Press subscribe
To make the customer king again
CBusinesses are no longer ‘selling’ their products and services. They just get the consumers to subscribe.
OMMERCE is a-changing. Businesses are no longer “selling” their products and services. They just get the consumers to subscribe. Think Spotify, Netflix and Zipcar. And in Malaysia, Flux. As our brick-andmortar world zips past us into the cyberworld, more pay-perproducts are turning turtle and going subscription. Welcome to the world of access over the hassles of ownership. But not all are headed that way, though. Some uncomfortable others have chosen to live in-between: here, it is a marriage of payper-product and subscription. Amazon is a case in point.
The discomfort is understandable. The future is what happens to a few. Always. The rest pay in cash. But the future can’t be held back either. It will happen sooner than later. The future pays too. According to one estimate, the global subscription economy is worth RM2.2 trillion. Zuora Inc, a cloud-based subscription management platform provider, even has an index to measure the new economy’s growth — think S&P 500 — the Subscription Economy Index (SEI). Business Wire, a Berkshire Hathaway company, has this to say about the subscription economy: it has grown 350 per cent over 7.5 years. Reason: consumers are increasingly demanding access to convenient, digital services over the ownership of physical products, says Business Wire’s Oct 3 report.
Will it apply to physical things like cars? Yes, says Flux in Malaysia, where you get anything from a Mini Cooper to a Mercedes-Benz on a three-year subscription. A shorter subscription period is possible, but comes at a price. For a three-year subscription, a Mini Cooper S Clubman costs RM4,318 per month while a 2013 Merc (S 300L) is RM6,383 per month. Except for petrol, toll and parking, everything else is borne by the vendor. The cars come with a mileage package, though. The standard limit is 2,000km. Moving from limited to unlimited package would cost wads more of ringgit. The economy may be new, but the old saw — there is no such thing as a free lunch — still applies.
Media companies are heading the pay-per-usage way too. As the NST reported on Monday, The Telegraph of the United Kingdom is a good example. It has 400,000 paying subscribers and five million registered users, after switching to a premium paywall and registered-access model two years ago. The newspapers’ next move is to secure 10 million registered users and one million paying digital and print subscribers by 2023. The NST hopes to head that way, too, on a three-part journey: print, e-paper and digital. Though our English reading public numbers may be a challenge, there is no harm in hitching the NST wagon to a star.
If Zuora Inc is right, the subscription model is not limited to one or two industries. It has crossed the traditional Software as a Service (SaaS) industry into business services and manufacturing. GE and Caterpillar are good examples of manufacturers who are giving a thumbs up to access over hassles of ownership. But moving from selling products and services to hawking subscription isn’t going to be easy. It will be more than a reengineering job. In fact, nothing less than a company-wide reinvention is called for. The customer must be made king again. Otherwise, he will unsubscribe.