Subscriptions in the Mirror Are Closer Than They Appear

by Tien Tzuo

VentureBeat recently asked me to provide a C-level briefing on the shift to the Subscription Economy which was just posted today.

It was great working with VentureBeat because they just get it. We had some great creative conversations to challenge some long held conventions at the heart of this transition and just what that means to old-school product businesses that will need to adapt to new subscription models.

While drafting the article, it was truly inspiring to think about just how far we’ve come in such a short period of time. Something big is happening and it’s as big as the “no software” vision we evangelized at salesforce.com. Just look at what’s happening:

• ZipCar’s market is expected to grow to $3.3 billion by 2016, leading the company to file for an IPO.
• Cloud computing’s pay-for-what-you-use model is disrupting the 1.4 trillion technology industry.
• Newspapers and magazines are rejecting the doom-sayers and moving to online subscription and billing models.
• Software-as-a-Service is beginning to dominate the entire software industry.
• Consumers are shifting to “membership” models of music and entertainment such as Pandora and Netflix.
• Emerging telco’s such as Vonage and Open Range are changing the face of home phone services.

At salesforce.com, we had a saying that people overestimate how much change can happen in a year, and underestimate the change that can happen in ten years. The subscription economy is upon us, and before you know it, everything will have changed, again.

Comments

[Qi Jin]

There are other analogy to zipcar. Any physical goods that need significant upfront commitment are bound to go through a similar process. For example, Corporate Jet Leasing business could be ( and have already been ) subscription based. Time sharing vacation homes business, I would argue, could also become subscription based. You pay a monthly fee to get access to a wide variety of destinations, rather than getting fixed on a particular location with a high upfront payment. For consumers, this model gives greater choice over the life time of the service, it is a time consuming experience to keep on researching and upgrading products, instead, why not let the service provider bringing the new things to us every month; For companies selling the service, the subscription model is simply a much better way to engage your customers with all sorts of touch points, esp with social medias. A sale is a start of a relationship, not an end like a product. Thus, one would argue that subscription based company would be able to in the long run out-compete product oriented company.

[Eldad]

I wrote this article about the rise of subscription based companies. let me know what you think.
http://plimusblog.com/2010/06/09/dear-customer-do-you-want-to-get-married-part-1-of-2/

(second part from top of the page)