If You Can’t Beat ‘Em, Join ‘Em: Car General Motors Embraces the Subscription Economy

by Tien Tzuo, Founder & CEO

 

Let’s say you’re looking for a new car. Your old car, meanwhile, sits idle in a garage 9/10 of the time. You want to test drive a new car, but you want to also save up more money so you can actually afford it. What do you do? Well, if you’re a subscriber to RelayRides, you might be able to earn money by lending out your idle car, find a free place to park your car, and even better, get a chance to test drive a new GM car on your own time. Seem impossible? In a few months it will be a reality.

Historically, the car industry has been one of the slowest to adapt to change. But in the wake of the financial crisis, well-publicized bailouts, and injured reputation, something has definitely
changed. A recent article that appeared in TriplePundit.com discusses the reasons why General Motors, one of the most iconic American car manufacturers, is moving into what the author calls the “access economy” but what we know as "Subscription Economy.” Whatever the terminology, the shift is about single-purchase product-oriented businesses moving to products-as-services and subscriptions. We encouraged BMW to embrace the subscription model two years ago when they only were timidly exploring the subscription/access/sharing model and ZipCar was just beginning to gain traction. Now ZipCar is a well-established brand and GM has jumped into subscriptions with both feet.

GM’s partner is RelayRides, a service that lets you share your car when it’s idle with other subscribers. It’s similar to other car-sharing services and, as the article adroitly points out, makes a lot of sense for GM to invest in. From a marketing perspective, car manufacturers benefit greatly by car sharing services as they get potential customers exposed to their products.

It’s also a good investment, as companies like ZipCar have taken off as late. GM and the other major manufacturers are recognizing that ZipCar and other car sharing services are growing very fast and are proving to be not just a flash in the pan but a true threat to their business. It’s likely that major car manufacturers feel they need to act because so much of the population has moved towards the subscription model embodied by ZipCar. Simply put, consumer buying habits are forcing GM and others to change.

And that change is not only good for GM, but it’s great for the entire industry-- from customers to upstart subscription companies to car manufacturers. For its part, RelayRides gets access to a great fleet of vehicles, gets exposure to millions of GM owners, and scores a major PR coup. But the biggest victors are the customers who can test new cars, have access to cars when they want, and ultimately tailor their driving experience to their own convenience. Customers having more choices when it comes to car “ownership” and driving is a great thing for everyone, and as more subscription services pair up with more car manufacturers, the likes of GM, Ford, BMW and Hertz will be recognized for what they are: pioneers.

Babysitting as a Service…The Importance of Trust in Subscription Success

by Megan Golden, Interactive Marketing

Are you a busy Bay Area parent? Do you and your hubby work late nights? Or do you just need a night to get out, away from your rugrats? Well then Wondersitter.com might just be what you need.

For all those Bay Area parents working Silicon Valley hours, subscriptions have come to the rescue, saving marriages one babysitter at a time. Since I’ll be checking No Dependents on my taxes this year, clearly I haven’t been in the market. However, I can confidently say this is the first subscription-based babysitting service I’ve seen. But the idea behind it is ages old: parents want a reliable, responsible babysitter who will reward their loyalty.

At the root of Wondersitter, lies its “Wonderdollars” program. Wonderdollars are purchased by parents in order to get discounts on booking fees, rewarding parents who frequently book. You can also sign up for a $99 a month subscription for daily day care.  And perhaps best of all, if the babysitter is late, doesn’t clean up, or otherwise fails to meet the customer’s expectations—the booking fee is waived. And this really seals the deal for me, as a someday-in-the-far-off-future Mother, that the company really does stand behind the sitters they send to your home to care for your children.

That’s ultimately the tipping point with service-as-subscription models. In order to subscribe, you need to trust the service to provide quality care every time. No one wants an experience like The Simpsons’ in the infamous first season episode-- you know, the one where a babysitter service sends a sitter who promptly tries to rob the place? So it looks like if Wondersitter’s employees rob your home, you’ll at least have your booking fee waived. Which is highly appreciated.

All jokes aside, Wondersitter is simply taking the service-as-subscription model and tying it to a business that, like massages and car rentals—is all about reputation. As Wondersitter continues to build its sitters’ reputation --  and I hope it does, so that my someday-in-the-far-off-future babies can take advantage of this -- the company’s reward programs will ultimately make it an attractive alternative to simple word-of-mouth recruitment.

A Call to Arms: How Subscription Economies are Saving the Journalism Industry

by Tien Tzou, CEO

In 2009, the journalism and publishing industries were reeling. The Rocky Mountain News had closed. The San Francisco Chronicle was in bad shape. The Seattle Post-Intelligencer was no longer in print. Unprepared for the move to digital revenue streams, these hulking and dated publishers and publications have found themselves getting flanked by blogs, eBooks, and “free content.” Bankruptcies and closures decimated the industry.

And with the demise of these high-profile publications, a greater danger emerged: the death of journalism itself. Sometimes considered the “fourth-branch” of the US government, throughout American history, journalism has kept power brokers honest, revealed truths and exposed lies. But as its flagship publications closed, people began to wonder if we’d ever see another Bob Woodward.

 

During 2009's dark times, I made the claim that in order to survive, publications and publishers would have to shift to digital, and re-invent their business models around the consumer, around subscriptions.

It seems that someone was listening. Over the last two years, the New York Times and Financial Times have started to move some of their content behind a paywall, and the success of these ventures indicate that customers are willing to pay for quality, subscription-based media content. Gannett, the world’s largest newspaper publisher, recently announced the majority of its 80 papers would be going behind a paywall in the next year. Similarly, in a recent Wall Street Journal piece, new CEO Scott Thompson seeks to move Yahoo “away from its advertising roots and get more of its revenue from fees and commissions."

Now on Thursday, Pearson announced a digital distribution model for its multi platform business. With Zuora’s help, Pearson launched its Plug & Play platform initiative in under 30 days, allowing third party developers to create, display, use and create Pearson’s award-winning content. Make no mistake about it, this is only the beginning for Pearson. "We are becoming a digital business," explains Pearson CEO Marjorie Scardino. "A third of everything we sell this year will be digital".

 

The New York Times’, Financial Times’ and Pearson’s actions indicate that the media industry is turning the corner; after a decade of decline, media companies demonstrate that diversified revenue streams and a digital, customer-focused model can ensure not only their survival, but their triumph.

It is my belief that media companies are a vibrant part of our culture’s fabric-- they entertain, they inform, and at their best, serve as watchdogs for our societal vices and champions of our better instincts. Though the “free content” craze has thrown the publishing industry to the mat, it’s obvious that they’re getting back up.


But now is not the time to stop. The journalism and publishing industries need to rally around the success stories of their peers and continue to adapt to new technology and new ways of reaching their audience. If The New York Times, Financial Times, and Pearson can succeed, we know others can as well. Consider this a call to arms, and we here at Zuora are happy to wave the flag.

Have the Media Subscription Wars Just Begun?

by Tien Tzuo, CEO

 

On Wednesday, GigaOm revealed that Taiwanese mobile hardware developer HTC may be developing a streaming music service in collaboration with Beats Audio’s Jimmy Iovine. Spotify is officially on notice.

 

Iovine, who serves as chairman of Interscope Geffen A&M, is a big mover and shaker in the music industry, and with his clout and HTC’s hardware abilities, could make some real noise in the music streaming race.

 

Lately, of course, the “race” has seemed like nothing but a Spotify monopoly. The popular music streaming app uses a combination advertisement/subscription-based business model combined with purchases with 3^rd party partners. Spotify has taken elements of iTunes, Pandora, and media sites’ models to create a three pronged revenue stream—and yet, despite its nearly 3 million paid subscribers, has not reported any profits.

 

According to the GigaOm piece, Iovine is not a fan of Spotify. And with Spotify’s recent announcement that its no-strings attached, unlimited service will no longer be free after users’ sixth month promotional period comes to an end, it seems that the time to make a move in this industry is now.

 

As Netflix’s handling of their pricing changes revealed, media executives still don’t quite understand how to price subscriptions models yet, and they better have the ability to change prices and bundles quickly and often. If Spotify’s moves spark a similar customer revolt, there could be an opportunity for HTC/Beat’s music service to capture market share.

 

And with Iovine’s backing, there are some major questions to be had as to what the music industry will do—do they throw their lot in with one service and not the other? Will customers, so accustomed to having unfettered access to all types of artists, now have to pick and choose which service they use based on the studios supported? Or will competition and lower prices allow for more specific subscription models, such as charging by use or by artist popularity?

 

But a presumed subscription war between HTC/Beat’s music service and Spotify is likely just another front in a larger media war that is brewing. HTC’s involvement suggests that hardware developers recognize the growing importance and profitability of subscription-based media models, and are moving to position themselves to take advantage. HTC is one of the major players in the mobile phone market, and is arguably one of the reasons why the Android platform has challenged Apple’s iOS. By packaging its presumed music service with HTC produced smartphones, the battlefield suddenly shifts from being just a battle between streaming music apps to a much larger hardware/content player war.

 

That’s what’s going to be the most interesting thing to watch here. HTC and Beat are unlikely allies, but they won’t be the only companies linking up to grab new positions in this evolving marketplace. There is going to be an all-out battle between content players, device manufacturers, Internet brands, broadcast/cable companies, studios, etc. There will be unholy alliances between former enemies just to stay in the game. There will be those that can stand on their own.

Ultimately, it will be a battle to own the customer via the subscription. Who can adapt, customize, and scale will determine the winners.