Ancillary Subscriptions for Non-Subscription Businesses
30 Nov 2021More and more companies whose revenues are not based primarily on subscription commerce are offering subscriptions in specific segments. We explore some examples and ask “why is this happening now?”
As mentioned in previous posts, many companies known for their advertising-based business models are broadening their offerings to include ancillary subscripitions. Let’s look at a few varied offerings and consider the implications.
Twitter Blue is a subscription add-on to Twitter’s consumer-facing timeline. Introduced in Australia and Canada last June, the offering was launched in the US (and New Zealand) earlier in November for a monthly fee of US$2.99/user/month. The benefits to the Blue subscriber include the ability to “undo” tweets before they appear in the timeline, ad-free acesss to articles from specified publications, and the ability to skin and style the client-side twitter apps. The intended audience for Twitter Blue is the power user: the benefits make the experience of using Twitter more pleasant and efficient.
Twitter v2 API This month Twitter also introduced a new version of its API. Access is now classified into three tiers - Essential (free to anyone, retrieve up to 500k tweets per month), Elevated (retrieve up to 2m tweets per month), and Managed (10m+ calls/month, dedicated account manager). Currenly, Managed is the only level which is paid, but the other two levels also contain elements of the subscription model (and a paid Elevated+ tier is anticipated). Users are required to register and indicate their intended use for the API. Access (API calls) are metered and controlled on a regular, monthly basis. The intended audience for the Twitter API subscription is the developer community - a broad swath which includes academics, independent researchers and companies looking to build additional functionality on top of Twitter capabilities.
Facebook Fan Subscriptions - is one of Meta’s first forays into subscription commerce. It allows “influencers” who use Meta products such as Facebook and Instagram to monetize their followings by selling subscriptions. This is a specialized offering: Meta is not offering the subscriptions itself, but is offering its platform (including payments processing) to keep a key audience segment on its products. Meta is fighting Apple’s app store here as the subscripiton management tool of choice - not only is Meta charging no fees to the subscription providers, but it is offering creators direct control of the customer/fan relationship.
These three examples all represent very different kinds of subscriptions targeted at different audiences. What they have in common are:
- each ties a key user segment even more closely to the platform by providing benefits that deepen the customer relationship; and
- the subscriptions bring in ancillary revenue which supplements rather than supercedes revenue earned from targeted advertising.
We believe that the trend will continue and more advertising-first companies will start offering ancillary subscriptions.