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.

 

#SubscribeTo

by TJ Laher, Community Manager

 

I’m doing a tribute to everything subscriptions, and so I ask my humble audience: what do you subscribe to?

In today’s connected, social and mobile world, it’s impossible not to subscribe to something. Heck, subscriptions go beyond SaaS businesses to cars, books, even toilets for those Manhattanites who are willing to rent out their loos. Recently, even Starbucks launched its subscription club for all of the java Joes out there that spend their life savings on black gold.

Not a coffee drinker? Me neither.

But perhaps your subscription is to your favorite corner deli with a daily sandwich, soda, and punch on your sandwich card. Because after all, subscriptions are becoming much more than just a way to get that fresh pair of boxers sent to your home every week-- subscriptions are a way of life.

So join us on Twitter as we celebrate all of the products, companies, and activities that we #SubscribeTo. Here are some examples:

“I #SubscribeTo Starbucks coffee every morning”
“#SubscribeTo @Ikesplace sandwiches”
“#SubscribeTo @Spotfy”

Take a look at the conversation happening right now... the twittersphere is waiting to hear what you #SubscribeTo!

Sending All My Love (And Subscriptions) To You

by Megan Golden, Marketing

 

Each year, Valentine’s Day rolls around and leaves millions of baffled sweethearts wandering the malls, candy stores and flower shops looking to somehow say “I love you” beyond the usual box of chocolates. Yet, despite all our searching, we all inevitably leave with that same old sad box of chocolates that we bought last year. And the year before that. And...well, you get the picture.

 

But there’s good news for all you cupids out there: If this year’s holiday shopping season was any indicator, the new Subscription Economy may earn you more brownie points than a fancy dinner and champagne... and best of all, keep giving all year long. Of course, we were all glad to see some improvements in the holiday shopping season this year.

 

According to market research firm ComScore, between November 1, 2011, and December 26, 2011, consumers spent $35.3 billion online, 15 percent more than consumer spent online in the same time period in 2010. But the coolest stats came in Brit Morin’s TechCrunch piece, (“Need A Last Minute Gift? There’s A Subscription For That”) which pointed out that some of the best gifts out there were the result of the shift to the Subscription Economy.

 

As Brit noted, subscriptions aren’t just about magazines anymore—and there not even about music services like Spotify and Pandora (although those are great gifts to give). There are subscriptions for everything under the sun—from Bacon of the Month (the name says it all) to Kiwi Crate (monthly craft kits for kids) to Tattly, which sends you and your loved ones monthly high-quality, non-permanent tattoos (different kinds of crafts for kids!).

 

As you can see, with subscriptions as gifts, the possibilities are endless. So, with that in mind, here are a few great gifts to consider this Valentine’s Day:

 

• Peanut Butter and Jelly of the Month—a perfect combination, just like you and your sweetheart (aawww).

• Book of the Month Club for Kids—proving the power of the Subscription Economy to handle personalization like never before, this isn’t your mother’s book of the month club. You can actually select each and every book by yourself, avoiding mismatched books while giving your littlest loves the gift of reading. Oh, and this club sends books with lollipops—bet your club didn’t do that!

• World of Warcraft—Guys love it. After all, nothing says love like a good game with swords, spells, and elves. In the new economy, even role-playing can be gifted.

• BustedTees Shirt of the Month Club—Fun shirts that will keep the laughs coming all year.

• Gardner of the Month Club—Keep love blooming all year long.

• And yes, don’t worry, there’s always wine. And more wine. And of course there are LOTS of choices for wine by subscription, including: New York Times Wine Club, Wine of the Month Club and the Amazing Wine Club just to name a few!

 

Have a great Valentine’s Day! Let us know what you bought us...

An Espresso Shot for the Subscription Economy

by Jeff Yoshimura, VP of Marketing

 

Just in case there weren’t enough Starbucks cafes near you, Starbucks has gone one better. To continue to serve the make-at-home crowd, Starbucks just introduced automatic delivery of its coffees and teas by subscription.

 

The Zuora team went crazy when we saw this! When we started Zuora in 2008, we had all these ideas of how we thought the Subscription Economy would grow in traditional product categories. Our CEO Tien would say, “I think you’ll one day see Starbucks by subscription. Why not?”

 

It wasn’t an accident that Tien chose Starbucks. Subscriptions are the obvious next step for a company that is masterful at retaining customers. It’s the idea that you are giving the customer MORE, and that the relationship shouldn’t end with the swipe of a credit card.

 

Starbucks laid this groundwork with its Gold program, offering loyal customers 10% off every purchase, free Wi-Fi use, free beverages on their birthday, exclusive discounts, and more.  Rather than continuing to chase customers, they wanted to solidify recurring customer activity. And the benefit of the long term engaged customer pays off in increased revenues and profits.

 

This is precisely what Zuora means when we talk about the shift from the “Buy Here” button of the 20^th century to “Subscribe Now” button in the 21^st century. It’s not just about mail order. It’s about providing customers what they want, where they want it and how they want it, which each customer may view as unique to them. Quoting the Starbucks email campaign:

 

Want to be sure you always have your favorite coffee on hand? Simply subscribe online to have your coffee or tea sent to you automatically, as often as you like. You can easily modify your order, rearrange your shipments or pause when you go on vacation. We're flexible for you.

 

Start your subscription now. 

 

What does this mean for other companies as well? Who else is amazing with customers? Who will be next to shift to the Subscription Economy? What other retailers? Maybe clothing companies? Who knows? And, again, why not?Whoever is that next big brand to make the shift, the Starbucks example itself should serve as a warning to companies who think the Subscription Economy is only about digital goods. As we’ve seen over and over, it’s about a fundamental change in the way you serve your customers. If you want to sit and think about that any longer, companies like Starbucks will come eat your lunch and have a tall half-skinny half-1 percent extra hot split quad shot (two shots decaf, two shots regular) latte with whip while they’re at it.

 

Zuora Recognized for Telecom Industry Award

by Shawn Price, President

"Don't worry when you are not recognized, but strive to be worthy of recognition."
— Abraham Lincoln

Ever since launching Zuora for Communications in April 2011, Zuora has been rapidly scaling up its presence in the communications industry. I’m proud to say that our efforts are being recognized. I’ve been given the OK to reveal that Zuora for Communications was selected as a 2011 Internet Telephony BSS/OSS Excellence Award winner by Internet Telephony Magazine.

Internet Telephony specifically pointed to Zuora’s achievement in “creating exceptional systems for supporting business support systems.” And the editors highlighted the success Zuora generated for Tata Communications with its revolutionary InstaCompute service.

In a blog post I wrote on June 15, I discussed the need for carriers to adapt to the changing world of smart devices and customer loyalties a thing of the past. That’s the reason we launched Zuora for Communications, a solution that brings the power of the cloud to communication service providers and enables service providers to launch any type of service from broadband, WIFI, 4G, VOIP, unified communications, and wireless devices services, as well as media services that are delivered over the network such as apps, cloud, gaming, video, and voice services. The solution enables service providers to price and package any communications service, manage customer interactions everywhere, bill and invoice customers in real-time and make decisions based on subscriber analytics.

That’s exactly what Zuora means by bringing innovation to the communications space, and we’ve just started. It’s great to have industry recognition for the work that Zuora is doing with telecom carriers like Qualcomm and Elevate, and we’re excited about the opportunity to serve more industry players in the new year.

Yahoo! for Scott Thompson: The Right Pick to Save the Company

by Tien Tzuo

Congratulations to Scott Thompson on being named the new CEO at Yahoo. Scott was one of Zuora’s inaugural board members, and has been a guiding force through our growth. He has helped our team focus on the big picture while providing positive energy or unvarnished feedback when we needed it most. And he did it all while turning PayPal into a payments powerhouse alongside the giants of Visa and MasterCard.

There’s no doubt that leading Yahoo is the biggest turnaround challenge in the Valley today. The company is clearly at a crossroads--and needs serious help. Yahoo needs two things right now: positive leadership for a team that’s been repeatedly beaten down, and critical analysis to build a cohesive strategy that the company, investors and customers can rally around. In my experience with Scott, he has those skills and then some.

Scott’s leadership was clear the first time we met. Zuora had just launched its first subscription billing product, and had a handful of SaaS customers including Marketo, Coremetrics, LiveOffice, Cloud9 and Box. We were looking for an outside board member and, still in the euphoria of just getting our company and product launched, we thought, why not go shoot for the moon and ask the leader of the company who revolutionized the online payments industry?

Looking back, I expected Scott to ignore my outreach, or at best punt me to an underling. To my surprise, he invited me to a meeting where his clear intention was, “How can I help?” I presented our bold vision, threw out 3-4 ideas and then snuck on at the end, “How about joining our board?” He loved our vision and never hesitated.

Scott's been instrumental to Zuora to this day. I have so many great Scott stories, but I have one in particular that the Yahoo crew should know. As I said, we had some early success, and I was feeling pretty good about myself. Scott took me down a rung, saying, “This is all great, but you haven't proven to anyone that YOU can make your team successful. That's your job, and you’re on the hook.” It was one of those moments where the color of the world changes, and you can see a whole new path ahead. That’s the kind of leadership Scott can provide.

So to Scott, thank you for all you have done for Zuora. Thank you for always asking me about my family. Thank you for the three hour lunches and dinners to invest in our success. You have a huge challenge ahead of you, but I have no doubt that you are the right guy for the job.

To the Yahoo ecosystem, congratulations on getting a great leader. I expect we will see some great things from the Yahoo team.

Silicon Valley: Culture-as-as-Service?

by Alexander Lethen, Regional Director of Benelux

Last week I met with the Dutch Minister of Finance, Mr. Jan Kees de Jager, at our Redwood City HQ. De Jager was on a short road trip through Silicon Valley to experience the innovation 'vibe' and pitch the Netherlands as the right location as a European HQ.

In our conversation we talked through the differences between Silicon Vally and the Netherlands - in particular - and Europe at large in terms of entrepreneurship and levels of innovations. Geographically, Silicon Valley is much smaller than the Netherlands, which is by itself already a pretty small country. Silicon Valley has produced over the last decades many of the most successful high-tech companies worldwide and is continuing to do so, especially in Anything-as-a-Services.

Although these are several other 'pockets' of high-tech innovation in the USA and abroad, the Valley - in my view - brings together the perfect ingredients for a highly innovative and attractive blend of success. There are many ingredients, and the most important ones are:

• raw entrepreneurism, many high-tech companies are started and founded by serial entrepreneurs and folks with a burning desire to found their own company,
• infectious optimism, many start-ups have an unbridled enthusiasm to 'change the world' and completely believe in their vision,
• proven intellect, many folks that want to be part of this culture have already moved to the Valley from other parts of the country or abroad,
• venture capital, many of the venture capitalists reside in this area, which makes it much easier to retain funding for the right idea,

On top of that it is located in a gorgeous part of the country, only miles away from San Francisco.

Unfortunately for the Dutch Minister of Finance, I was not in the position to gift wrap this blend in a handy little package, for him to take home.

Whoever could package 'Culture-as-a-Service' is certainly on to a killer-app. In the mean time, you can always subscribe to this culture by signing up with many of the Valley's most innovative companies to optimise your business.

Introducing BaaS. And we don’t mean Billing-as-a-Service.

by Kyle Christensen, Senior Director of Product Marketing

It seems like every day the Subscription Economy manages to convert another “product” into a “service”: Software-as-a-Service. Platforms-as-a-Service. Infrastructure-as-a-Service. Music-as-a-Service. Movies-as-a-Service.

Today we stumbled upon what may be the most...ahem...innovative service yet:

The Bathroom-as-a-Service.

No, really. Check it out at www.cloo-app.com. It’s called CLOO’ (short for community loo). To quote from their site: “CLOO' is based on one simple truth— we all have to pee. Though in urban cities finding a clean, available restroom is difficult & frustrating. That’s where CLOO' comes in.”

The idea is that if you live in a city, you can open up your private bathroom to members who sign-up for the CLOO community. In exchange for using your facilities rather than waiting in line for the Starbucks bathroom, members will kick you a small monetary contribution. Users can track down the closest loo on their mobile devices, members and hosts rate one another, and happiness and relief ensue.

Now...I’m sure peer-to-peer peeing doesn’t exactly appeal to everyone. But the fact that such a service actually exists is yet one more indicator that the “Subscription Generation” is growing more and more accustomed to sharing or subscribing rather than buying. And this shift is fundamentally changing how all companies will eventually do business.

Yes, Software-as-a-Service. Yes, Media-as-a-Service. But also Vehicles-as-a-Service (www.zipcar.com), and Handbags-as-a-Service (www.bagborroworsteal.com) and Vegetables-as-a-Service (www.farmfreshtoyou.com.) And today...the introduction of the Bathroom-as-a-Service (www.cloo-app.com.)

It’s a brave new world. Happy bathroom hunting.

Publishers Say No to Apple: The Revolution Starts Now

by Tien Tzuo

Paidcontent posted an interesting update last week to Apple’s iTunes App Store saga. Back in June, when the subscription policy was going into effect, I said publishers need to own their own destiny by creating their own flexible billing platforms that could meet reader expectations for how they want to consume content.

We believed that for publishers to survive, they had to say “No” to Apple’s outrageous demands. What started as a message of protest, has become a revolution.

Well, it’s now August, and some formidable players have joined the revolution, and have established their own content monetization strategy outside the walled garden of Apple’s App store.

The Wall Street Journal waved the flag of self determination, and went on record as saying, “We remain concerned that Apple’s own subscription would create a poor experience for our readers, who would not be able to directly manage their WSJ account or to easily access our content across multiple platforms.” Spoken like a company who has a subscription billing system that is working for them.

Or how about the Financial Times? According to the Paidcontent piece, their app is still up and running, as it’s always been, and processes subscriptions through its own channel.

The time for hand wringing is over. It’s time for other publishers to join us in standing up and saying no to handing over 30% of their revenues, saying no to losing the relationship with the subscriber, and saying no to Big Brother. It’s time to say yes to the freedom of the press. Join the revolution and come visit www.saveourpress.com.

Yes, there’s work to be done. The key question now is, how will this all fall out? Will the remaining “in app” publishers continue to say “Thank you, may I please have another?” or will they find their way to owning the subscription experience?

I don’t see a choice. Publishers are either “in” or they are on the outs.