So why the sudden boom over the past decade? Consumers are eager to own less physical things, and they also value long-term relationships with companies. Today’s consumers want to pay for exactly what they use while taking advantage of the cost-saving perks and variety that come along with a subscription business model.
Here, we’ll take a closer look at what makes the wheels of the subscription economy turn and why marketers will continue to make use of this model for the foreseeable future.
The rise of the subscription economy
These days, services like Netflix and Amazon Prime seem like permanent fixtures in the global economy. However, that wasn’t always the case. There once was a time when Blockbuster and traditional e-commerce reigned king – that is until businesses figured out that traditional methods are more vulnerable to fluctuating industry trends and inefficiencies.
The popularity of subscription services has revolutionised commerce, allowing businesses to provide a wide range of services and functions from anywhere in the world. The streamlined, cost-saving nature of subscription services is beneficial for both businesses and consumers alike.
Of course, the Covid-19 pandemic also played a role in helping launch commerce into the digital age. A global shift toward remote work and automation means that decentralised businesses can benefit greatly from the subscription model. Although the concept already existed in the form of gym memberships and magazine subscriptions, the subscription model is slowly being picked up by businesses in all industries, ranging from retail to software to healthcare. Before we know it, it may be difficult to find a service that hasn’t adopted a subscription model!
Crunching the numbers
When considering any business decision, it’s necessary to look at the cold hard facts before coming to any rash conclusions. Apart from ensuring your business analytics plan is solid, taking stock of your situation can also lead to higher revenue and improved business adaptability down the line. A professional business analyst or marketing specialist can help businesses decipher the numbers if needed.
The subscription economy certainly holds up to scrutiny, with the Subscription Economy Index showing that “revenues of subscription companies in the SEI grew 11.6% while the S&P 500 sales declined – 1.6%,” as stated in the Business Wire resource above. In Q4 of 2020, subscription businesses grew at a rate seven times faster than their traditional competitors.
Influencer marketing on the rise
For influencers and influencer marketers, the industry worth has “more than doubled to $13.8 billion in the past three years alone.” A large part of this growth is due to the rising subscription economy. Building brand awareness and setting benchmarks can better help marketers understand measurement and ROI with influencer marketing investments, so everyone benefits from new strategies and revenue increases.
This year, internet subscription platform, OnlyFans, is sponsoring the Influencer Marketing Show London to emphasise how the subscription model can be used across the board. Some subscription platforms, such as OnlyFans, have a reputation for presenting as a platform for NSFW content, though it’s time to break the stigma and discuss how creators can use the platform to earn more and connect directly with their audiences.
The subscription model in action: success cases
Don’t believe the subscription model is as successful as it claims to be? Think again. It can be applied in fields as diverse as medicine and billing systems, and it can even help even the playing field for influencers and content creators worldwide.
During the Covid-19 crisis, for example, political tensions and the precarity of the global market meant influencers needed to turn to audiences to monetise, as ad revenue and other streams of income dried up. Simple ways influencers can use their platforms to monetise include live streaming and adopting influencer subscription models. Crowdfunding can help finance projects spearheaded by independent creators, while tipping platforms on Twitter, YouTube, and Patreon allow influencers to better connect with their audiences.
Among smaller creatives, it’s well-known that 1,000 loyal followers can be worth more than thousands of half-hearted subscribers. A small and loyal following is how influencers can create meaningful relationships within their communities, all thanks to the subscription economy.
For example, neurologist and philosopher Sam Harris hosts a podcast called Waking Up, where he sustains intellectual musings and prolific interviews with a $100 annual subscription fee for financially-able listeners. The success of subscription models like these has made it clearer than ever before that quality takes precedence over quantity, and has shown firsthand the benefits of investing in a strong long-term business model.
Besides the democratisation subscription models offer for independent creators, they can also benefit businesses large and small. Amazon’s Prime membership programme, along with its broad product selection, helps drive sales for the retailer. The company’s subscription revenue amounted to $25.21 billion in 2020, which represents a 31.2% increase from the prior year. In response to Amazon’s whopping success, Walmart and Target have established their own subscription-based models, to similar success.
Getting on board with the subscription economy
As the subscription economy booms, it continues to fuel its own growth. For example, Skillshare is a frequent sponsor of YouTube videos, and many creatives have honed their skills through Skillshare courses. This circular, self-sustaining model partially explains the rapid rise to fame of the subscription model.
While many things are subject to change in today’s technological world, one thing that’s here to stay is the subscription economy. It has streamlined business and entertainment for billions of people worldwide and shows no signs of stopping. If you haven’t already, it’s time to get on board with subscription-based business models before they steamroll the entire commerce industry.