Zuora Named Top OnDemand “Company of the Year,” 16 Customers Also Honored

by Tien Tzuo, Founder & CEO

 

Today, I feel honored to announce that we’ve been named AlwaysOn’s OnDemand Company of the Year.  

In selecting Zuora, AlwaysOn stated, “With early market entry, strong revenue, and an extremely stable, secure, and useful suite of products, Zuora's success and continued growth is indicative of its ability to launch and monetize subscription-based products and services of any size in any market.”

While we’re excited and humbled by the accolade, the greatest honor is seeing so many of our customers among the list of OnDemand Top 100 winners. These companies are the proof that the Subscription Economy is becoming the engine for change across a variety of industries. OnDemand’s recognition of 16 of our customers confirms we’re not only creating the best product we can, but are helping the best companies in Silicon Valley become better. The companies selected as winners vary from technology firms like Box to social media startups like Branchout, demonstrating the portability and universality of Zuora’s platform. Zuora isn’t just partnering with companies in varied verticals, but the best companies in these industries. 

The winners were announced last month and selected by media networking publication Always On. The competition this year was fierce, with hundreds of private technology companies being nominated by investors, technology leaders, journalists, industry insiders and bankers. In addition to Zuora, Zuora customers Box.net, GoGrid, Xactly, Acquia, Mulesoft, Syncplicity, Symplified, Jive Software, Marin Software, Marketo, DotNetNuke, BrightEdge, BranchOut, People Matter, Yammer, and Zendesk were also honored this year.

Companies were selected based on a set of five criteria: innovation, market potential, commercialization, stakeholder value, and media buzz. This is actually Zuora’s third year we’ve honored by AlwaysON, but this year feels sweeter to us with so many friends to call and congratulate.

 

PS: For those at AlwaysOn OnDemand who requested a copy of my keynote presentation, The Only 3 SaaS Metrics that Matter you can view the deck via SlideShare or my recorded presentation via Ustream.  

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.

The Fear of Paywalls and the Newspaper Industry’s Need to Change

by Tien Tzuo 

The Wall Street Journal’s Papers Put Faith in Firewalls perfectly encapsulates what’s wrong with the publishing industry right now. Instead of celebrating innovation and seeking new ways to adapt to a rapidly-changing media dynamic, the WSJ Russell Adams’ voices the skepticism of the industry, the very same skepticism which has led to the newspaper industry eschewing change in favor of increasingly stagnant and outdated revenue models. 

If “metathesiophobia” is the fear of change, then we need to come up with a new term for fear of changing business models. And make no mistake about it, newspapers need to change. In a new Pew Research Center study on the state (or fate) of the publishing industry, one newspaper executive lamented: "There's no doubt we're going out of business right now." 

But the Pew study reveals that these prescient executives still live in a culture paralyzed by fear. The Pew study describes this fear in detail, interviewing newspaper executives who reveal a culture of “inertia” that make innovation impossible to achieve within newspapers. According to 

the Pew report, many executives won’t risk trying to change their approach to revenue because their publications would fail anyway and they’d be blamed for it. “There might be a 90-percent chance you’ll accelerate the decline if you gamble and a 10-percent chance you might find the new model. No one is willing to take that chance,” explained one beleaguered executive. 

Is this really what has become of the fourth branch of government? Sitting around passively accepting their fate? Is this how they intend to honor classic journalists, some of whom risked their lives to bring us the highest quality reporting? We need a free, independent media to not just survive, but thrive. It’s time for publishing leadership to either lead or move aside in favor of those who can.

The Wall Street Journal rightly highlights the success of The New York Times, Wall Street Journal, and Pearson’s Financial Times (who also happens to be a Zuora partner). But the author claims these are the “exceptions” to the rule rather than what they truly are: the leaders in the space.

These pioneering icons won’t be going back to a free model. Free is going away, and newspapers need to understand this. People have already shown that they will pay for quality content, and now it’s a matter of newspapers understanding this and adapting to it... quickly.

The truth is, when newspapers begin to think creatively about their approaches to digital, they’re more likely to succeed. The Economist handed the keys to all of their online content to its Tablet Chief, Oscar Grut. The Washington Post hired Rob “Cmdr Taco” Malda, the founder of Slashdot, to overseer its online strategy. These are people who don’t come from 40 years of journalism experience, but instead have a background in digital content that newspapers so desperately need.

Paywalls aren’t a perfect solution, but they’re a start. Next, we’ll begin to see subscriptions that cater to a variety of consumers-- frequent readers, fans of the Sunday sections, or just the occasional browser. We need publishers to have this power and this relationship with the customer, and not cede it to Apple or Google, who have been all too happy to control content while the print industry struggles.

 

 

 

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.

 

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.