Subscription Business Model

The subscription business model is a business model where a customer must pay a subscription price to have access to the product/service. The model was pioneered by magazines and newspapers, but is now used by many businesses and websites.

Rather than selling products individually, a subscription sells periodic (monthly or yearly or seasonal) use or access to a product or service, or, in the case of such non-profit organizations as opera companies or symphony orchestras, it sells tickets to the entire run of five to fifteen scheduled performances for an entire season. Thus, a one-time sale of a product can become a recurring sale and can build brand loyalty. It is used for anything where a user is tracked in both a subscribed and unsubscribed status.

Membership fees to some types of organizations, such as trade unions, are also known as subscriptions.

Industries that use this model include mail order book sales clubs and music sales clubs, cable television, satellite television providers with pay-TV channels, satellite radio, telephone companies, cell phone companies, internet providers, software providers, business solutions providers, financial services firms, fitness clubs, and pharmaceuticals, as well as the traditional newspapers, magazines and academic journals.

Renewal of a subscription may be periodic and activated automatically, so that the cost of a new period is automatically paid for by a pre-authorized charge to a credit card or a checking account. In the U.S., recurring card charges must be disclosed in writing to the cardholder at least 10 days before each charge.

A common model on web sites, colloquially becoming known as the freemium model, is to provide content for free, but restrict access to premium features (for example, archives) to paying subscribers. In this case, the subscriber-only content is said to be behind a paywall or - in a scholarly context - closed access, which alludes to the alternative model of open access. The razor and blades business model (also called the bait-and-hook model) is an attempt to approximate the subscription model, but without a formal agreement by both parties.

Read more about Subscription Business Model:  Types of Subscriptions, Effect On The Vendor, Effect On The Customer, Effect On The Environment

Famous quotes containing the words subscription, business and/or model:

    The mode of founding a college is, commonly, to get up a subscription of dollars and cents, and then, following blindly the principles of a division of labor to its extreme,—a principle which should never be followed but with circumspection,—to call in a contractor who makes this a subject of speculation,... and for these oversights successive generations have to pay.
    Henry David Thoreau (1817–1862)

    One of the necessary qualifications of an efficient business man in these days of industrial literature seems to be the ability to write, in clear and idiomatic English, a 1,000-word story on how efficient he is and how he got that way.... It seems that the entire business world were devoting its working hours to the creation of a school of introspective literature.
    Robert Benchley (1889–1945)

    The best way to teach a child restraint and generosity is to be a model of those qualities yourself. If your child sees that you want a particular item but refrain from buying it, either because it isn’t practical or because you can’t afford it, he will begin to understand restraint. Likewise, if you donate books or clothing to charity, take him with you to distribute the items to teach him about generosity.
    Lawrence Balter (20th century)