Subscription Economy News – Week of 4/1/2019

By Stephanie Li April 4, 2019

Every week, we bring you the top stories and analyses from the global Subscription Economy. 

Charles Schwab Now Offers Investment Advice Digitally via Subscription
Excerpts from an article by Dana E. Neuts in Subscription Insider

Last week, Charles Schwab joined the subscription economy, offering investment advice digitally via subscription. The company previously offered this as a fee-based service called Schwab Intelligent Advisory, charging clients an advisory fee of 0.28 percent. The new subscription-based service is called Schwab Intelligent Portfolios Premium, and it builds on the company’s free, more basic 24/7 digital investment service called Schwab Intelligent Portfolios.
Now, rather than paying an advisory fee, Schwab Intelligent Portfolios Premium will pay a one-time initial fee of $300 for planning and a $30 monthly subscription fee, billed quarterly. Using Schwab Intelligent Portfolios Premium requires a minimum investment of $25,000.

“Cost and complexity are two of the biggest roadblocks to accessing financial planning, and our goal is to break down those barriers,” said Cynthia Loh, Charles Schwab vice president of digital advice and innovation, in a March 28 news release. “These changes are a result of client feedback and our commitment to meet consumer expectations for simplicity, transparency and value.”

“Subscription-based pricing is second nature to many of us who pay this way for other forms of ongoing access and guidance – from streaming media services to fitness and personal training memberships. We think people should have the opportunity to pay for financial planning the same way,” added Loh.

Read the full article in Subscription Insider.

Reebok is launching a new membership program to build direct customer relationships
Excerpts from an article by Suman Bhattacharyya in Digiday

Reebok is angling for a deeper relationship with its customers through a tiered loyalty program that offers free shipping and returns, VIP customer service, events, training sessions and other personalized offers.

On Tuesday, the company launched Unlocked, a new tiered member program that quietly rolled out on Reebok’s site last month. For Reebok, it’s a competitive move against newer brands that have had a head start on loyalty programs like Lululemon or Under Armour. It’s an effort to grow sales, build customer relationships, and get additional feedback as it evolves its product selection.

Customers can sign up for the program by creating a profile on Reebok’s site. They can gain points by buying products, but customers also have opportunities to build reward points balances just by interacting with the brand, including reviewing products, posting to social media platforms about their experiences with products on Facebook, Instagram and Snapchat, and going to events. In return, customers get benefits like free shipping and returns, training sessions, early access to products, invites to exclusive events, and personalized customer service. Through experience-based rewards, Reebok is encouraging customers to offer more information on their preferences, so it can tailor rewards and offers to members’ needs. ReebokOne, the brand’s trainer network for Reebok-certified fitness professionals, is also seeing benefit updates with the roll out of Reebok Unlocked.

The profiles the company wants to build are an effort to acquire more customer data to personalize loyalty offers and get feedback to inform future product releases.

Read the full article in Digiday.

Could Subscription Save Utilities?
Excerpts from an article by Gordon Feller in T&DWorld. 

It’s no secret that utility companies are searching for ways to boost profit margins at a time when electricity prices are low and demand is flat. The headlines about Pacific Gas & Electric Company’s (PG&E’s) bankruptcy in January 2019 coupled with similar stories from 2018 — like Sempra Energy investors demanding the company halt new growth efforts and CenterPoint Energy’s acquisition of Vectren Corp. — shows that utilities are feeling the heat.

Today, many subscription and as-a-service startups like Sparkfund, SmartWatt, Metrus Energy and Redaptive have emerged in the energy space. These businesses buy and install energy-efficient technology like LED lights and electric vehicle charging stations in a customer’s space and maintain it over the length of the contract term while customers pay a fixed, monthly fee.

“Subscription removes the key barriers that traditional financing options present for the commercial real estate sector without compromising environmental or financial sustainability,” said Asher Burg, chief revenue officer at Sparkfund. A subscription doesn’t involve upfront capital, so it has no negative effect on an organization’s balance sheets. Monthly energy bills plus the subscription cost are generally lower than before and the organization can put its capital elsewhere.

Read the full article in T&DWorld. 

Music Is Finally Making More Money Than It Was In 2007
Excerpts from an article by Amy X. Wang in RollingStone

After weathering decades of decline, the global recorded music industry saw its fourth consecutive year of revenue growth in 2018, according to the latest annual review from the International Federation of the Phonographic Industry (IFPI). The IFPI reports that music sales from around the world topped $19.1 billion last year — finally rebounding enough to eclipse the $18.4 billion made in 2007.

The 2019 “State of the Industry” report, released Tuesday, finds that of the $19.1 billion earned in 2018, nearly half (47 percent, or $8.9 billion) came from ad-supported and subscription music-streaming services. Streaming revenues overall swelled 34 percent from 2017 to 2018, and paid/subscription streaming rose 33 percent. Physical formats like CDs, meanwhile, dipped 10 percent, and digital downloads fared even worse, tumbling 21 percent.

The consumption format trends are all in line with what’s being observed in the U.S. music market: shrinking physical and digital album sales, paired with a continued boom in streaming. On an international scale, some regions — North America, Latin America and Asia — are contributing more to industry regrowth than others, but the common thread among music fans in those countries is a tendency to tune in via music-streaming services. Because of streaming, digital sales of music (referring to paid streaming, free streaming and downloads all together) crossed the $10 billion mark for the first time ever.

Read the full article in RollingStone

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