The Rise of Subscription Commerce

27 Aug 2021

With this post we begin a series about subscription based businesses and the software technology needed to support them.

The rise of subscription commerce is in plain sight. What was once an isolated mode of consumption is now becoming a mainstay. Netflix and Amazon Prime immediately come to mind, as well as Adobe, LinkedIn, and more recently Uber. Even Google supplements their ad dominated business with subscription revenue.

One would be hard pressed to describe this shift in terms of software’s favorite narrative of disruptive economics. A simple reason is that we already know about subscriptions, have had subscriptions, and so have our parents and grandparents. This type of commerce has a long but unsexy backstory from an earlier age. Whatever we tell ourselves (investors, customers) about the rise of subscription commerce, in some way it needs to emphasize continuity, not disruption.

Historically, the subscription model was not a feat of a charismatic figure, and it did not burst forth to express a grand but unappreciated concept. It is a story in which there are no heroes to emulate nor to become. There is no challenging meta-equation underpinning it all that anyone should look for. Besides missing attractive narrative components that draw talent in, subscription commerce to date lacks definition. This raises some doubt about whether it amounts to a workable problem.

And in a way this makes the subscription space very interesting. There is no doubt that in the future, Big Tech will rely more heavily upon subscription revenue streams, and this practice is at the core of many digital product businesses already. The humble subscription, itself unable to rise to the level of a grand organizing principle, has the potential to help shift markets away from models that burden customers with downsides and inconveniences, the most prominent being the diminishment of privacy that ad-based models are conditioned upon.

We think that this growing and dynamic market is a space where things are happening. Yet today’s businesses that have moved into subscription revenue models are discovering sites of pain, both in terms of business practice and the tech offerings available to select among. In the next series of posts, we will address some of these challenges and offer up some alternatives to go forward successfully in this burgeoning area.