Every week, we bring you the top stories and analyses from the global Subscription Economy.
Subscription Models Can Inspire Innovation in Stagnant Industries
Excerpts from an article by Serenity Gibbons in SFGate
Innovation has taken on renewed importance for many businesses. In fact, McKinsey & Company found that more than 70 percent of senior executives expect innovation to be a top driver of growth for their businesses. However, 65 percent of those same executives lack full confidence in their ability to fuel innovation.
The subscription model is designed to help brands shake loose the cobwebs by reorienting them around the customer, not the product or service. A company that centers itself — and its business model — around customers will stay self-aware, making failure much less likely.
Tien Tzuo, the co-founder and CEO of subscription management platform Zuora and the author of “SUBSCRIBED: Why the Subscription Model Will Be Your Company’s Future — and What to Do About It,” explained to Bloomberg that every industry can benefit from the subscription model. Nontraditional businesses have turned to the model to become successful, but it requires them to rethink their customers. Manufacturing, he says, has declined in both production and employment for half a century, but it’s undergoing a resurgence because brands are realizing that everyday products can become something else — say, hardwood floors can become smart floors driven by sensors — and can provide the background to the many services attached to those products. It’s made possible thanks to the data these subscription platforms provide.
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SiriusXM Posts Record Revenue, 300K New Subs In Q3 Earnings Report
Excerpts from an article by Dan Rys in Billboard
SiriusXM has a lot to celebrate in its earnings report for the third quarter of this year: at $1.5 billion, Sirius’ revenue jumped six percent over the same period last year, and set a new record for quarterly revenue for the company. Driving much of that growth was a boost of 298,000 additional self-pay subscribers for the quarter, bringing its number to 28.5 million self-pay subscribers. In total, Sirius ended the quarter with approximately 33.7 million total subscribers, according to its filings with the SEC.
This was the first quarterly report since Sirius announced Sept. 24 it had reached an agreement to acquire Pandora in an all-stock deal worth $3.5 billion, which the company expects to close in the first quarter of 2019. That deal would create a combined internet radio conglomerate that would have brought in just shy of $7 billion in revenue in 2017.
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How car subscription app Fair wants to disrupt the market for car loans using subscriptions
Excerpts from an article by Trent Gillies in CNBC Markets
To buy a car, an auto loan locks you in for 5 or 6 years. A lease is a shorter term alternative, but it’s still a 3 year deal. However, there’s a third, even more flexible option: A monthly subscription.
Enter Fair, which is two-year old startup where you choose a used vehicle, get approved and complete the transaction — all on your smartphone app. The service falls somewhere between a long-term car rental, and a shorter term car lease. Today, Fair is available in 22 cities and 12 states, with plans to go national by year’s end.
“What we’re doing is giving mobility without going into debt with a car loan,” Fair founder and CEO Scott Painter told CNBC’s “On the Money” in a recent interview. “Americans are already at a place where we understand that we pay for what we want to use,” he said, adding that Fair promotes the idea that a car “doesn`t have to require this big burden of debt.”
It’s an idea that’s already got some adherents in car manufactures like BMW, Volvo and Cadillac, all of which are testing their own auto subscription models that give customers more flexibility to acquire new vehicles.
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Generation Rent: Subscription Models In Consumer Electronics
Excerpts from an article by Mark Burgess in MinuteHack
Subscriptions are nothing new but in the wake of the financial crisis, millennials, the first generation of digital natives, have given rise to what is being called a “sharing economy,” increasingly opting for access over ownership. This trend has grown dramatically and the e-commerce subscription market is expected to be worth £1 billion in the UK by 2022.
So how can consumer electronics brands and retailers tap into the new trend? Curated experiences, personalised to consumers’ interests and needs are key to driving growth. Taking the three categories into account, consumers fall in three corresponding camps: those seeking to streamline purchases of products they do not want to have to keep track of (replenishment-based), those looking for recommendations they wouldn’t have thought of themselves (curation-based), and those interested in things that are not widely available to the public (access-based).
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For more on what’s making news in the Subscription Economy, check out Zuora’s Subscribed Magazine!