Another business model: subscriptions

Want to build a business like Netflix? Zuora’s CEO, Tien Tzuo, showed me its new platform the other day and I recorded him on my cell phone. I like it when I see business models that aren’t just “advertising” and Zuora’s platform seems well thought out (Tien used to be an executive at Salesforce.com and obviously learned a lot by hanging out with Marc Benioff).

I joke around with him that if advertising falls apart due to the economic troubles that I’ll have to start charging my viewers for my videos, so the idea interests me. Just kidding, but there’s a lot of businesses that can make use of a subscription strategy. Today they announced a new product and a partnership with PayPal.

Comments

  1. I don’t see subscriptions doing any better than they are. In fact, with the economy tightening it’s belt, the opposite may be the case.

    Speaking of advertising… Robert, what’s with the ads and that horrible survey thingie on your site? Site looks a lot better without them.

  2. I don’t see subscriptions doing any better than they are. In fact, with the economy tightening it’s belt, the opposite may be the case.

    Speaking of advertising… Robert, what’s with the ads and that horrible survey thingie on your site? Site looks a lot better without them.

  3. Well, I think he’s dead on with his advertising-doesn’t-work, we-need-a-new-business-model overview. I don’t think he should charge accounts to get setup, though, that should be free to the publisher. Also, there are a bunch of features that seem more appropriate to a large client rather than a blogger or individual publisher. The site integration methods seem a bit opaque as well. I think they should bang out a blogger-focused product using their industrial-strength backbone. Shouldn’t take more than 2-3 months.

  4. Well, I think he’s dead on with his advertising-doesn’t-work, we-need-a-new-business-model overview. I don’t think he should charge accounts to get setup, though, that should be free to the publisher. Also, there are a bunch of features that seem more appropriate to a large client rather than a blogger or individual publisher. The site integration methods seem a bit opaque as well. I think they should bang out a blogger-focused product using their industrial-strength backbone. Shouldn’t take more than 2-3 months.

  5. I think subscriptions make sense. In the 13 years that I’ve been on the web, I have yet to buy even one thing because of an online ad. But I have a subscription to netflix (why clutter up my house with DVDs when I can have access to zillions easily? i also like their recommendations and have found several good flicks that way.), multiply (unlimited full sized image and video storing so i don’t have to worry about losing pics if a HD crashes? as a parent with lots of kid pics, this rocks my world), and emusic (i’ve found some wonderful music through them and its a cheap but legal way to collect tunes).

  6. I think subscriptions make sense. In the 13 years that I’ve been on the web, I have yet to buy even one thing because of an online ad. But I have a subscription to netflix (why clutter up my house with DVDs when I can have access to zillions easily? i also like their recommendations and have found several good flicks that way.), multiply (unlimited full sized image and video storing so i don’t have to worry about losing pics if a HD crashes? as a parent with lots of kid pics, this rocks my world), and emusic (i’ve found some wonderful music through them and its a cheap but legal way to collect tunes).

  7. Maybe subscriptions is it if you can keep them at a constant rate.
    However people require change implying changing rates, then subscription becomes quickly a headdache.

  8. Maybe subscriptions is it if you can keep them at a constant rate.
    However people require change implying changing rates, then subscription becomes quickly a headdache.

  9. It is interesting Robert that you joke saying ” joke around with him that if advertising falls apart due to the economic troubles that I’ll have to start charging my viewers for my videos, so the idea interests me.”

    Actually if you have the guts and if you really want to find out how valuable your content is do a test of an interview and have it so that people have to pay 1$ to view the content. I wonder just how much money you would make?

    Since I don’t know your audience size, because you don’t really share your stats with us, I would bet dinner that you wouldn’t be able to get one percent of your average daily viewership to pay a buck to see your content. And don’t use for your test an interview with Steve Jobs or Gates… it woudl skew the results.

    I think in today’s Internet world, people are so use to “free” and don’t want to pay for information.

    Oh, and I will tell you that a service you talked about a while back, SmugMug, is a great photo sharing service.

    After testing other photo sites, I really like SmugMug’s approach, site and corporate attitude.

  10. It is interesting Robert that you joke saying ” joke around with him that if advertising falls apart due to the economic troubles that I’ll have to start charging my viewers for my videos, so the idea interests me.”

    Actually if you have the guts and if you really want to find out how valuable your content is do a test of an interview and have it so that people have to pay 1$ to view the content. I wonder just how much money you would make?

    Since I don’t know your audience size, because you don’t really share your stats with us, I would bet dinner that you wouldn’t be able to get one percent of your average daily viewership to pay a buck to see your content. And don’t use for your test an interview with Steve Jobs or Gates… it woudl skew the results.

    I think in today’s Internet world, people are so use to “free” and don’t want to pay for information.

    Oh, and I will tell you that a service you talked about a while back, SmugMug, is a great photo sharing service.

    After testing other photo sites, I really like SmugMug’s approach, site and corporate attitude.

  11. Scoble,

    I would pay a subscription for premium content (NOT your cell phone)

    Also, I would prefer to pick the topic.

    Why not ask your viewers the top topics they might pay for and donate the money to charity?

    Ric

  12. Scoble,

    I would pay a subscription for premium content (NOT your cell phone)

    Also, I would prefer to pick the topic.

    Why not ask your viewers the top topics they might pay for and donate the money to charity?

    Ric

  13. I think most businesses would like to establish a subscription based service to their site. The problem is, in these times where “Free” runs the table it’s hard to set that up. Especially when it’s content that you supply. Because of the internet so much is available for free, that in order to compete, you have to keep it free and hopefully rely on advertising to make money.

  14. I think most businesses would like to establish a subscription based service to their site. The problem is, in these times where “Free” runs the table it’s hard to set that up. Especially when it’s content that you supply. Because of the internet so much is available for free, that in order to compete, you have to keep it free and hopefully rely on advertising to make money.

  15. Craig,

    I founded Free.TV so I KNOW ‘free’ does NOT work

    There has to be a ‘catch’ – even if it is just advertising. But more and more people are willing for a (small) fee to avoid the ads – see the change in online videos.

    ric

  16. Craig,

    I founded Free.TV so I KNOW ‘free’ does NOT work

    There has to be a ‘catch’ – even if it is just advertising. But more and more people are willing for a (small) fee to avoid the ads – see the change in online videos.

    ric

  17. @ Ric,

    It doesn’t even take a small fee to avoid ads. It takes Firefox with certain extensions or Opera to block ads. And it’s still free…

    Most people will not pay for anything anymore. They have an “entitlement” mentality. The WWW started off free, with precious few exceptions (Netscape and a couple of others). Getting people to pay for stuff after these last couple of weeks will be increasingly difficult.

    Most people won’t pay for content. Not all, but most.

  18. @ Ric,

    It doesn’t even take a small fee to avoid ads. It takes Firefox with certain extensions or Opera to block ads. And it’s still free…

    Most people will not pay for anything anymore. They have an “entitlement” mentality. The WWW started off free, with precious few exceptions (Netscape and a couple of others). Getting people to pay for stuff after these last couple of weeks will be increasingly difficult.

    Most people won’t pay for content. Not all, but most.

  19. Actually, I’d agree with Tien here – there are plenty of businesses that can charge for subscriptions and succeed even in the content world – you can see it with deviantART whose monetization model was all ads till its members *asked* for a subscription service.

    The value isn’t just the content, it’s also around the convenience and reliability of the service versus spending your time searching for *free* content – there are businesses who have found that their core audience is more than willing to make that tradeoff.

  20. Actually, I’d agree with Tien here – there are plenty of businesses that can charge for subscriptions and succeed even in the content world – you can see it with deviantART whose monetization model was all ads till its members *asked* for a subscription service.

    The value isn’t just the content, it’s also around the convenience and reliability of the service versus spending your time searching for *free* content – there are businesses who have found that their core audience is more than willing to make that tradeoff.