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Tag: Subscription Model

  • Move Over Subscription Economy, Usage-Based Billing Is Here

    Move Over Subscription Economy, Usage-Based Billing Is Here

    Subscription pricing models may be an unforeseen casualty of the economic downturn, paving the way for usage-based billing.

    Subscription pricing models have permeated everything from cloud services to mobile apps and are a far cry from the early days of computing and the internet. For those old enough to remember, software was sold — often in a box — for a one-time fee for that major version of the software. When a major new version was released, users could usually pay a cheaper upgrade fee to move to the latest and greatest.

    With the rise of the internet, however, subscription models quickly dominated the market and all but supplanted the one-time fee model. Thanks to the economic downturn, however, Business Insider makes the case that subscription pricing may be on the verge of going the way of its predecessor.

    In place of subscriptions, usage-based billing is the new hot thing in the software market. Rather than a flat monthly rate, usage-based billing only charges customers for what they actually use. As Insider points out, this is not uncommon among cloud providers but is poised to spread out to other areas of the industry.

    The model could be a viable and appealing option for much wider use, especially as businesses are looking to rein in expenses wherever possible.

    “If you think about the evolution of business models, it’s always trended more and more towards being more friendly to the customer,” Rishi Jaluria, an RBC software analyst, told Insider. “It is very likely, in my opinion, that there will be more companies that are either on a consumption model or offer a consumption element to the model.”

    Jaluria’s views are shared even by those entrenched in the subscription model approach.

    “The best companies are saying, ‘We want to have a mix of models that really accommodates all our different customers,’” said Tien Tzuo, CEO of Zuora, a subscription-billing-management company. “Different customers might want different things as well.”

  • Peloton Moving Toward Subscription Model, Says CEO

    Peloton Moving Toward Subscription Model, Says CEO

    “In five or ten years from now, I’d be surprised if (Peloton wasn’t available as part of a subscription),” says Peloton CEO John Foley. “I think there’s a there for sure. It’s not something you’re going to see in the next year. We didn’t need to have it yet but I love moving in that direction.”

    Peloton said in their Q2 earnings release that paid Peloton Digital subscriptions grew 210% year-over-year as they reduced the price of Peloton Digital to $12.99 and extended their Digital free trial period to 90 days during March and April because of sheltering in place restrictions that were in place around the world. Peloton also launched integrations with the four leading over-the-top TV platforms including Amazon Fire TV, Android, Apple TV, and Roku.

    John Foley, CEO of Peloton, discusses the likelihood that the company will eventually offer subscriptions for its internet-connected fitness products instead of requiring an expensive purchase:

    Moving In The Direction Of A Subscription

    In five or ten years from now, I’d be surprised if (our connected fitness products weren’t available as part of a subscription). I think there’s a there for sure. It’s not something you’re going to see in the next year. We didn’t need to have it yet but I love moving in that direction. It’s all in the name of affordability for our members, our current members, and new members, and making sure they feel incredible about the value.

    One thing I will point out is that my favorite metric last Q4 which was ended July 1, 2019, our subscriptions were used 12 times a month on average. This year, the quarter that just closed, they were used close to 25 times a month on average. So when you’re paying us $39 a month and getting 25 workouts from your household it’s close to $1.50 per workout. It’s just insane value. We’re very excited about that and we’re going to continue to push with more content and more access to our content.

    Bike+ Is Now The Best Bike In The World

    To the extent, we are having a hard time making bikes fast enough at the current price you would say we don’t have to change the price at all. Of course, we are with our better best strategy. With the better best we can have the premium product, the best product in the world, which the new Bike+ that we came out with this week is. Bike+ is now the best bike in the world and it’s at just under a $2,500 price point. Over time, it allows us to do a lot of creative pricing.

    Right now, the original bike that’s the best cardio machine on the planet loved by millions is under $1,900. From a finance perspective, it is under $49 a month which we’re very excited about. We do think that as we grow the SAM and TAM globally price point for our products is going to matter so we’re getting out in front of it.

    Peloton Moving Toward Subscription Model, Says CEO John Foley
  • YouTube Subscription Fees May Soon Be A Reality

    YouTube Subscription Fees May Soon Be A Reality

    Are YouTube subscription fees almost upon us? A recent report suggests that the oft rumored feature is soon to be announced.

    The Daily Mail reports that Google will introduce a YouTube subscription fee this week. The new initiative will allow channels to monetize their content with direct contributions from fans, instead of relying upon ad revenue.

    The current report suggests that Google will add 25 to 50 channels to the initial rollout of its subscription service. It will also reportedly cost as little as $2 a month per channel, and doing so will provide a few perks to the subscribers. The biggest, of course, is exclusive content only available to subscribers. The videos will also reportedly be ad-free.

    The current rumors, however, don’t address what YouTube intends to offer to non-subscribers. Will subscriber content only be available to those who pay? Or will YouTube allow non-subscribers to watch some content with the support of advertising?

    Alongside channel subscriptions, previous rumors also suggested that YouTube would begin monetizing live events. In other words, users could pay a small fee to watch major live events, like the Red Bull Stratos Jump from last year.

    There’s still too many variables to even think about with a platform as big as YouTube. The announcement is expected to come sometime this week though. We’ll continue to keep an eye for any such announcement, and bring you all the details as soon as it happens.

  • YouTube Subscriptions May be the Future

    YouTube Subscriptions May be the Future

    Reuters is reporting that YouTube may consider selling subscriptions to viewers sometime in the near future. Speaking at the Reuters Media and Technology Summit, Salar Kamangar, CEO of YouTube and senior vice president of video at Google, said that smaller cable channels might have a place on YouTube, and could sell subscriptions through an a la carte option. He also stated that some of YouTube’s “top content creators” want to be able to sell subscriptions as well. Kamangar said the company is talking about subscription options “very carefully.”

    The cable channels Kamangar mentioned are channels that have a small audience, and so don’t command many, if any, fees from cable distributors. These channels would lose little by offering their content directly through a YouTube subscription. Obviously, this is a shot across the bow of the cable industry, which is fighting as hard as it can to not simply become another utility industry, pumping out internet connections to homes the way electricity companies or water companies provide their products. Just this week, the U.S. Department of Justice began investigating cable companies for possible anti-competitive practices with regards to Netflix and Hulu.

    As for content creators on YouTube, it’s likely that few of them would be able to charge subscription fees on their own. Groups of them could team up, though, creating their own channels. Recently, more for-profit YouTube channel ventures have been popping up, such as Felecia Day’s Geek and Sundry.

    I suspect Kamangar said YouTube was discussing the prospect “very carefully” because it knows the uproar that would be caused if YouTube users were suddenly asked to pay for content that used to be free. Still, if YouTube can gather up enough quality content to make it work, it would be another step closer to breaking the cable company monopolies in the U.S. And when that finally happens, premium-quality channels such as HBO can finally be free to sell their content directly to willing customers, even without YouTube.

    (via Reuters)