| Richard Feder maintains that the subscription model will gain momentum on the Internet as the memory of free service fades and the utility of new service increases. |
Just as manufacturing organizations are once again adopting a subscription model as a means of pricing product-service packages marketed as solutions, it appears that Internet-based businesses are abandoning it, instead giving away everything from information to music in order to sell advertising. As questions are being raised about the ability of telephone service providers, newspapers, and others to sell subscriptions in the future, I recently asked readers what the future of this wonderful Twentieth Century revenue generator might be.
The response gives hope for those hoping to utilize the subscription model in the future.
"Down but not out" was the verdict of Jonathan Robertson, who went on to say, "The model isn't working for phone and cable companies, not because the model is bad, and not because they aren't providing value ... but ... the implementation at the phone companies is geared around giving more value to new customers than to existing customers. Any company pursuing the subscription model by taking its customers for granted should be pursuing another model."
Another view is that Internet companies will return to the subscription model given their signal lack of success in supporting themselves solely with advertising. Claiming that the advertising model "went bust," one respondent concludes that the "'free' connotation to the Internet is eroding away slowly."
Richard Feder maintains that the subscription model will gain momentum on the Internet as the memory of free service fades and the utility of new service increases. As he puts it, "Value to the subscriber base will increase as the frame of reference in which the subscriber determines value switches away from prior cost." He also suggests that positioning a new service in the prospect's mind as a "free trial subscription" can facilitate the transition.
Is this a case in which the Internet economy is out of step with more traditional business practice? Or are we seeing an irreversible trend in some industries away from the subscription model, in part because of Internet-facilitated competition? What do you think?