Amazon Prime and other Subscription Businesses: How do you Value a Subscriber?

Subscription businesses allow you to distribute portions of your revenue to people who add value. This isn't rocket science this has been the business model for cable businesses for decades.

The company was selling about $50k of subscriptions per week in January and sales grew steadily to about $200k during the last week of November. As with jobs sold on the site, there are no incremental costs associated with each dollar of subscription revenues, which makes for a very attractive business model.

Transactional businesses are good. Subscriptions are a recurring revenue stream where users decide that they want your product—in this case, content—and then continue to pay for it so long as the content is providing them with the information and/or entertainment that they want.

One way to segment subscription businesses is to divide them between purely digital subscriptions and subscriptions with physical products

Apple, of course, is one of the most successful versions of this. The company currently has 585m total paid subscribers for its various services, allowing it to earn revenue over the usage cycle rather than from purchase to purchase.