Subscription Business Models

This free-to-download report brings together the best examples we’ve seen of how news and media organisations have risen to meet the challenges of COVID-19. It looks at a range of tips and tactics to help all kinds of publishers, from subscriptions to eCommerce, the state of ad tech, and tools for building loyalty.

The Publisher’s Guide to Navigating COVID-19 report’s 80+ pages are split into seven chapters covering the pandemic’s impact on the media, what it means for subscription strategies, and how publishers are building loyalty and engagement.

It concludes with a chapter exploring the legacy of COVID-19; the structural issues it has accentuated, the trends it has accelerated, and what this means for publishers looking at their business plans for 2021 and beyond.

The report also comes packed with charts throughout and a comprehensive appendix, as well as recommendations for further reading.

The purpose of this study was to explore key attributes that may influence customers' behavioral intentions toward beauty subscription box retail services (SBRS). The Stimulus-Organism-Response paradigm was used as a conceptual framework for examining the relationships among variables, such as product-related attributes (Stimuli), attitude (Organism), Word of Mouth (WOM), and repurchase intention (Response). A total of 357 useable responses were collected through an online survey, administered on Amazon Mechanical Turk. Structural equation modeling was used to test the proposed model and hypothesized relationships. Results suggested that product quality, product assortment, and product uniqueness were significant predictors of customers' attitude toward SBRS. Furthermore, customer attitude toward SBRS had a significant positive influence on WOM and repurchase intention. This study provides insight for retailers to influence WOM and purchase intentions toward beauty SBRS.

Founded just 20 years ago, the Netflix brand has had an impact around the world and has changed our understanding of modern entertainment.
The company made the move from analog to digital media in 2007, after 10 years in which its business had consisted of offering customers a flat rate for DVD rental by mail. The business model has not substantially changed (bringing films and television series into the home) but has now gone 100% digital, with a monthly subscription for streaming contents instead of downloading them to a playback device. Betting on the Internet seemed risky at the time given what was happening with home entertainment, which had been weakened by piracy and declining sales and rentals of content on a physical format. “Nobody is going to pay for something they can get for free” was often heard, especially among the traditional players in the industry, who were (and are still) mired in the dilemma of how to continue their analog business while exploiting the demand generated by the new digital ecosystem.

Netflix proved that it was possible. It has been true to its philosophy of providing its product on demand with total access, including its original content. It is currently the leader by a wide margin in Internet television with nearly 110 million subscribers worldwide, and is available in more than 190 countries (according to statistics from the third quarter of 20171. This journey has not been without setbacks and mistakes.

The company made the right adjustments to its business model when necessary, adapting its product to a world engulfed by the accelerated pace of innovation and constantly changing consumer habits. It also proved that providing digital content services could be profitable, offering an added value for which users would be willing to pay. In the process, it also radically transformed cultural consumption patterns in
television viewing.

THIS ARTICLE WAS ORIGINALLY PUBLISHED ON AC/E DIGITAL CULTURE ANNUAL REPORT 2018 - DIGITAL TRENDS IN CULTURE. CREATIVE COMMONS LICENCE 3.0 https://www.accioncultural.es/es/ebook-anuario-2018

This MA dissertation investigates the dynamics of podcasting by visiting cultural, technological and social developments that have occurred in the medium. The motivation behind this dissertation was an attempt to fill the void in available research towards perspectives of podcast consumers and producers. Thorough investigations into the podcasting industry, production methods, experimental applications, emerging technologies and pivotal trends were made as a part of the literature review. This dissertation outlines findings from interviews conducted with podcast users and a podcast producer with results spanning across podcasting, role of software, smart speakers and production and distribution strategies. Research findings indicated optimism towards emerging technologies like smart speakers in the podcasting space, with confidence into them gradually building up. The findings also suggested that information acquisition continues to be core motivation behind consuming/producing podcasts, with contemporary podcasting models like The Daily by The New York Times gaining steam. The findings brought forth some interesting new directions that can benefit with further enquiry, including but not limited to the ad-free paid subscription model, influence of politics on podcasting, use of podcasts in contemporary academia and enhancing discovery and experience.

In music streaming services like Spotify, discrete pieces of music no longer has a price, as has traditionally been the case in music retailing, both analog and digital. This article discusses the theoretical and practical implications of this shift towards subscriptions, starting from a critical review of recent literature dealing with the commodification of music. The findings have a relevance that is not limited to music or digital media, but also apply more broadly on the study of com-modification. At the theoretical level, the article compares two ways of defining the commodity, one structural (Marx), one situational (Appadurai, Kopytoff), arguing for the necessity of a theory that can distinguish commodities from all that which is not (yet) commodified. This is demonstrated by taking Spotify as a case, arguing that it does not sell millions of different commodities to its users, but only one: the subscription itself. This has broad economic and cultural implications, of which four are highlighted: (1) The user of Spotify has no economic incentive to limit music listening, because the price of a subscription is the same regardless of the quantity of music consumed. (2) For the same reason, Spotify as a company cannot raise its revenues by making existing customers consume more of the product, but only by raising the number of subscribers, or by raising the price of a subscription. (3) Within platforms like Spotify, it is not possible to use differential pricing of musical recordings, as has traditionally been the case in music retail. Accordingly, record companies or independent artists hence can no longer compete for listeners by offering their music at a discount. (4) Within the circuit of capital. Spotify may actually be better understood as a commodity producer than as a distributor, implying a less symbiotic relationship to the recorded music industry.

Purpose
– This paper analyzes consumers’ attitudes and behaviors towards online piracy and their willingness to try subscription-based music services. The objective is to develop and test an attitude-intention model which includes ethical considerations in consumers’ decision making process regarding music consumption.

Design/methodology/approach
– The study analyzes 505 consumer questionnaires using a structural equations model.

Findings
– Attitude toward online piracy is positively determined by economic and hedonic benefits and negatively by moral judgment. A favorable attitude toward online piracy, in turn, negatively influences consumers’ willingness to try subscription-based music services, which is also directly determined by their interest and involvement with the services themselves.

Research limitations/implications
– The limitations of the paper are linked mainly to the adapted scales, to the analysis of just two subscription-based music services (Napster and Spotify) and to the fact that all respondents came from one country.

Practical implications
– The results call for a greater commitment by music industry actors to educate consumers about the consequences and implications of online music piracy, while also stressing the value added and hedonic benefits offered by subscription-based music services.

Originality/value
– This paper is the first to focus on consumers’ propensity toward online piracy and their willingness to try subscription-based music services as a possible alternative to the phenomenon, through the development and test of an attitude-intention model that includes ethical considerations.

In recent years, the rise of paywalls and move to subscriptions has been a major trend across the media landscape.

However, despite this focus, publishers need to ask tough questions about the potential — and sustainability — of this income stream. So, what do we know about the subscription landscape, and what questions should publishers be asking themselves?

In this two-part series, we look at the lie of the land and determine the most important strategic questions that publishers — large and small — need to address.

It’s too early to understand the full implications of the COVID-19 pandemic and its impact on publishers.

For some, it could be an “extinction-level event” with outlets around the world being affected. Others may emerge stronger, as a result of increased digital subscriptions, revenue diversification, and reduced – or hollowed-out – competition.

Whatever happens, it’s likely that the industry will look very different on the other side of this crisis. Given all of this uncertainty, what do we know about the current media landscape?

Although there are some data-lags, we can discern some notable trends. Here are eight of them, as told through ten charts.
Via: whatsnewinpublishing.com/covid-19s-impact-on-the-media-in-10-charts

Supplier firms are increasingly seeking new ways to personalize their offers and differentiate their products , especially in contested digital markets. One approach that shows promise involves encouraging customers to participate in pricing decisions using schemes such as "pay-what-you-want" where the customer has an input into determining the price. These approaches can benefit both the customer in terms of paying a reasonable price and reducing risk, and the supplier in terms of increasing sales and generating deep customer insights that can assist in relationship development. However, extant research shows limitations associated with these pricing approaches and, despite some qualified successes, there has not been widespread adoption in businesses. This study extends consideration of existing participative pricing schemes and proposes a new conceptual framework, termed FairPay. This framework overcomes many of the limitations of previous approaches, while addressing important challenges, especially those faced by many digital product suppliers. The framework offers an attractive pricing solution for both customers and suppliers, ensuring an equitable exchange that is based on value-in-use. We discuss the application of this framework in the context of digital products, where the approach has special promise. c h i n e s e a b s t r a c t ,. " " (pay-what-you-want) , ,. ,. , , , ,. , , FairPay. , ,. ,. , .

The purpose of this study was to explore key attributes that may influence customers' behavioral intentions toward beauty subscription box retail services (SBRS). The Stimulus-Organism-Response paradigm was used as a conceptual framework for examining the relationships among variables, such as product-related attributes (Stimuli), attitude (Organism), Word of Mouth (WOM), and repurchase intention (Response). A total of 357 useable responses were collected through an online survey, administered on Amazon Mechanical Turk. Structural equation modeling was used to test the proposed model and hypothesized relationships. Results suggested that product quality, product assortment, and product uniqueness were significant predictors of customers' attitude toward SBRS. Furthermore, customer attitude toward SBRS had a significant positive influence on WOM and repurchase intention. This study provides insight for retailers to influence WOM and purchase intentions toward beauty SBRS.

Three Ecommerce Approaches Making the Most of “Buy It To Try It”

The tough, counterintuitive lesson most retailers have learned is that despite the costs associated with merchandise returns—globally, the industry loses $643 billion annually—offering free return shipping and longer return windows drives more loyalty, larger purchases and even store footfall among ecommerce shoppers. What has been slower to sink in is that conditional buying is the year-round new normal for a growing number of ecommerce consumers. Their decision to buy is actually a prelude to a later decision to keep the merchandise—or buy more of it, a decision they make after they’ve recreated the store experience at home, where they can assess their purchase at their leisure, and, in most cases, return what doesn’t work while suffering little to no downside.

Just where did today’s conditional buying trend come from? First, consumers’ quest for ways to compensate for the lack of materiality in ecommerce shopping continues. Second, consumers’ heightened awareness of their value in a low-loyalty, price-transparent market has led to a sense of entitlement regarding perks—such as free returns—for their patronage. There is also a larger, cultural dynamic at work that stems from the sharing economy. Hedging one’s financial bets by leasing or renting as a semi-permanent deferral of the decision to buy and the onus of ownership has created an experimental consumer mindset even when buying is the objective.

Where some saw lemons, others saw lemonade in conditional buying. Three ecommerce models are converting Buy It To Try It behaviors into a less narrowly transactional and more personalized, participatory and periodic consumer experience.

1. Encouraged Over-Ordering
Zappos has long been an open proponent of over-ordering or the home try-on experience, encouraging consumers to order more than one size of shoes, and the policy appears to be paying off: their most profitable customers return 50% of what they buy. Many luxury apparel retailers routinely send two sizes to customers, and Rent the Runway tells shoppers to add a “backup size” for free and that “exchanges are quick and easy.” Warby Parker’s five pairs/five days/free shipping and free returns formula has done more than its share to popularize the Buy It To Try It trend. For online apparel-shopping men of newer entrant Mott & Bow, a purchase of one pair of jeans automatically comes with another, and the wrong fit is shopped back for free. And for a product notoriously hard to fit, True & Co. offers a five-bra collection for trying on at home, with a 30-day free return window.

2. Subscription Shopping
The $3B subscription economy is hard to miss these days. Of total American household consumption, goods have decreased by 10 percent over the past two decades while services have increased, and the subcom approach simply surrounds products with service. The Buy It To Try It subcom companies focus on product discovery, e.g., curated product mixes, some expert-led, some consumer survey/profile-based, most a blend of the two. This is a clear way for consumers to “buy” via subscription in order to try the product before buying all, some or more of the apparel, dog treats or wine. Getting subscription sampling consumers to trade up to a full size, increase the frequency of their deliveries, or keep most of the box’s contents is the trick. A full 50% of the monthly samples Resource/Ammirati client Birchbox mails are purchased by their consumers in full size on the site, in no small part because Birchbox matches a consumer profile with others like it using affinity analysis, thereby packing boxes likelier to appeal.

3. Personal E-Stylists
Of the three Buy It To Try It ecommerce models, this one takes relationship building the farthest by mixing art and science, or, more precisely, personal merchandisers, buyers and stylists’ judgments with data analytics. Bombfell explains that technology is used to surface fit and style recommendations for each consumer, but that a “human stylist (the sort with years of experience working in production, design and merchandising in men's fashion) has the final say.” Before you can say structural unemployment for stylists thanks to algorithms and data mining, Keaton Row pairs consumers with everyday fashionistas who work on commission and can improve over time through dashboards, lookbooks and live chat with their clients. Everywear taps founder and former Lucky editor-in-chief Brandon Holley’s network of professional fashion stylists, and puts recommendations in the context of a closet review (information that is then licensed to stores), a patently ingenious way to decrease returns. So far, out of every hundred customers, thirty make a full-priced purchase. Free returns are the cost of doing business for these e-stylist businesses, but incentives to keep the merchandise are strong: 70 percent of Stich Fix customers order a second box within 90 days, enticed by the 25% discount they earn if they keep all five items.

Unlike many flash sales retailers, the supernova ecommerce model of five years ago that put little emphasis on service and relationship-building, these three ecommerce models offer more latitude in the final phase of the “funnel”, where more discovery and, for that matter, self-discovery deepen the consumer’s pleasure and sense of intimacy with the retailer. Ideally, this yields more loyalty and better conversion rates, and once consumer habits are locked in due to these ecommerce models’ amenities, it becomes harder for competitors to penetrate the line of service defense erected around the retailer’s products. The never-ending race to keep the services meaningful, however, cannot be underestimated. One day, free shipping and free returns, the next day, some equivalent, perhaps, of Amazon Prime value-adds like streaming content and cloud storage.

This is a relationship marketing PhD which is examining, using Commitment Trust Theory, the customer decision to maintain subscribing to a massively multiplayer online game. This PhD is not an examination of initial purchase decision, but of the ongoing, post-purchase, customer retention. In keeping with the contextual nature of Commitment Trust Theory, this study examines the antecedents of the re-subscription decision and their effect on the key mediating variables of Commitment and Trust and modifies the framework to model the subscription based nature of the business situation and the context. The key contribution of this research to the literature is the application of the Commitment Trust framework to a customer’s ongoing relationship with a massively multiplayer online game entertainment product; a situation and context which has not been examined in the literature. An online questionnaire survey was used to collect a sample of data from 2226 massively multiplayer online game customers. This sample data was then analysed using Structural Equation Modelling to test the relationship hypotheses between the constructs proposed by Commitment Trust Theory. Furthermore, hypotheses examining the effect of relevant demographic and categorical variables upon the constructs of Commitment Trust Theory were also tested and analysed using appropriate statistical techniques. Evidence was found to support the Commitment Trust Theory framework in a massively multiplayer online game subscription situation, with the study’s model explaining 85.7% of the variance of the sample data, with evidence presented to support the key mediating variable approach to modelling the circumstances. The study, based on examining the effect size of the construct relationships using standardised regression weights then gives evidence that a more parsimonious model which reduces the number of constructs from 16 to six (a 70% reduction in complexity) would still produce a model explaining 85.3% of the variance of the sample data (a 0.4% loss in explanatory power). The study concludes that the key antecedent constructs in the sample for a customer’s renewal of an online gaming subscription are current satisfaction, past satisfaction, the amount of game capital they have within the game and the metagame benefits they derive from the game. The study supports a key mediating variable structure, but provides evidence that while Commitment and Trust are both relevant and statistically significant, a more efficient explanation examining the effect size of the relationships as well, would focus on the antecedents of Commitment rather than Trust, as Trust and its antecedents were not found to have a significant effect size on the overall decision to re-subscribe.