Subscription Model Quotes

There are two sides to the battle in front of us, and on one side is Black Friday discount, Wi-Fi hotspot, this year's model, subscription only, now with more stretch, noise-canceling-noise-creating headphones, one car to every green, this lane ends. The other side is magic.

If you’re just managing expectations, instead of creating new opportunities, you’re not doing it right.

Inside our gift-wrapped packages there was a doll, kitchen utensils, modeling clay, a recipe book, crayons, a year’s subscription to France Loisirs, a princess outfit, and a magic wand.

Other benefits: As a company Adobe struggled for many years with people using pirated copies of its software, particularly for costly Creative Cloud applications like Photoshop. The subscription model automatically reduces piracy, since the company no longer ships packaged software that can be copied. Further, organizations on tight budgets with single projects can pay to use the service for only a month or two.

But even when Facebook isn't deliberately exploiting its users, it is exploiting its users—its business model requires it. Even if you distance yourself from Facebook, you still live in the world that Facebook is shaping. Facebook, using our native narcissism and our desire to connect with other people, captured our attention and our behavioral data; it used this attention and data to manipulate our behavior, to the point that nearly half of America began relying on Facebook for news. Then, with the media both reliant on Facebook as a way of reaching readers and powerless against the platform's ability to suck up digital advertising revenue—it was like a paperboy who pocketed all the subscription money—Facebook bent the media's economic model to match its own practices: publications needed to capture attention quickly and consistently trigger high emotional responses to be seen at all. The result, in 2016, was an unending stream of Trump stories, both from the mainstream news and from the fringe outlets that were buoyed by Facebook's algorithm. What began as a way for Zuckerberg to harness collegiate misogyny and self-interest has become the fuel for our whole contemporary nightmare, for a world that fundamentally and systematically misrepresents human needs.

The reason subscription (and RSS) was abandoned was because in a subscription economy the users are in control. In the on-off model, the competition might be more vicious, but its on the terms of the publisher. Having followers instead of subscribers - where readers have to check back on sites often are barraged with a stream of refreshing content laden with ads - is much better for their bottom line.

There are other models to explain Cygnus X-1 that do not include a black hole, but they are all rather far-fetched. A black hole seems to be the only really natural explanation of the observations. Despite this, I had a bet with Kip Thorne of the California Institute of Technology that in fact Cygnus X-1 does not contain a black hole! This was a form of insurance policy for me. I have done a lot of work on black holes, and it would all be wasted if it turned out that black holes do not exist. But in that case, I would have the consolation of winning my bet, which would bring me four years of the magazine Private Eye. In fact, although the situation with Cygnus X-1 has not changed much since we made the bet in 1975, there is now so much other observational evidence in favor of black holes that I have conceded the bet. I paid the specified penalty, which was a one-year subscription to Penthouse, to the outrage of Kip’s liberated wife.

It was in Cleveland that Magic Slim became the most successful pornographic film producer in America. His training center was a key link in a human trafficking supply chain stretching from the former Soviet Republics in Eastern Europe to the United States. Trafficking accounts for an estimated $32 billion in annual trade with sex slavery and pornographic film production accounting for the greatest percentage. The girls arrived at Slim’s building young and naive, they left older and wiser. This was a classic value chain with each link making a contribution.  Slim’s trainers were the best, and it showed in the final product. Each class of girls was judged on the merits. The fast learners went on to advanced training. They learned proper etiquette, social skills and party games. They learned how to dress, apply makeup and discuss world events.  Best in-class were advertised in international style magazines with code words. These codes were known only to select clients and certain intermediaries approved by Slim. This elaborate distribution system was part of Slim’s business model, his clients paid an annual subscription fee for the on-line dictionary. The code words and descriptions were revised monthly.  An interested client would pay an access fee for further information that included a set of professional  photographs, a video and voice recordings of the model addressing the client by name.  Should the client accept, a detailed travel itinerary was submitted calling for first class travel and accommodation.  Slim required a letter of understanding spelling out terms and conditions and a 50% deposit. He didn’t like contracts, his word was his bond, everyone along the chain knew that. Slim's business was booming.

Internet subscription for $59—seemed reasonable. The second option—the $125 print subscription—seemed a bit expensive, but still reasonable. But then I read the third option: a print and Internet subscription for $125. I read it twice before my eye ran back to the previous options. Who would want to buy the print option alone, I wondered, when both the Internet and the print subscriptions were offered for the same price? Now, the print-only option may have been a typographical error, but I suspect that the clever people at the Economist's London offices (and they are clever—and quite mischievous in a British sort of way) were actually manipulating me. I am pretty certain that they wanted me to skip the Internet-only option (which they assumed would be my choice, since I was reading the advertisement on the Web) and jump to the more expensive option: Internet and print. But how could they manipulate me? I suspect it's because the Economist's marketing wizards (and I could just picture them in their school ties and blazers) knew something important about human behavior: humans rarely choose things in absolute terms. We don't have an internal value meter that tells us how much things are worth. Rather, we focus on the relative advantage of one thing over another, and estimate value accordingly. (For instance, we don't know how much a six-cylinder car is worth, but we can assume it's more expensive than the four-cylinder model.) In the case of the Economist, I may not have known whether the Internet-only subscription at $59 was a better deal than the print-only option at $125. But I certainly knew that the print-and-Internet option for $125 was better than the print-only option at $125. In fact, you could reasonably deduce that in the combination package, the Internet subscription is free! “It's a bloody steal—go for it, governor!” I could almost hear them shout from the riverbanks of the Thames. And I have to admit, if I had been inclined to subscribe I probably would have taken the package deal myself. (Later, when I tested the offer on a large number of participants, the vast majority preferred the Internet-and-print deal.)

How do you decide what video game to choose in the vast ocean of online gaming nonsense? There are 100s if not thousands of options permeating the internet. They range from honestly free, pay to win, and all the way up to an actual subscription based model. One of the first decisions you need to make is quite simply, what kind of game do I enjoy? Are you more of a first person shooter type person? If so you will most likely want to ignore role playing games or real time strategies. conversely if you are more of a role playing or real time strategy fan perhaps first person shooters are not for you. Once you have the type of game you are looking for nailed down games the next step: do you want to pay money? This is a big one and a tricky one. So many games out there present themselves as 'free'. I assure you, they are most certainly not free. Think a simple little game like Candy Crush is free? Next time you are in the Google Play or iTunes store Improve WoW PvP check on top grossing apps. You will very quickly change your mind on that. On a more relevant note some games are both free and pay, but maintain a respectful balance. By this I mean you do not HAVE to fork out hard earned cash in order to compete. League of Legends is an amazing example of this. A player cannot obtain any upgrade which will make their character better through monetary expenditures. What you can do; however, is purchase cosmetic items or other no stat gain frill. On the other end of the spectrum you have a game such as the behemoth World of Warcraft. World of Warcraft has managed to maintain a subscription based model for 10 years now. Multiple 'WoW Killers' have risen up since the inception of World of Warcraft using the subscription base as well. Damn near every one of them is now free to play. Rift and Star Wars are the two that really stick out. Leading up to their release forums Wow XP Off PvP Stream across the internet proclaimed them the almighty killer of World of Warcraft. Instead Warcraft kept on trucking and both of those games changed style to f2p not long after their release. These are just a few different games and styles of games for you to choose from. Remember, you get what you pay for in almost every case. (LoL being the exception that proves the rule)

In the old world, you could grow by doing three things: sell more units, increase the price of those units, or decrease the cost required to make those units. In today’s world, you have three new imperatives: acquire more customers, increase the value of those customers, and hold on to those customers longer.

Here’s the key takeaway—it is perfectly rational for subscription businesses to spend all their profits on growth, as long as their bucket doesn’t leak. Remember, as long as you are growing your ARR faster than your recurring expenses, you can step on the gas. As Ben Thompson of Stratechery notes, “You’re not so much selling a product as you are creating annuities with a lifetime value that far exceeds whatever you paid to acquire them.

we use it to manage our recurring expenses. In other words, we use it to budget. Every year, we determine COGS, G&A, and R&D spends as a percentage of our ARR. Budgeting used to be a total nightmare, with all sorts of politics and loud voices. Now it’s actually pretty simple. All our department heads know that the best way for them to grow their budget is for them to contribute to growing our ARR. How are they using their resources effectively toward that single goal? When ARR grows, your budget grows.

you used to be able to do fine just by deploying SAP better than the next guy. That’s no longer the case. Today, IT is where you compete. It’s where you spin up new services, new experiences. It’s where you set up test beds and experiments. It’s where you iterate and scale. It’s where you find the freedom to grow.

subscriptions are the only business model that is entirely based on the happiness of your customers. Think about it—when your customers are happy, then they’re using more of your service, and telling their friends, and you’re growing.

Freed from a blockbuster mindset,

where a = accumulated future value, p = principal or present value, r = rate of return in percentage terms, and n = number of compounding periods. All too often, management teams focus on the r variable in this equation. They seek instant gratification, with high profit margins and high growth in reported earnings per share (EPS) in the near term, as opposed to initiatives that would lead to a much more valuable business many years down the line. This causes many management teams to pass on investments that would create long-term value but would cause “accounting numbers” to look bad in the short term. Pressure from analysts can inadvertently incentivize companies to make as much money as possible off their present customers to report good quarterly numbers, instead of offering a fair price that creates enduring goodwill and a long-term win–win relationship for all stakeholders. The businesses that buy commodities and sell brands and have strong pricing power (typically depicted by high gross margins) should always remember that possessing pricing power is like having access to a large amount of credit. You may have it in abundance, but you must use it sparingly. Having pricing power doesn’t mean you exercise it right away. Consumer surplus is a great strategy, especially for subscription-based business models in which management should primarily focus on habit formation and making renewals a no-brainer. Most businesses fail to appreciate this delicate trade-off between high short-term profitability and the longevity accorded to the business through disciplined pricing and offering great customer value. The few businesses that do understand this trade-off always display “pain today, gain tomorrow” thinking in their daily decisions.

Membership Economy organizations assume they’re going to deal with the same customers, forever. The well-being of the customer, and the health of the long-term relationship, is the highest aim of these organizations.

To respond to this shift from ownership to usership, companies across all industries have been transforming their businesses from a traditional up-front revenue model—in which they sell a product or service in exchange for a one-time fee—to subscription models. We’ve been writing extensively about this trend, which we dubbed Subscription Commerce back in 2014, and it shows no signs of slowing down.

Patty was a Netflix senior executive for the company’s first fourteen years and helped drive its remarkable growth through 2012. Patty believes the company’s long stretch of success was fueled by this “very deliberate” strategy of “making it easy to leave and come back.” Patty notes that, while “pissing off consumers” may have short-term benefits, “a subscription model creates the most profit over the long term—over years, generations.” Eric, who went on to serve as chief algorithm officer at online fashion retailer Stitch Fix, added that companies that make it easy to quit get better data about how to keep customers satisfied and loyal. That’s because the “time to feedback” is faster for the company and the evidence is less noisy because most customers are keeping the service because they want it, not because they are trapped in a roach motel.

While Wyeth handled the technology, Tudor focused on business development. He gave ice cream–making demonstrations to confectioners, he offered coffee shop owners a water-cooling jug of his own design, and he came up with ice-block subscription models—customers could sign up for one or two deliveries a day, on a monthly plan. He even designed and built some of the earliest domestic iceboxes, which he called “Little Ice Houses,” so that customers could store their daily allowance of ice at home. Meanwhile, despite his self-pitying journal entries, Tudor had to admit that the nascent ice industry enjoyed some unique advantages. Ships departing New England ports were generally light on their outbound voyages, and frequently resorted to carrying stones as ballast, which they simply tossed overboard at their destination in order to return with foreign cargo. Once they were convinced that most of Tudor’s ice wouldn’t melt in transit, they gladly carried it at low rates: even a discounted cargo made more economic sense than a pile of rocks.

As a result, the most important recommendation for organizations of all shapes and sizes moving forward is to anticipate worst case scenarios at a minimum. Even in cases where organizations cannot or will not make some of the operational changes recommended below, the exercise of focusing on nonsoftware areas of a given business can help identify under-realized or -appreciated assets within an organization. Particularly ones for whom the sale of software has been low effort, brainstorming about other potential revenue opportunities is unlikely to be time wasted. One vendor in the business intelligence and analytics space has privately acknowledged doing just this; based on current research and projecting current trends forward, it is in the process of building out a 10-year plan over which it assumes that the upfront licensing model will gradually approach zero revenue. In its place, the vendor plans to build out subscription and data-based revenue streams. Even if the plan ultimately proves to be unnecessary, the exercise has been enormously useful internally for the insight gained into its business.

The fact is that the majority of software businesses today are leaving money on the table by focusing strictly on the production and delivery of software at the expense of other customer needs in the process, whether that’s operational assistance (services), improved decision-making (telemetry analytics), or the ability to amortize their capital outlay over longer periods of time (subscription models).

however, the round trip was a very long one (fourteen months was in fact well below the average). It was also hazardous: of twenty-two ships that set sail in 1598, only a dozen returned safely. For these reasons, it made sense for merchants to pool their resources. By 1600 there were around six fledgling East India companies operating out of the major Dutch ports. However, in each case the entities had a limited term that was specified in advance – usually the expected duration of a voyage – after which the capital was repaid to investors.10 This business model could not suffice to build the permanent bases and fortifications that were clearly necessary if the Portuguese and their Spanish allies* were to be supplanted. Actuated as much by strategic calculations as by the profit motive, the Dutch States-General, the parliament of the United Provinces, therefore proposed to merge the existing companies into a single entity. The result was the United East India Company – the Vereenigde Nederlandsche Geoctroyeerde Oostindische Compagnie (United Dutch Chartered East India Company, or VOC for short), formally chartered in 1602 to enjoy a monopoly on all Dutch trade east of the Cape of Good Hope and west of the Straits of Magellan.11 The structure of the VOC was novel in a number of respects. True, like its predecessors, it was supposed to last for a fixed period, in this case twenty-one years; indeed, Article 7 of its charter stated that investors would be entitled to withdraw their money at the end of just ten years, when the first general balance was drawn up. But the scale of the enterprise was unprecedented. Subscription to the Company’s capital was open to all residents of the United Provinces and the charter set no upper limit on how much might be raised. Merchants, artisans and even servants rushed to acquire shares; in Amsterdam alone there were 1,143 subscribers, only eighty of whom invested more than 10,000 guilders, and 445 of whom invested less than 1,000. The amount raised, 6.45 million guilders, made the VOC much the biggest corporation of the era. The capital of its English rival, the East India Company, founded two years earlier, was just £68,373 – around 820,000 guilders – shared between a mere 219 subscribers.12 Because the VOC was a government-sponsored enterprise, every effort was made to overcome the rivalry between the different provinces (and particularly between Holland, the richest province, and Zeeland). The capital of the Company was divided (albeit unequally) between six regional chambers (Amsterdam, Zeeland, Enkhuizen, Delft, Hoorn and Rotterdam). The seventy directors (bewindhebbers), who were each substantial investors, were also distributed between these chambers. One of their roles was to appoint seventeen people to act as the Heeren XVII – the Seventeen Lords – as a kind of company board. Although Amsterdam accounted for 57.4 per cent of the VOC’s total capital, it nominated only eight out of the Seventeen Lords.

Gogol flips through the book. A single picture at the front, on smoother paper than the rest of the pages, shows a pencil drawing of the author, sporting a velvet jacket, a billowy white shirt and cravat. The face is foxlike, with small, dark eyes, a thin, neat mustache, an extremely large pointy nose. Dark hair slants steeply across his forehead and is plastered to either side of his head, and there is a disturbing, vaguely supercilious smile set into long, narrow lips. Gogol Ganguli is relieved to see no resemblance. True, his nose is long but not so long, his hair dark but surely not so dark, his skin pale but certainly not so pale. The style of his own hair is altogether different—thick Beatle-like bangs that conceal his brows. Gogol Ganguli wears a Harvard sweatshirt and gray Levi’s corduroys. He has worn a tie once in his life, to attend a friend’s bar mitzvah. No, he concludes confidently, there is no resemblance at all. For by now, he’s come to hate questions pertaining to his name, hates having constantly to explain. He hates having to tell people that it doesn’t mean anything “in Indian.” He hates having to wear a nametag on his sweater at Model United Nations Day at school. He even hates signing his name at the bottom of his drawings in art class. He hates that his name is both absurd and obscure, that it has nothing to do with who he is, that it is neither Indian nor American but of all things Russian. He hates having to live with it, with a pet name turned good name, day after day, second after second. He hates seeing it on the brown paper sleeve of the National Geographic subscription his parents got him for his birthday the year before and perpetually listed in the honor roll printed in the town’s newspaper. At times his name, an entity shapeless and

Porter’s aerial palace, complete with twenty-six windows, a long exhaust pipe for steam sticking out the rear, and a giant American flag fluttering over the rudders, was designed to ride beneath an immense cigar-shaped dirigible. The engineering was lunacy, but Porter’s marketing was brilliant. He proposed dispensing entirely with the notorious jumping-off hassles along the Missouri River by launching his “aerial locomotive” from New York. The coast-to-coast trip, Porter’s calculations showed, could be made in just three days—five days if the prevailing headwinds were particularly bad that week. Porter aggressively advertised his “Air Line to California” in eastern newspapers and magazines. Amazingly, over two hundred suckers paid a subscription price of $50, which included three-course meals and wine, for the inaugural balloon hop to the gold fields. That winter, a large crowd gathered in a Long Island cornfield to watch Porter test a model of his airship. But the craft never left the ground because the steam engines were far too heavy for the balloon. The would-be Porter aeronauts, however, were the lucky ones—they never had to leave in the first place. The 125 paying passengers on the first Turner and Allen Pioneer Train were not so fortunate. The Turner and Allen expedition of 1849

Netflix’s algorithm has a deeper (even if still quite limited) understanding of your tastes than Amazon’s, but ironically that doesn’t mean Amazon would be better off using it. Netflix’s business model depends on driving demand into the long tail of obscure movies and TV shows, which cost it little, and away from the blockbusters, which your subscription isn’t enough to pay for. Amazon has no such problem; although it’s well placed to take advantage of the long tail, it’s equally happy to sell you more expensive popular items, which also simplify its logistics. And we, as customers, are more willing to take a chance on an odd item if we have a subscription than if we have to pay for it separately.

build a new technology model (on-demand, or delivered over the Internet—now called cloud computing), a new sales model (subscription based), and a new philanthropic model (integrated into the corporation).

Another, less obvious benefit to this model is that once a subscription business achieves scale, the predictability of its revenue streams allows it to be more aggressive with long-term investments, since it isn’t obliged to maintain large cash balances to weather short-term variations in the business.