Has subscription become a viable business model for your business?

craig reardon

I have a problem with the term ‘digital disruption’.

My problem is that it’s so weighed in the negative with all of the connotations that ‘disruption’ can bring.

Spoil, ruin, halt, undermine, challenge, destroy and interrupt are the kind of connotations that come out of the term, making it a threat to the business operator – which is the last thing they really need when there are so many business disruptions today.

But perhaps if the term was spun in a more positive light, one of bringing you new business opportunities, revenue streams, business models and product extension opportunities, perhaps smaller business operators may be a little bit more open to finding out more about it.

What’s more, both traditional and social media love nothing better than to scare the bejesus out of people by using such an earth-shaking catchphrase to gain attention and attract eyeballs and advertising revenue.

Opportunity instead of threat

The fact is, the digital revolution provides as many, if not more opportunities to the informed and curious business operator than it destroys. Just ask the founders of Google, Amazon, Facebook, Uber, as well as local beneficiaries Kogan, RedBalloon, Seek and Carsales.com.au

Sure, none of these upstarts had as much to lose from their exploits as the businesses they have sought to replace. But equally nothing but narrow-mindedness prevented their traditional predecessors from beating them to the punch by offering their own digital service and in turn minimising the damage from a left field competitor.

As outlined in this blog last week, it’s critical for today’s business operator to identify new ways of delivering their customer benefit or risk going the way of so many hopelessly slow, cumbersome and ultimately defunct businesses.

The subscription opportunity

Take the subscription business model for example.

Prior to the internet, the business model of subscription required pretty deep pockets to be able to sustain the kind of service that subscribers were prepared to commit regular payment to.

The subscription business model was the one that has kept newspaper publishers, television broadcasters, telcos, power companies, fitness centres, sports and many other massive industries in business for decades.

In turn it required significant resources to manage all of the management, marketing, sales, billing, support and other aspects a subscription-based business needed to operate.

Positive disruption

But the internet has also disrupted this model in a positive way. Electronic delivery, marketing, sales, billing and support have reduced the reliance on expensive labour to operate a subscription business.

Provided you have a service that a big enough market requires and your product is ready to go to market, you may well be able to offer a professional subscription offering for what amounts to petty cash.

For example, a good but affordable e-commerce website capable of selling, or at least activating, subscriptions and a payment gateway service that automates regular subscription payments may well be all that’s required to commence your subscription service.

Many pre-internet businesses have woken up to these developments and have started offering subscription services for the first time.

Rivers of subscription gold

Intellectual property services such as training, coaching, content and entertainment are now being paid for by subscription.

Experts in all kinds of fields are now finding they can package their services in a way that can realise an unprecedented regular and valuable revenue stream.

Experts in fitness, cooking, management, financial advice, communications, writing and many others are now enjoying the stability and assurance that comes with having healthy deposits land in their bank account every month.

Now that the previous barriers to offering a subscription service have been removed, predominantly cost, the smallest business operator can offer their service in this way.

Outstanding scalability

The other great advantage of most subscription services is the ability to scale up with very little additional cost. Provided there is no time-based labour associated with your service, the cost between delivering your service or content to a handful of subscribers versus several thousand subscribers can be next to nothing.

For example, a streaming music service needs only add cheap server capacity to offer the same service to thousands more subscribers.

Similarly, buying a higher capacity webinar plan can mean up to thousands more can log into your content offering with zero impact on the cost of providing the valuable content.

For anyone with any kind of intellectual property and an open mind, these are exciting, rather than frightening times.

In addition to being a leading eBusiness educator to the smaller business sector, Craig Reardon is the founder and director of independent web services firm The E Team which was established to address the special website and web marketing needs of SMEs in Melbourne and beyond. 


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