The subscription business model is a business model where a customer must pay a subscription price to have access to the product/service. The model was pioneered by magazines and newspapers, but is now used by many businesses and websites.
The first UK subscription newsletter was the London Property Letter launched in the early 1960s by Sylvester Stein, previously editor of South Africa's Drum magazine. The London Property Letter utilized the standing order payment where the subscriber signed up for a continuous annual payment from his or her bank account. Around the same time, the Consumer's Association launched Which? magazine using the same standing order techniques.
In 1982, Running magazine was launched by Sylvester Stein to cater for the new jogging and running craze that had arrived from the USA. The standing order subscription model was adapted for use on this and other consumer news trade magazines by Peter Hobday, appointed publishing director of Running magazine by Sylvester Stein in 1982. Peter Hobday increased the subscription sales of Running Magazine to become the highest circulation title the athletics field. Running magazine eventually evolved into Runner's World.
Rather than selling products individually, a subscription sells periodic (monthly or yearly or seasonal) use or access to a product or service, or, in the case of such non-profit organizations as opera companies or symphony orchestras, it sells tickets to the entire run of five to fifteen scheduled performances for an entire season. Thus, a one-time sale of a product can become a recurring sale and can build brand loyalty. It is used for anything where a user is tracked in both a subscribed and unsubscribed status.
Membership fees to some types of organizations, such as trade unions, are also known as subscriptions.
Industries that use this model include mail order book sales clubs and music sales clubs, cable television, satellite television providers with pay-TV channels, satellite radio, telephone companies, cell phone companies, internet providers, software providers, business solutions providers, financial services firms, fitness clubs, and pharmaceuticals, as well as the traditional newspapers and magazines.
Renewal of a subscription may be periodic and activated automatically, so that the cost of a new period is automatically paid for by a pre-authorized charge to a credit card or a checking account. In the U.S., recurring card charges must be disclosed in writing to the cardholder at least 10 days before each charge.[1]
A common model on web sites, colloquially becoming known as the freemium model, is to provide content for free, but restrict access to premium features (for example, archives) to paying subscribers. In this case, the subscriber-only content is said to be behind a paywall. The razor and blades business model (also called the bait-and-hook model) is an attempt to approximate the subscription model, but with a formal agreement by both parties.
Types of subscriptions
Effect on the vendor
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