Mike Slaats

Why you should focus on the subscription model


Subscription models: Obviously something I’m interested in given the fact I run a SaaS business, but software-as-a-service and these payment subscriptions are just one of the many subscription models out there. Last week, I was looking at my credit card statement and almost 90% of all charges were made without me having to pull up my credit card. There’s subscriptions on services such as Netflix and Spotify, I have a couple of membership fees such as Makerlog, which is an online community for makers, and Swipe Files, which is a newsletter I really enjoy, and there’s subscription for apps and software I’m using and these charges happen automatically, right, just because I submitted my credit card once, and you know this made me wonder.

While it’s obviously great to have a subscription with Spotify, to have unlimited access to all of my favorite music, I mean, because of it, we never have to buy an album in the store physically, it’s also kinda fascinating to me that we have so many subscriptions nowadays for different services and products.

Access over ownership?

I think this is partly because we’re just not that interested anymore in really owning stuff. We’re just so much more into having more access to stuff to meet our needs in a wider perspective. I mean, we would rather have access to all music for 9 dollars a month instead of buying just one album. But we do not own that music physically like we did before, and that’s ok.

vinyl records

So what fascinates me is that we’re really pivoting into a more and more subscription-based world where access is more important than ownership.

I read a tweet the other day that stated: “The world is moving from products to services” and I think that’s true because more and more consumers are -as I said- favouring access over ownership.

Win-Win for both consumer as company?

The most interesting thing about these subscription models is the win-win for both the consumer als the company. Think about it: the consumer has more access for a relatively lower fee, and the company has a steady income stream plus all the data to optimize its products and services in the best way possible.

And with that, I have to think back about a section in the book ‘Subscribed’ where they analyze the success of Netflix in comparison to traditional Hollywood film studios. Netflix has a steady income streak of millions of subscribers each month plus it has the data of what’s popular among its audience.

Netflix subscriber growth

So they actually know how to invest their money. So one example is House Of Cards, at the time, they knew this type of series and these actors were popular and thus it became a successful formula.

This is something traditional film studios don’t have. They have to take big risks with even more financial risks as well. So one of the best things Disney could do was launching a streaming service as well, following Netflix’s good example.

Physical products try to come up with subscriptions as well

And not only digital products are shifting towards subscription-like models. Think about Apple’s care service, or, even companies like Starbucks. They were relatively fast with launching a sort of subscription model because they could see the benefit of having loyal customers and collecting data.

Because when they launched their app, they made it possible to pre-order your coffee real easily through the app, and the consumer could also add favourites, see payment histories, and locate Starbucks shops nearby, which all immediately resulted in more sales, but not only that, from that moment on Starbucks was collecting valuable data from its customers. So it could see, for example, which products were the most popular in certain regions or even within certain populations.

So why I think you should look into subscription models, being it a subscription for your newsletter on Substack, or a SaaS product, a Micro-Saas product on platforms such as Shopify, or even something like getting fans and followers for your work on platforms such as Gumroad, I think – like we just discussed – that you’re chances of being successful are going to be so much higher when you have both the monthly recurring revenue as the data that subscription models can bring you.

Because companies that know what their customers want and how they want it, and besides that, also have the financial security of those subscriptions in order to actually build it, will definitely succeed over companies that think how their product should look like.