal management.
- Leverage growing digital economy and the “Internet of things.”
- Provide targeted marketing through richer, transaction-based customer insight.
- Build a customer annuity through predictable revenue, services and revenue recognition.
It was announced this week that YouTube is planning to launch paid channel subscriptions in the Spring.
Thoughts on YouTube’s Move to Subscriptions
Brian Bell, Zuora Chief Marketing Officer
“According to multiple sources, YouTube is preparing to launch paid subscription channels in the second quarter of 2013, allowing individual channel producers to charge between $1 and $5 a month to subscribers. Content won’t be limited to episodes, but content libraries and live events as well.
We encourage the competition between cable companies and newer players like AT&T, Netflix, Microsoft, Apple, Amazon, and yes, YouTube. The competitors are coming from all sectors of industry: Microsoft and Sony have already moved to make their entertainment centers not just video game platforms, but hubs to watch streaming sports and movies. And HBO has already made moves to become untethered to the cable company it once needed to survive.
The real winner in all of this will be the consumer as each business vies to offer the most flexibility, the most options, and the most personalized relationship with the consumer”. (edited from his blog)
“Zuora is built from the ground up by SaaS industry visionaries and veterans from salesforce.com, WebEx, Accenture, Google, eBay, Oracle and Vitria”.
Some of these visionaries and veterans sit on the Zuora Strategic Advisory Board which provide the stewardship to maintain market leadership and grow at pace.Tien Tzuo “Zuora’s subscription billing and commerce platform changes the way subscription businesses manage and sell to customers, allowing them to bring new products to market in less time, with more flexibility and less hassle”.
The Subscription Economy is about fostering customer centric relationships with medium to high profit customers that will grow and endure over time.
Finally, before YouTube launch their subscription channels they need to address the illegal uploading of movies.
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