15 May Subscription Models
There are 2 classic business models for web businesses, or more generally put, for media businesses. These have and continue to be advertising and subscription based. Obviously advertising models are about eyeballs – how many people can you get to look at your content so that you can monetize them through advertisers. Subscription models are closer to the models in other industries, i.e. they involve selling the customer something they want rather than giving the customer something for free and charging someone else for access to them.
Today I want to talk about subscription models. At Indaba, we currently offer a single subscription product – a “Pro membership.” It offers members enhanced functionality including increased file transfer. We originally structured our subscription product this way because it was simple – there’s one thing to buy, and it’s easy to make a decision and understand what you’re getting.
Lately I’ve been thinking a lot about single product subscription models. There are indeed other examples of this – Flickr’s Pro account being the one that comes to mind most frequently. However, I am struggling to come up with examples of innovative web applications that go the other way, and create multi-product subscription models. I bring this up because it seems terrifically odd and counter to long-understood business logic. To market a product effectively, you have to segment your audience, and then figure out what each segment wants. If you do this right, you can then sell each segment a product that makes sense for them.
Single product subscription services lump every potential paid customer into a single group, potentially missing the opportunity to monetize customers that need a more targeted product and associated messaging. In Flickr’s case, this might mean structuring subscriptions that cater specifically to professional photographers, or design studios, or photo buyers. This goes for Indaba as well. Certainly something for us to think about.
Anyway, I suspect this may have happened because of the overall emphasis on simplicity which pervades modern design, web development, and business thinking. Also, the entrepreneurs who start web companies are often fairly green, and when you’re inexperienced, it’s much easier to err on the side of simple. Simplicity isn’t necessarily a bad thing, but it isn’t the end all and be all in all situations either.