The inspiration for this week’s article came from a blog written by Fred Jacobs titled “When will ‘Netflixification’ Come To Radio?” Fred’s article revolved around Netflix’s innovation of a subscription model for its entertainment offerings, which got me to thinking about when the subscription business model for media began.
The Subscription Model
We would have to journey back to the 17th century to find the earliest records of book and periodical publishers pioneering a subscription business model for print media.
The subscription business model is one where the customer
pays a recurring price
at regular intervals to access a product of service.
Most recently, Apple is said to be working on a subscription model for its hardware; iPhones, iPads, computers etc. Why? Well customers are good, but it turns out that subscribers are even better. Emarsys’s Chris Gooderidge writes that over the last nine years, “the subscription economy has grown nearly 6x (more than 435%),” with subscription businesses growing five to eight times faster than those with a traditional business model. The two years the world closed down due to COVID only served to accelerate companies’ and consumers’ digital transformation.
On Demand & Subscriptions
What most of us want, as consumers, is convenience. We want what we want, when we want it. The subscription business model fulfills this desire. It enables us to listen to music or play games, as well as watch TV shows and movies.
The more customers gain a taste
of truly personalized repeat services,
tailored specifically to them…
they won’t want to go back to what they had before.
In 1923, in Dundee, Michigan, an early radio entrepreneur offered subscribers a wired radio system, that would provide radio programs from several radio stations for $1.50 a month; which would be $24.75/month in 2022. While it didn’t succeed, it was the precursor to what later would become the cable television industry.
Subscription Television (STV)
Back in the 60s, over-the-air television experimented with a subscription model. Companies in Connecticut and California each found themselves in court with theater owners when they developed a subscription business model that offered recent movies to be viewed in the home. The battle in Hartford, Connecticut made it all the way to the Supreme Court.
In the end, the pay television model was taken over by cable television, which learned in addition to providing a community antenna to receive distant broadcast television signals, could also create original programming. These new program channels could be offered on a subscription basis, like CNN, ESPN, The Weather Channel etc.
Is a Subscription-Based Business Model Right for You?
Like most questions along these lines, the answer is: it depends.
The subscription model is dependent on products and services that have a high perceived value to the consumer. (Note: things offered for “FREE” often don’t have a high perceived value)
On the blog, Billing Platform, they list four common successful subscription based business models:
- Consumables and Retail Models in Subscription Billing: companies like Dollar Shave Club and Blue Apron
- As-a-Service Subscription Billing Models: companies like Microsoft with their Office 365 and Dropbox
- Digital Entertainment Subscription Billing Models: companies like Netflix, Disney+, Apple TV+, Amazon Prime, Hulu, Peacock etc for video and Spotify, Pandora, Radio Tunes etc for audio
- Maintenance and Repair Subscription Billing Models: companies like landscaping, pest control, heating & cooling, as well as other common maintenance needs
Which brings us to the million dollar question, when do we max out on all of these monthly/annual subscriptions? When do we reach, “peak subscription;” that light-bulb moment when we realize we need to start eliminating some of these expenses.
It was that very question that finally got me to sit down and review our monthly household subscriptions and total things up. It’s something I’ve been meaning to do anyway, but Fred’s blog was the spark that put me in action.
Here’s our entertainment subscription list:
- Amazon Prime
- Frndly TV
- Apple TV+
- Washington Post
- Time Magazine
- The Atlantic
- Consumer Reports
- Radio Tunes
- Pandora Premium
- Sling TV
Now, to make most of these digital entertainment subscriptions work, we need to subscribe to an internet service and since we use many of these services on our iPhones, we also need to add in our monthly call/text/data plan too.
Our monthly cost is $228 or $2,736 annually.
Fred reveals that in the upcoming Techsurvey 2022, two-thirds of the people in his survey now agree with the statement, “I am concerned about the growing number of subscription fees I’m paying for media content.”
I urge you to sit down with your bills and do an audit of your household’s entertainments subscription expenses. If you are like us, you didn’t subscribe to all of them at the same time, but added them one-by-one over a period of years.
The problem for all of us, comes to making a “Sophie’s Choice” of our media subscriptions. We love them all and trying to decide which ones to eliminate is NOT an easy decision.
What one learns when they are faced with this decision is that we are “happily hooked” on all of them.
Commercial radio and TV operators also need to realize as the subscription economy for entertainment continues to grow, the number of hours in a person’s day is finite, and our time with subscription media means little is left over for OTA radio/TV.
People will spend their time, on those media services
they spend their money with.
4 responses to “Subscription Media”
Why would consumers pay for over the air or streaming radio when there is already Sirius XM. In my opinion, the industry would have to provide programming that is unique to that space. This would require greater investment by radio for which there is no motivation to improve or innovate. Radio is a slow burn into insignificant reach. Some former radio personalities are going the podcast route with paid subscriptions or monetizing on Substack.
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Excellent observations Victor. Thank You for contributing to the discussion.
One of the more annoyingly repetitive ads I’m seeing on my iOS Youtube app ALL. THE, TIME. is for an app called “TrueBill” that’s supposed to make it easy to find subscriptions you’ve forgotten about and easy to unsubscribe from them. We have DEFINITELY reached, and passed, peak subscription.
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I think you may be right Aaron. -DT