How can subscriptions fail?

An analysis of the subscription ecosystem, the benefit for users, and why subscriptions can fail.

Have you ever subscribed to a music streaming or film streaming service? Ever used a free trial for anything? My estimate is everyone reading this will at some point in their life be a subscriber.

In 2016, as startups were shifting to alternative (way better) payment services like Stripe, Apple and Google got up to speed and updated their subscription revenue split from 70:30 to 85:15. Monetisation has rapidly shifted in recent years — from single-purchasing (in-app purchasing), ad-supported or paid-apps to more lucrative subscription models.

Subscriptions are big business too. At the time of writing, Dropbox is valued at $7.5bn+, Spotify $26.5bn+ and Netflix $122bn+. From regular payments (weekly, monthly, annual), automated billing of customers, less one-off purchasing and a higher lifetime value, the value to business is clear… but what about the value to user?

To understand the value of subscriptions, I analysed over 50 subscription services and produced 5 main categories of benefits. It is important to note that subscriptions can offer a combination of these benefits, but tend to have 1 at the forefront.

These services include film streaming, music streaming, news, media, magazines, science journals, articles and learning courses.

These services include quick delivery, auto ordering (replenishing), auto billing and flexibility.

Cost-saving benefit compared to single purchasing. % off price if you are a subscriber

These services include office suite software, cloud software, storage, creative software, accountancy software, marketing and development software.

These services provide a specific niche, novelty or delight, such as beauty boxes, craft stationary, pasta delivery, creative marketplaces, makeup sample boxes, skin moisturiser samples, craft beer, wines, baking boxes, tights, socks.. the list is endless.

When services have an aggressive light-box pop-up demanding you to subscribe the moment you land on a page.

Think about it — would you pay a restaurant bill every month.. from outside of the restaurant you’ve never been to before going in? Without even smelling the food, tasting, reading the menu, knowing what you’ll get? Not demonstrating the value of subscribing is a strategy to put off anyone.

Another reason why subscriptions can fail is their benefits decay overtime. For example, a film streaming service has a limited film library. Users will unsubscribe if content dries up. Unless there is new content, the value of remaining subscribed reduces.

Not every product or service needs a subscription model. A bespoke furniture or wedding dress shop with a low purchase frequency for example can survive with single-ordering. There must be enough benefits to create value

A free trial/tier or discounted first try is one of the best ways of encouraging new users to try a service and familiarise themselves with how it works. A user will understand the value of remaining subscribed when their need has been validated.

Here’s a breakdown of some successful subscription services and their initial offering to demonstrate value:

The best subscription services retain their value by keeping the user benefits fresh. For example:

Content — new and exclusive films, music, articles, exclusive content
Convenience — maintained reliability, even more convenience option
Cost — maintaining low cost, affordable, more savings and deals
Software — new features, improvements, reliability
Niche — new surprises, delights and novelty

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