The Rule of Threes: The subscription economy from a consumer’s perspective

Then there’s that ever-elusive feeling that you’re in a club of some kind: You’re closer to the author, artist or creator, which may make you feel like you have more say or feedback about what they’re producing and releasing into the world.

We expect that consumers will have a clear preference for about three subscription services that they are willing to pay for, with the rest being long-tail.

So while there’s no limit to the content or formats we can have today, there is a limit to an audience’s time and attention. As Netflix’s CEO Reed Hastings helpfully said a few years ago when asked if he’s concerned about more recent streaming entrants:

We went from everything being bundled to almost everything being available on demand today. We believe the pendulum will swing back to more bundling, with curation, packages, and formats that surface and help people decide what to consume based on their personal preferences.

One of the most storied examples of how a subscription business model can thrive predictably comes from an industry where subscriptions weren’t an obvious fit -- Costco

We’re competing with sleep, on the margin.

Those of us who spend our careers analyzing businesses tend to see these types of massive behavioral shifts from a business-first perspective, but what does this look like for consumers?

If you’re playing to be a part of that prized collection of three paid services, then subscriptions are a viable monetization path for you. For everyone else, ads are likely to be the best – and only – viable option.