Why subscriptions just don’t work for customers

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.

In short, subscriptions are not a panacea. Price changes do not solve product/market fit on their own. But, if your product gets better with more usage, addresses a naturally recurring behavior, and has a potential “upgrade tier” of users, a subscription model could be very successful.

Subscriptions are attractive because they are predictable, but not every product or service is a natural fit for subscription.

But the appeal of subscriptions often hinges not on a better deal but on an escape from having to make deals. For many direct-to-consumer subscriptions, the absence of active purchasing decisions is the entire point. They replace more active forms of brand loyalty with a passive form in which the subscribed user is loyal to the point of effectively... See more

The switch from “ownership that you purchase” to “access that you subscribe to” overturns many conventions. Ownership is casual, fickle. If something better comes along, grab it. A subscription, on the other hand, gushes a never-ending stream of updates, issues, and versions that force a constant interaction between the producer and the consumer. I

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And, in another sense, hardware companies that shift to a subscription model are pricing according to reality. If you buy something and use it every day for years, it makes sense that you’d pay for it as you use it rather than buy an uncertain amount of usage at one upfront price. The gradual shift to subscription-based hardware is just the economi... See more

If subscriptions work, they allow companies to consolidate market share and drive out competitors before loyalty wears thin, the impotence of voice becomes apparent, and customers head for the exit. If this approach succeeds, as examples like Amazon suggest, customers might find that when their loyalty finally fades, there’s nowhere else to go.