The sense of media ownership has been muddled in today’s highly digital business world. In the past, individuals often went to a retail store and physically purchased a CD if they wanted to listen to new music. As technology has advanced, however, the need to travel to a store has slowly dissipated, allowing people to download and listen to digital music instantly.
While this has made life more convenient for the consumer, it has also introduced a lost sense of ownership, according to a report by MusicRadar. As a result, the idea of purchasing digital songs and CDs is less valued than it was in the past. This has led companies to experiment with different ways of distributing products, including the subscription commerce model.
How consumers are reacting to subscriptions
Subscription services are becoming more popular, especially in the digital music industry. Since individuals are no longer purchasing physical CDs, the lower recurring payments make more sense to many consumers, MusicRadar noted. In most cases, companies deploy a monthly subscription offering, allowing customers to have limitless access to music.
These business models appear to benefit both the end user and the vendor, as seen in the success of services like Spotify and PowerFX’s Soundation Studio, the news source reported. In the case of PowerFX, the company wanted to work off a freemium model and develop different pricing for varying offerings.
“This gave us a good idea of what our users would like and how much they could pay,” said Bil Bryant of PowerFX, according to MusicRadar. “Although we also have non-subscription-based offerings, our monthly subscription offering is our most successful.”
A separate report by Crain’s Chicago Business echoed the growing prevalence and success of subscription commerce. By leveraging a subscription model, companies can provide a convenient experience for customers while simultaneously having the ability to track and predict recurring revenue.
“It’s a proven customer acquisition model [but] it’s also about motivation and convenience and helping people actualize their intentions without having to get their butt off the couch and go buy the stuff,” said Troy Henikoff, co-founder of Chicago startup incubator Excelerate Labs, according to Crain’s Chicago Business.
As more companies embrace the subscription lifestyle, it will be increasingly important for organizations to utilize a subscription management platform that enables decision-makers to monitor usage more effectively, allowing them to make adjustments to enhance customer satisfaction.