THE SUBSCRIPTIONS REVOLUTION

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I Will Subscribe

Apple’s long anticipated entry into the music streaming space poses a whole list of questions. For example, is this merely a defensive measure on Apple’s behalf? Is its move to a subscription-based service alongside Spotify and Netflix a sign of more to come? And, importantly, have you subscribed to the subscriptions revolution yet?

Apple Play aims to neutralise the threat from competitor subscription music streaming services such as Spotify, Tidal and Google Play and return to Apple’s heyday when iTunes was the number 1 music platform. It has a huge competitive advantage as Apple already holds one of the largest customer bases of any company in the world. It also has $178 billion in cash reserves, so there’s no problem with funding.

For the music industry Apple Play is yet another landmark in its evolution. Yet, many of our clients and contacts in the tech industry will be equally fascinated by the messages it gives on subscriptions – and how we are now accepting this payment model as the norm. This is especially the case in the software industry where the cloud and related developments are enabling vendors to provide software, infrastructure, platforms and more as a service.

These days you can buy almost everything on subscription – from movies to ‘artisan’ bacon delivered to your door. In fact, the subscriptions business model is rapidly changing the way in which we consume products. Why is this? For consumers it’s the convenience of having something regularly delivered or avoiding a huge financial outlay. For providers it promises a regular source of income.  It cajoles customers into a state of loyalty with exclusive offers and other tempting value-added incentives.

A subscription service customer base can grow very quickly. With a one-off sale a customer may never have anything to do with the brand or company again. With subscriptions the customer is hooked waiting for the next instalment. Ultimately if the customer continues to pay for their subscription they can be considered a happy customer. They also allow businesses to create accurate cash flow and revenue projections based on the customer numbers, the services they are using and subscription periods.

Who can predict who will be next to adopt the subscriptions model? YouTube has a huge opportunity to increase revenues by offering users advertisement-free, unique content and other live streaming opportunities via a subscription service. Supermarkets could also begin tailoring orders on a weekly or monthly basis based upon the consumers needs. Will we soon need to subscribe to survive?

Businesses understand that nothing lasts forever and there is always a need for a replacement or upgraded product. If they can retain the customer long enough to repurchase their products then ultimately they have a secure revenue stream and a large customer base.

Apple isn’t breaking new ground this time. Spotify and Netflix had already done the heavy work in the entertainment market. But, the fact that such an iconic brand has now adopted the model could just pave the way for even more to come.