Subscription Economy News: Surfair, TripAdvisor, Rocketspace

By Aarthi Rayapura September 2, 2014

 

Excerpts, quotes and highlights from this week’s Subscription Economy news. Some  takeaways:

 

  • Increased demands for flexibility are breaking annual plans up into monthly installments. What would a daily or an hourly subscription plan look like?
  • Lengthy, expensive post-graduate programs are being disrupted by lean professional bootcamps.
  • Traditional “above the fold” media home pages are out, the streaming “river of news” feed is in.
  • As storage costs approach zero, connectivity costs are following suit.
  • The next third of the population will probably get smart phones before they get credit cards, leading to some interesting monetization challenges.
  • Consumers are starting to enjoy “unlimited access for a fixed monthly fee” plans as much as enterprises enjoy usage-based models.

 

 

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Microsoft keeps unbundling. Today the company updated its Word, Excel, and PowerPoint iPad apps to allow users to purchase a monthly subscription to Office 365 directly in the apps. Previously, customers were able to purchase a yearly subscription for Office 365 Home within the apps for $99.99, but it’s now possible to buy a monthly subscription for Office 365 Personal and Office 365 Home via in-app purchase.

 

 

Media home pages are obsolete.   Instead people tend to arrive at article level via an array of referrers – a link from another site, a search engine results page, a post on social media, or a daily newsletter. Indeed a recent design change at Quartz, interpreted as a return to the more traditional homepage, instead reflects the supremacy of the email newsletter. We should instead think about the architecture and design of the likely entry point for 80% of visitors: the article page. Does it work as a place to read, view and watch? Does it work as a landing page? Does it allow the reader to understand where they are in relation to the rest of the site? And does it point to where they might like to go next?

 

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Much like storage, the cost of connectivity is approaching zero. “The cost to connect has dropped so far to the point where I can connect a light bulb economically. When GE began selling flight power by the hour, which was a Harvard business case a dozen years ago, it cost a lot of money to connect that engine. But as a proportion of the total engine cost, the cost was very small. Back then, if I took that same connectivity to an ice cream machine in a SuperAmerica, that was too much money as a portion of the total cost.”

 

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How do you monetize mobile apps in areas where credit card penetration is low? Bemobi is changing the mobile app monetization model for developers of high-quality Android apps through a subscription-based app store, available through wireless carriers.  “In many places in the world, Android app developers face an uphill battle in regards to revenue,” said Pedro Ripper, Bemobi’s Chief Executive Officer. “A key factor is the limited penetration of credit cards which severely restricts initial payments. By offering a strong subscription-based app store, billed to users through their monthly carrier statements, we’ve created a ‘Netflix-style’ service that works extremely well even in countries where credit cards and debit cards are more widely used.”

 

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Subscription boxes go local. “The key to recognize is that the consumer loves to buy within their lifestyle,” says Marshal Cohen, chief industry analyst of The NPD Group, a research firm in the Port Washington, N.Y. Purchasing a subscription box is like treating yourself every quarter or each month, he adds. “It’s the only way to buy a gift for yourself without knowing what the gift is going to be.” Batch (above) sends quality local goods to homesick Southerners from three cities and counting: Nashville, Charleston and Memphis.

 

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TripAdvisor scales its recurring revenue. The company discovered the subscription-fee business in 2009 when it launched Business Listings, which enabled hotels to place their contact information and links on the property pages that TripAdvisor created without any input or permission from the hotels. It’s now a significant percentage of their revenue base. Some 9% of hotel and other lodging listings on TripAdvisor are now tied to Business Listings’ subscriptions, and the company plans to expand its sales force to bring in more subscribers.

 

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SurfAir ramps up. The members-only luxury airline in California, has been making headway with its agile, intelligent business model: unlimited flying on its scheduled, in-state flights for a monthly fee. The number of members has grown to more than 900 from 250 this year, with another 350 on the waiting list, said Jeff Potter, the chief executive. Founding members enrolled for $1,350 a month; the fee will rise to $1,750 on Sept. 1. To meet the demand, Surf Air has ordered 15 new Pilatus PC-12 NG aircraft and taken options on 50 more. “It’s not cheap, but it’s not out-of-this-world expensive,” says customer Mark Alioto. “The first couple of times, it was disorienting because it was so easy. ” And he’s not put off by flying with strangers. “The people you meet on the flights are so interesting,” he said. “It feels like a flying TED talk.”

 

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Why developers need finishing schools.  RocketU is a 12-week bootcamp, based out of office rental / start-up incubator Rocketspace,  for developers that’s designed to immerse students in a hands-on environment to help develop business and corporate work experience and hone tech skills in preparation for a career, says Nick Almond, vice president of education, RocketU. Tony Scherba, CEO and co-founder of Yeti, a small design and development shop that works with Silicon Valley start-ups, designed RocketU’s curriculum to address what he saw as a major obstacle in the process of educating developers – that current two- or four-year degree programs didn’t do enough to prepare students for development in the real world.

 

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The New York Times’ paywall has plenty of room to grow. At its current pace, the Times is still adding about $20 million a year in digital subscription revenue. It will approach $170 million for all of 2014, and will hit $200 million by 2016, if it can muster 8.5 percent annual growth, which is hardly unrealistic.

 

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Unlimited concerts for $25 a month. Introducing Jukely.

 

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