World’s largest technology conglomerates have been focusing on subscription-based business strategies from 1960’s, and in the modern day, various examples have been set taking into account the success brought upon by loyal customers with 2 of the largest companies based completely on subscription business model making it in list of the top 10 companies in the world.
So it’s official! Millennials aren’t interested in the hassle of free and pirated content anymore, owning bad quality records and finding them after browsing 10 pop-up advertisements when you can get everything at one place for paying as much as your 1-time lunch money seems like we were missing out on a better alternative. For entrepreneurs, SaaS has been a one-stop solution for all their software needs regardless their type of business. Renting through subscription-based services is a way better idea than stealing content from unreliable sources on the internet, and also, it’s legal. Subscription-based businesses pay a royalty for each minute of use to the company that owns the software/content, which in turn results in proper royalty being paid to the developers/artists and keeps everyone happy and in business.
A catalog which provides you with everything you want and everything you would need while offering a lot more if you wish to explore.
The best example of possibilities and how software-based subscriptions work is, software as a service (SaaS). SaaS is an online service providing software to subscribers, any subscriber can use it through any computer with an internet access, it saves from enormous hassles of buying specialized hardware, and the need for installing and maintaining the software. Also, whenever a new software version is released, you wouldn’t have to care about paying extra cost for the upgraded version.
The greatest example of flourishing subscription in content and marketing based businesses is Amazon, Amazon provides customers with 3 different services for a price that’s lesser than any such subscription you could buy alone (Netflix). But it does compromise in size of its library, Amazon prime video is way behind Netflix when it comes to producing original exclusive content, Amazon music offers a small library of 1 million songs while competitors offer up to 32 million. Amazon as an online marketplace makes its music and video streaming (and downloading) services as free perks, the marketplace offers enough perks like priority access to amazing deals and free delivery for a yearly subscription worth 100$/year.
With every original software/content comes great debt of paying for the production costs, or the cost of leasing from top artists in the industry. It may seem as a bad debt at first, but realizing that you own all the original content while retaining a huge customer base by including works from top artists makes it a much better investment than any other on earth. The short-term losses are momentary and would pass in a few years considering both the customer base and revenue shows an upwards trend (highly probable). The reasons why a subscription business retains and expands customer base:
Subscribers are proven to be extremely loyal especially in the entertainment business, same goes in the case of clients comprising of companies as this business proves highly beneficial for both parties involved. The customers who had been paying a minimum fee for months would think a million times before ending it for the obvious reason of losing data associated with their subscription.
Most users from time to time feel nostalgia, it may act as a double-edged sword as the user may not prefer subscriptions over owning forever at all, but if they do, it’s all you could ever wish for! Retaining nostalgic customers is way easier than you can imagine, they won’t even ever think about ending their subscription. While same nostalgia hardly strikes when they are assured that their content is logged in their profile and is just a click away as long as they are subscribed, it would lead to paying overall less royalty being paid to the artist, which means more profit, all while retaining lifetime customers.
3. Cravings for new content. ASAP!
As long as you provide the new and best content on your channel, keep updating software as the new versions are rolled out, users would never want to switch as long as they get the best content/software in the industry as soon as it is released.
4. Emotional attachment.
As users begin their journey with you, they would be least attached as they don’t have anything in their library. If a user starts using your service as their primary streaming service, they would surely develop an emotional bond with using your service as a one-stop for all their needs in that category. Also, all their browsing data and downloaded content rest on their devices through your service so they are very unlikely to leave.
Same goes with software, as data of all their users are logged in already they would think a million times before switching. Just don’t get ignorant on the services you promised and you would retain most customers.
5. Wide accessible library (with no strings attached).
Suppose you buy 1000 records for your music collection (legally), they would cost around 30000$. If you subscribe to apple music (or any other streaming service) you can have 30 million songs at your disposal for unlimited downloading and listening for 10$ a month (2$ a month if you are in India). The reasons to choose subscription are obvious.
6. Services and perks ahead of their main services.
Softwares over SaaS usually comes with perks such as a wider usability scale and a guarantee to protect data, your data can virtually never be corrupted or hacked compared to storing it in a server in your own office.
Apple music USP features beats1 radio 24/7 with every subscription, what makes this perk one of a kind is the fact that no algorithm runs beats1, the tracks to be played are queued by actual radio jockeys.
Amazon, as discussed above, provides all users with prime video and Amazon music theoretically free of cost.