subscription-economy

While sitting in the audience at Zuora’s Subscribed event for customers and partners in San Francisco this week, I couldn’t help contemplate the meaning and progress of what was once a set of words that didn’t roll off the tongue. I am talking about the “subscription economy” — and it’s really something.

The data coming in from a variety of sources shows how rapidly subscriptions have become a big part of our lives, and why not? As I am fond of saying, subscriptions have become the way to commoditize technology and other things so that they can spread to the largest markets possible.

Eighty percent of consumers were seeking new consumption models in 2014, according to The Economist. Also, half of the people in France were moving away from traditional ownership models, and 80 percent of German companies already had addressed the issue of subscriptions.

We spent US$420 billion globally on subscriptions in 2015. Now that’s not huge in a world where the aggregate GDP is $75.59 trillion, but here we’re looking at direction. Subscriptions were a mere $215 billion in 2000, according to Credit Suisse, so we’re still early on the hockey stick. Let’s just say the puck has been dropped.

Quality Equalizer

We once relied on mass production and mass communication to do the commoditization job — and they were somewhat effective, giving us the largest middle class the world has ever seen. Everyone on the planet — except the top 1 percent — wants many of the accoutrements of middle class life, whether that means having an iPhone or a diet rich in protein, or a car, and it’s amazing how many of those elements lead from subscriptions.

However, it’s also worth noting that mass consumerism resulted in products for mass markets that were diluted or a little less capable than the good stuff. Subscriptions aren’t like that; everybody gets the same product via subscription, which means that subscriptions effectively have done an end run around much of the degradation, while increasing quality in ways we wouldn’t have thought of before.

All is far from bliss, though.

More people…