The Subscription Economy Is In Full Swing

Jean Michel Laurent
July 22, 2020
1 min read

In October 2019, Netflix reported 158 million subscribers. Spotify, 118 million on the same date. No doubt about it, the subscription economy is in excellent shape. Each year, the model gains ground — affecting established companies, startups, and individuals. It’s even reaching sectors that are as disparate as fashion and IT.

Consumer habits are changing. Rather than owning a product, the paradigm has shifted in favor of the sharing economy and subscription pricing. These new options allow customers to save money and stay flexible.

The subscription economy in full swing

According to a survey conducted by Harris Poll on behalf of Zuora, 66% of French people in 2019 used subscription services. What’s more, 92% of French people are satisfied with this model and 29% think they will make more use of subscription services within the next two years.

Without a doubt, the subscription economy is in full swing. While some element of “subscription” has long been a part of commerce, we can see that successful subscriptions increasingly involve intangible assets — as digitization obliges. This reflects new consumption habits where the need for property is no longer the prevailing model. Only 9% of French people are today attached to ownership of goods that they use according to Observatoire des Comportements de la Consommation (Consumer Behavior Observatory).

It can be noted that the model is changing towards B2B, particularly in the software release sector. According to a MGI Research study on behalf of Zuora, the software market by prior subscription is expected to reach $ 100 billion by 2020.

Benefits of the subscription model

So, why is it such a success? Quite simply, the price of leasing a service is less costly than buying a product. For example, Adobe Suite would cost around a thousand euros to purchase — not to mention the updates added to the bill. However, an Adobe Creative Cloud subscription is only 60 euros per month and can be canceled whenever you want.

For the company offering the service, financial security is a plus. Retaining customers through subscription pricing also allows better personalization of services. Companies can also ensure more consistent, aligned use of their products and services. By pushing updates live to all users at once, a company can effectively eliminate lost time caused by incompatible files, integrations, and operating systems clashing with out-of-date software. This simplified equation allows businesses to fully focus on the task at hand — increasing productivity and optimizing their products.

The subscription economy is therefore a new paradigm that provides significant time saving, productivity and competitiveness. However, for a company, the switch between a single-unit classic economic model and a subscription model can be complex. Before starting such a service, you must make sure that the existing infrastructure is ready to welcome these new subscription practices