The Year in Subscriptions, 2021
23 Dec 2021Four major 2021 trends in subscription commerce that we will continue to follow in 2022.
Subscription commerce is unglamorous and its mechanics are taken for granted. Yet, it remains foundational for most business on the internet including current hot topics like the metaverse and web3. While subscriptions lay just beneath the surface of the major tech industry news, occasionally, the topic surfaced in the headlines. As the curtain falls on 2021 and rises on 2022, here is our take on four major trends in subscriptions.
Subscriptions have become more ubiquitious than ever
To demonstrate that subscriptions are everywhere as one of the primary business models of the digital era, one has to look no further than the investor presentation submitted to the SEC for Donald Trump’s SPAC. The slide deck regurgitates standard tech industry jargon in an attempt to demonstrate bona fides to launch a major media service. The two major revenue streams highlighted are advertising for the social media portion of the enterprise and subscriptions for streaming media. The point here is that subscriptions pop into the mind immediately as one of the two ways (along with adversising) to float an online start-up media business.
Subscriptions have spread to companies whose primary business model is advertising
As discussed in an earlier post, ad-supported social media companies such as Facebook and Twitter have started to offer ancillary subscription products. These products are varied and address varied market segments (eg. developers, power-users) and tie those users even more closely to the company and its products. In each case, the ancillary subscription addresses an end- or business-customer need not satisfied by the core product’s reliance on ad-tech.
B2B Companies are increasingly jousting over ownership of the Subscriber Relationship
One of the primary benefits of subscription commerce over one-off transactions is the ability to manage a customer relationship for the longer term and to leverage that relationship to sell add-on or additional products. Companies providing technology used by other companies to sell subscriptions are struggling with how much of that ownership should belong to the primary seller and how much should remain with them.
One manifestation of this is evident in the Epic Games v. Apple litigation. The judge, while agreeing with Apple’s arguments about its control over App Store purchases, ordered that the tech giant allow companies selling on the platform to communicate directly with end users including about other methods for purchasing subscriptions. Apple’s motion for a stay of this provision was initially rebuffed, but then sustained by an appeals court. Litigation is ongoing.
Other platform and tools providers took a different approach, allowing their business customers to build and monetize customer relationships. One example of this is Facebook Subscriptions (originally called Fan Subscriptions) which allows “influencers” to sell access to premium content; another one is Discord which is currently rolling out “premium memberships,” a way for communities to create a paid subscription tier with paywall-protected content.
Paid Newsletters and the Democratization of Subscriptions in “Print” Media
In the world of journalism, the enablement of paid email newsletters catalyzed by Substack has started a revolution. Substack (and other tools like it) empower entrepreneurial journalists to create subscription businesses that in a few notable cases are quite lucrative. The subscriptions these tools support are technically basic, but Substack helps those on its platform with almost all aspects of running a small media business including financial, legal and editorial. Most importantly it shares subscription revenues with the newsletter operators (who keep 90 percent).
This trend is important not because the subscription newsletter model is applicable to all businesses, but because we believe that it will encourage entrepreneurs in other industry verticals to create platforms and solutions which will provide similar comprehensive support for subscription commerce. This emerging area is one we will follow with great interest in 2022.