[evildan]

I keep finding myself thinking back to what my wise ol' boss said to me one night while we were working late one night. It was one of those nights where I found myself behind his desk helping him out with his computer and he found himself behind a cigar spouting off the latest business ideas with me.

He said that from a money making standpoint, the future of business commerce lies in subscriptions. The focus of consumers tends to be on price which they associate with value. That is the primary drive to consume; value vs. price.

He went on to say that some subscription businesses could actually charge 1/3 the previous price of their products because subscriptions are generally abused by consumers. Meaning, that consumers are generally interested in the subscription at first then they have a tendency to not use it anymore. If your company has a perishable or renewing items (food, rentals) your in the best spot. By having subscribers that don't use the product, it means free money for your company.

Yes, most subscribers generally lose interest in their subscriptions, and end up buying something they really don't want in order to maintain what they believe to be a value.

The problem with subscriptions, as I see it, is you're taking the consuming power away from the consumer. Think about it. How many subscriptions do you have? Think of them all...

Internet, phone, .Mac, Magazines, Newspappers, Special interest clubs, Health clubs, Car Insurance, Home (Renter's) insurance, Life insurance, book clubs, shopping co-ops, Health insurance, 401K, AAA, Cable (Satellite) TV, cell phone... and let's not forget the biggest subscription of them all... federal and state taxes.

My belief is that for the most part, I am better off not subscribing. How many times do I find myself in need of a tow for my car? In the last 13 years, that would be 0. How much does a tow cost? Probably about $100, but let's go crazy and say it's $500. I would still be coming out a head if I took the money I spent for that option on my car insurance (roughly $50/year x 13 years = $650) and saved it for a rainy day. If I just parked that money in a savings account I could be making an additional 3% a year on it.

How much money do I really spend in music? I don't know for a while there it seemed like I was spending quite a bit, but when I did the math, it wasn't anywhere near $180... (7 songs @ /99¢ per month for 8 months = $55.44). I kind of like the idea of having that power of deciding when to buy and how much to buy. I'm big enough to take a look at my consuming and decide if it's not worth it for me. Oh and by the way, I own all of those 56 songs. I can take them home with me... put them on my iPod, take them wherever I go. When someone asks me where I got the song, I can say... "hmm, not sure... probably iTunes Music Store." I don't have to worry about renewing anything to anyone... it is good old purchasing power.

Not all subscriptions are evil, of course... but they all share some common traits.
1. Easy to subscribe to; not so easy to unsubscribe
2. Tend to alter consumer buying pattern (i.e. NetFlix's limiting number of movies you can have at one time)
3. Very little, if any attention, to the subscriber. (helps promote drop off in interest)
4. Massive amount of attention before renewal time.

Despite what most consumers think, subscriptions favor the business, not the consumer. In most cases the consumer would be better off buying rather then subscribing.