A subscription is a product or service which is paid for periodically, rather than all at once. Magazines and newspapers are often subscription products. Public utility services like internet connections or cable television are examples of subscription services. Subscriptions fees are usually charged for a consistent time period, typically in weeks, months, or years.
In a traditional business model, revenue flows linearly – from marketing to sales and finance. But in subscription businesses, the revenue flow is cyclical. While the purposes of all functions remain unchanged, their revenue implications are amplified since customers need to be ‘won’ not just once but through every recurring billing cycle.
Subscription business models were first introduced in the 1600s by newspaper and book publishers. With the rise of technology and software as a service (SaaS) products, many companies are moving from a business revenue model where revenue is made from a customer's one-time purchase to a subscription model where revenue is made on a recurring basis in return for consistent access to the delivery of a software good or service.
Types of subscription business modelsEdit
Subscription business models can include a variety of companies and industries. Those industries include:
- cable television,
- satellite radio,
- lawn care,
- storage units,
- coffee and many more.
In publishing, the subscription model typically involves a Paywall, Paysite or other "toll-access" system (named in opposition to open access). As revenues from digital advertising diminish, a paid subscription model is being favoured by more publishers who see it as a comparatively stable income stream.
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- Schoen, John W. (2015-04-20). "How do cable companies make their money?". www.cnbc.com. Retrieved 2021-07-18.
- "'Churn and burn': Publishers are prioritizing subscription volume over immediate revenue". 15 June 2020.