A Subscription Based Business

It’s no secret that many companies these days are implementing or are trying to implement a subscription strategy for their businesses. This is especially so for the entertainment industry. We only have cable channels at first, now we have a multitude of streaming services.

Netflix, Disney, Amazon all offer subscription for their streaming services, and once cable only channels are not far behind. Discovery Channel for example also has its own subscription offering for its streaming services.

Therefore, companies earning money thru subscription services is nothing new. In the music industry for example, music streaming companies like Spotify have upended the industry and have become the dominant force in it.

The notable success stories in the subscription business are of course Netflix and Spotify. Though they now face stiff competition, being in the subscription business early has allowed them to capture a big chunk of the market already.

It’s no big secret that implementing a subscription based business could be very lucrative for your business. The subscription business for example has made Daniel Ek, the founder of Spotify, a billionaire.

Since your clients pay you on a regular basis, you have a reliably constant income. Unlike a one off transaction where your sales depend a lot on the willingness of your customer to buy your product at one instant, a subscription service allows you to presale your products.

And what happens when you have already presold your products? Of course you generate capital to create products you have not created already. As you can see, a subscription service offering can be a pretty neat deal for you.

Let’s have an example to illustrate this advantage of a subscription income. I’m sure that most of you are already familiar with Patreon. It’s a funding platform where one of the things you can offer is a subscription service.

Let’s say that you offer a woodcraft subscription service. You may upload promotional videos in YouTube and images in your own website of the woodcrafts you have cut on a mass scale basis.

For example, you may advertise that you do woodcraft of plywood animal silhouettes. You can offer a subscription service where you mass produce these plywood animal silhouettes and send them to your subscribers.

Your subscribers then would make their own woodcrafts based on the animal silhouettes you have created. You would continue to send them different plywood silhouettes as long as they are your paying subscribers.

The advantage of this strategy is that if in the first place you don’t have the tools and supplies to create these plywood animal silhouettes, you can buy these with the subscription money that you have collected.

Now, who in their right mind would subscribe to you? People who have no time to create their own plywood animal silhouettes. There are just too many busy people these days who just want premade parts for whatever projects they are making.

This is just one example of a subscription service. I purposely shied away from using a digital or an entertainment product as an example just to show the varied ways a subscription business can be applied to a lot of products.

Because if you think about it, a lot of products can fall under the subscription model. There are companies for example who sell subscriptions to snacks and shaving products and have been profitable.

Another obvious advantage of a subscription service for the company offering it is that once a customer has subscribed to them, there is a good chance that these subscribers would stay with them for the longterm.

My family for example has been subscribers for the same cable tv company supplier for ages. I think it’s more than a decade now, but we haven’t changed our cable tv company supplier. But I don’t blame my family for sticking to them.

I could say that our cable tv company’s services have progressively changed not to our liking as the years passed by, but in spite of this we still stick to them. What could be the reason for our inaction?

Because we, like a lot of people don’t want to undergo the minor hassle of having to change our subscription providers. Only in cases of extreme anger do we change our subscription providers.

And our subscription providers seem to make it a point to make cancelling our subscriptions to them very hard until we delay cancelling our subscription or we entirely give up on cancelling our subscription.

This is the reason why if you have a business there is no time is soon enough to offer a subscription than now. This is because as previously discussed, people tend to stick with their subscription companies for a long time. They can even stick with them their entire lives.

And not only do your subscriber tend to stick with you for a long time or even their entire lives, but their children may even follow the same habit of sticking to your subscription service. Let us take a look at the subscription business of Walt Disney.

It’s pretty obvious that Walt Disney has carefully cultivated its image as a child friendly entertainment company. I’m not insinuating that there is something sinister about this strategy, but it has clearly worked for them.

Imagine a family growing up with a Disney subscription. As the children of these families grow up, not only would they have fond memories of their childhood courtesy of a Disney subscription, they would naturally want the same thing for their children.

And the trend is likely to continue. These children would become parents themselves and would want the same thing for their own children. It would be good to think of this winning strategy by the Disney subscription service.

I don’t claim to know how you can copy Disney’s winning formula which they applied to their subscription service. All I know is that your presentation and product must be child friendly in order to follow their winning example.

For example, you can offer a subscription service for paper toys that could serve as recyclable and temporary playthings for children. Paper toys like paper dolls and paper clothes are especially popular among girls.

Perhaps there might even be a day when Disney would offer a subscription service for recyclable and disposable toys. Imagine if Disney would offer such kinds of toys to go with their newest movies or streaming series.

I’m not saying that the Disney strategy is the best as Netflix is still more successful than Disney in the streaming subscription business, but we can see that Disney has a good potential to beat out Netflix in the long run.

This must be the reason why Netflix is now also offering content solely aimed for children. They also realize that capturing young children as customers is a very profitable thing in the long run, as parents not only want adult content but also child content in their streaming subscriptions.

If you are an artist, especially if you are in the music or book industry, you might have noticed that there are online articles which report on how Spotify or Amazon for example are killing the livelihood of many artists.

Music artists who used to make decent money from the sale of their music CDs are earning less per unit on their music when it becomes added to a music streaming service. This is the reason why music artists are now starting to go back to doing live music to supplement their income.

The same goes for ebooks. Once your ebooks becomes part of a subscription service, your income per unit of your ebook sold becomes lesser as compared to when you’re selling the book as a unit product.

Of course there are exceptions to the rule, there are still artists generating good income from being an artist who is a part of a subscription service. Amazon for example can claim to give a full-time livelihood for some ebook authors.

Of course Amazon and other companies takes a cut from the earnings of an ebook author as well as Spotify. These subscription companies also largely control your presence in their subscription platform. They can kick you out of their subscription platform anytime they want.

As has been said, Patreon and similar online companies allow you to offer subscription services for your products. I have also stated a few examples of what products you can offer to your customers in exchange for them to be your subscriber.

The beauty of owning your own subscription platform is that although it may take more of your time, you have almost a complete control on how your subscription service would be run by you.

If you for example offer arts and crafts related services and products, you can for example bundle your videos, ebook, and your art craft together as one offering. I don’t think you can do this yet in Amazon no matter how sophisticated an e-commerce platform Amazon has now become.

As such, a small subscription company has the flexibility to mix and match their different products together to work cohesively as one. Besides this, the small subscription company also has a more personal appeal to it.

This more “personal” appeal is very important now that more and more product providers are competing for the same group of customers. You can for example get subscriber feedback on the products they want more from you.

Many companies are now trying to adopt and implement a subscription based business model. The reasons are obvious, subscription earnings not only stabilize a company’s income stream, but they also provide the much needed capital to fund the production of products.

As an artist or a product creator, the more you can stay independent from online companies that offer subscription services, the better it would be for you. This is because you would free from the restrictions imposed by these subscription companies.

Emailed Short Story Subscription Service And A Little About J. Thorn