Content Owners: Subscription-Only Leaves Money On The Table

Sarah Gray   ·   2016-11-11

Subscriptions seem to be the go-to answer for all the internet's monetization needs – but they’re often not the right answer.

The near-universal adoption and exclusive use of subscriptions as the paid business model discourages most consumers from paying for most content, to the point that paying is an objectively bad choice in most situations.

It's easy to see why businesses favor subscriptions. Subscriptions are simple to implement, manage, and market. They provide a nice, steady revenue stream that makes planning and forecasting easy.

They're also appealing to a specific segment of the market: high-volume consumers. When "unlimited" content is bundled within a subscription, the subscription is usually a terrific deal. The consumer gets a significantly lower unit price when compared to a la carte purchases, plus a convenient billing cycle.

The problem with subscriptions is that, as appealing as they are for high-volume consumers, they are equally unappealing to everyone else. The same subscription that is an incredible deal for a heavy user is a complete rip-off for light, occasional users.

By and large, consumers have realized that if you only watch one TV episode per week, Netflix is crazy expensive; if you only listen to music for a few hours a month, you're paying an obscenely high per-song rate on Apple Music or Spotify.

To top it off, everyone wants a subscription: Hulu, Netflix, Spotify, Amazon, Apple Music, YouTube, HBO Now... Each, ranging from around $5 - $15 and you're quickly back to $100+ cable fees. Add in 4-5 news publishers to cover the bulk of your news consumption, and that number gets closer to $200.  

When asked to subscribe to all these services, consumers evaluate, "will I actually use this enough, consistently enough, to make a subscription worth it?"

It shouldn't shock anyone that in the vast majority of cases, the answer is "no."

Maybe it's "no, I definitely won't use this subscription," or maybe it's "no, I'm not sure so I'll pass on the financial commitment" - either way, it yields the same result: the consumer pays NOTHING.

And that's a shame for content owners, because it leaves a LOT of money on the table - from consumers who might very well have paid something but not were not willing to commit to a subscription. If you want consumers to pay for your content (you should, and there’s plenty of evidence that they will), then you should be implementing different business models that maximize your income.

Even if subscription revenue is your end goal, it’s not where you start in today’s market. After all, the leap from “paying nothing” to “paying something” is a huge one; if you make it, getting from “paying something” to “paying more” is a piece of cake.

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