Subscription models - the future of the Internet (not advertising)

Mon 25 Jun 2018
By John Nayler

At a global scale, so-called "big tech" businesses are raking it in. Some of them are banking huge profits, others re-investing everything. Yes, everything. They have come to realise that delivering videos, music, content, social media platforms, search results or overpriced sexy phones to people on a worldwide basis scales quite nicely. You might have thought that the different cultures might prefer one construct over another but it turns out that at a deep psychological level we are all programmed similarly.

While Google, Facebook and other global internet companies have built very successful business models around advertising, the new breed of major players are changing the game.

Amazon, Spotify, Netflix and the rest of the new breed work on a subscription model ... and why wouldn't they? We hate advertising right? ... and for a small fee, we can upgrade from the free "sponsored" product to the ad-free subscription product.

For these businesses, they are now virtually assured of keeping you on a string for long beyond what you think you might. They play on human nature these now well-developed means:

1. Making choices for you
One of the key outcomes that big internet companies have learned from big data and what they know about you is that it is actually pretty easy to predict other "products", music, movies, etc that you might like based upon your patterns and what others have done before you that have similar tastes.... and we love it.

2. We stick to a choice once made
Once you have selected Spotify over Pandora, Itunes or Google Play, you are likely to stick with this choice and go so far as defending the choice to your friends.

3. It's only $5 a month right?
Apathy is the other thing that works in favour of the subscription model. Once we are accustomed to the $5 disappearing from your credit card monthly, we are unlikely to make the effort required to turn it off.

4. Dopamine is irresistible
Brain chemistry is such that we can't help but want more and more little "hits" from our favourite platform giving as treats. Even more so if they are random. More on that another time.

The resolve:
Subscriber: Know that subscription models are the preference of a smart modern business and once you're in, your subconscious mind will work against you.
Business: Do you have a subscription model?

Welcome to reality
John Nayler