Beer Goggles #5 - Like and Subscribe
Row row row your boat, gently down the revenue stream.
Everywhere you look nowadays someone is trying to sell you a subscription. It has transcended from being a clever little strategy for selling recurring goods such as newspapers and magazines and is now the default retail strategy across many industries, especially for software.
A great example of how this has been done was the introduction of Adobe Creative Cloud back in 2013. This package was based on a monthly subscription and gave access to almost all of Adobe’s catalogue of apps including free updates for when new editions were released. Before this each individual app had to be acquired on its own through a one-time purchase at a much higher rate, and if you wanted to use the new version you would have to buy it again once it was released.
So at a glance this new model has a lot of appeal for individual freelancers and small businesses, as the cost for the tools they use to make their living becomes a smaller and more manageable overhead. Of course, this comes with the added benefit of being able to opt out at any point and try a competitor’s offering, right?
But this is not as simple as it sounds. As anyone who has used Adobe CC or similar products will attest, after a period of time you learn the full weight of its capability along with useful shortcuts and develop an efficient, organised workflow. Meaning eventually, you will be so far into their ecosystem that there becomes a hidden cost associated with switching as you would have to re-learn any new software.
By enticing customers in with a seemingly low cost of entry and the illusion of great value by bundling multiple products together (even though most will never be used), Adobe have managed to create a system that limits competition (especially as they have become industry standard) and transforms their customer base into lifetime revenue streams.
Many different companies across many different industries have sweitced from the one-time purchase model to the subscription model. As typified by the Microsoft 365 offering, Netflix for video media, and Spotify for music to name a few.
It has proven itself so profitable that industries you wouldn't expect have also adopted the subscription model such as a monthly box of curated wine, a season pass for cosmetic video game content and even colouring books.
Even though there is the illusion of choice and being able opt-out at any time, I think for some industries this model could be seen as somewhat morally depraved and exploitative as it does not necessarily improve the product or lower the lifetime cost for consumers. Regardless I think it is here to stay for the time being.
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