Could you imagine having to subscribe to every application, every song, every video game, every premium website, and most other forms of content you interact with on a daily basis? Well, the possibility that this will occur is constantly growing, and if it is bound to happen, we should expect this trend to become fairly popular within the next 10 years. While businesses would benefit from the increased control, consumers might not be as appreciative to these change.

The primary reason for companies moving to a subscription-based model is for the increased control of their products. They want this for several reasons: the potential to thwart piracy efforts (which is not likely to happen), the knowledge of how many users are using the company’s products, the ability to offer simpler pricing arrangements, and the fortune of having a continuous revenue stream.

The Good & the Bad

There are benefits for the consumers and companies, but at the same time, there are various things that could go astray. It is almost impossible to make this happen unless a service is developed to handle these subscriptions (more on that later). One must question why we don’t have a system like this in place already, but, then again, we have only been blessed with the iPhone around a year ago. I guess these things take time.

The good points of subscription-based models:

• Subscription-based pricing models can be convenient if done right. For example, imagine not having to type in your address, phone number, and credit card number every time you want to purchase something. This could become a reality if a service was created to assist with managing and paying subscriptions. Also, it would be very nice to have one bill for all my subscriptions.
• A serious problem today is that some developers are not being compensated for their hard work. Piracy has become quite easy for consumers to take part in, and this has harmed many of the companies’ and individuals’ bottom lines.¹
• Consumers could potentially be more secure by using a subscription management service. When you think about it, when you want to purchase something online—which in many instances this material will come from companies you never heard about and places you never heard of before—you usually pay with your credit card. I have done this countless times over the years, and I always question what happens with my data—is it really secure? Well, if a company could securely interact with a service that manages my subscriptions for me, this transaction could be made safer.
• If you are subscribing to a service, chances are high that you will be able to receive technical support. Today, you tend to purchase products from a company at full price. The problem is that many of these companies seem to forget that their products sometimes have issues or require assistance by its users. But if you were subscribing to a product, those companies might be more inclined to provide assistance so they won’t lose you as a customer.
• There is a simple concept of only paying for what you use. This could be applied to a subscription-based model. If a user was paying on a monthly basis—which is why many companies will prefer yearly payment plans—he or she could simply stop paying and end their service. This would be the pay-for-only-what-you-use concept in its magnificent glory.

The bad points of subscription-based models:

• A huge problem that might arise with subscription-based pricing models is that there could be too many subscriptions to manage. People already have bills that they pay on a monthly basis, so why would they want to add more monthly payments? I only subscribe to a handful of services, but, even now, I still feel somewhat overwhelmed by it all. (See “Subscription Management” below.)
• Subscriptions could begin to add up. Let’s say you had to pay $5 a month to play a game like, for example, GTA IV. Doesn’t seem that expensive, right? However, what happens when you also want to play Call of Duty 4, GRID, Madden NFL ‘09, Civilization IV, and Spore? Well, your $5 per month bill is now a $30 per month bill. Now, for simplicity’s sake, this is assuming that the price wouldn’t go lower with time (which it probably would), but even so, it could still add up to the same amount you might pay on a yearly basis. If the price did decrease with time, I could see it becoming better value, but who knows? Maybe developers could add additional content on a somewhat regular basis to keep the price up.
• Software activation is already a pain these days, but could you imagine having to go through a more difficult process if a software was required to connect to the internet to check for a subscription status? Obviously, the software would need to do this on a daily, weekly, monthly, or, at least, yearly basis in order to see if the user is still paying for the software in question. What happens when your internet access is nowhere to be found while on that exotic trip to Africa—that important application you needed to use can no longer be accessed. Again, what happens then?
• Finally, I must mention that these changes are going to happen whether or not we want them to, but I still question if all this is really necessary. Must we deal with subscriptions in the future? Is it only the matter of businesses and developers having more control over their products?

Subscription Management

When a majority of companies decide to go the subscription-based route (which will happen—it is only a question of time), what consumers will need is a way to manage all these subscriptions. It is quite difficult to imagine a person having to pay bills from 10, 20, 40, or more software companies with other existing bills. It can’t work that way. Subscriptions need to be combined into one bill for the sake of sanity.

What consumers need is a service which will easily allow you to add, remove, modify, combine, and separate subscriptions. This service should, ideally, bill you once per month at a time you decide is convenient for you.

The question of how to handle someone who can’t afford to pay for these subscriptions will arise. Well, it’s simple really, you pre-pay for the services! If you can’t pay, you don’t have access to a particular item. On the flip-side, if you decide to cancel your subscription before the end of the month, you should be compensated for the time you didn’t use.

I am very confident that a handful of companies will take on this effort. As a matter of fact, I have a good idea of which companies would dare to attempt this feat on such a massive scale: Microsoft, Apple, Amazon, PayPal, and Google. Apple and PayPal are the two companies that stand out above the rest. Apple is going to become familiar with the concept of subscription-based services after developers begin releasing software on the iPhone. PayPal, on the other hand, would only need to create a dedicated section of their site to handle subscriptions—software developers could add a button on their site or integrate this payment method directly into their software.²

What’s The Point?

What I am saying is that subscription-based pricing models can be a viable option if we are given the tools and services to properly manage these subscriptions. If we are left without these tools and services, the benefits to the companies will remain, but the frustration to the consumers will be prevalent.

I leave you with one question of what you would do if you owned a software development company that is profitable but losing a significant amount of revenue due to piracy. The company I want you to imagine owning is, non-other than, Adobe. If you moved your software to subscription-based options entirely, you could tightly control the software and potentially thwart some piracy efforts. Revenues, most likely, would skyrocket. However many who have pirated your products for years might consider switching to alternatives—doors might open for other companies to take advantage of such a decision. What do you do?