Businessmodel Subscription

With the advent of the Internet and the World Wide Web the subscription business model has really come into its own. A subscription business model is reliant on having a product on offer that consumers want on a regular basis. In the past this has been pioneered by newspaper and magazine subscriptions – the consumer pays a set price to have access to the product.

The subscription model stands to play an increasingly important role as more and more companies embrace online delivery over the internet. As Rappa says “instead of buying a piece of software and installing it on your computer, you subscribe to a piece of software, and pay some kind of periodic fee to have the benefit of using that application” (Rappa 2009). Now we have the ability to charge per day, week, month etc. for access to a product or service or even put in place evergreen subscriptions. Evergreen subscriptions are where the member signs up for a subscription which will automatically roll over on its renewal date hence the term evergreen as it is always in place until the member cancels the subscription.

Our example eBay does have a subscription service but it is a basic high use subscription model in that high use members can opt to pay a monthly fee and incur lower insertion fees, special page features, sales reports etc (ebay.au 2012). A more interesting example of the subscription business model is Moshi Monsters.

Moshi Monsters is a free online game for kids, where they adopt a monster and look after it. They can connect with their friends, make new friends in a safe environment and play games to earn points to spend on their monster (MoshiMonsters.com 2012). But Moshi Monster also uses the ‘bait and hook’ (or Razor and Blades) subscription model (Picker 2010) . In this case only a certain amount of the site content is free but if you want more for example to purchase clothes for the monster or have access to more games and play areas you need to pay an annual subscription. So in basic terms you are given a taster free but all the really good content you need to subscribe to. An overview of the subscription model is demonstrated in the embedded video titled 'Understanding the Subscription Model'.

Understanding the Subscription Model

References:
Ebay Australia, (2012). Subscription Levels. Retrieved from http://pages.ebay.com.au/help/specialtysites/store-subscription-levels.html

MoshiMonsters.com, (2012). Parents Information retrieved from http://www.moshimonsters.com/parents

Picker, R. C. (2010). The Razors-and-Blades Myth(s). John M. Olin Law 7 Economics Working Paper No.532 (2D Series). Retrieved from http://www.law.uchicago.edu/files/file/532-rcp-razors.pdf

Rappa, M. (2009). Managing the Digital Enterprise: Business Models
Transcript of podcast: http://digitalenterprise.org/transcripts/business_models_tr.html

Video - http://youtu.be/LyfTM0zLOvM

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