The end of the subscription era is coming
nickfthilton.medium.com
nickfthilton.medium.com
I am completely unconvinced. The fact that the "average/median" income from these models is low is completely unsurprisng. We should expect that the vast majority of the income would go to the very top performers. This is not an indication that subscription doesn't work, just that it's going to end up looking like acting, music, and professional sports. Those are all real careers that have persisted for a very long time where the "average" wage is extremely low.
This article does a bad job clearly stating what the author thinks the problem is (just vaguely gesturing at average wages without explaining why that should matter), doesn't suggest an alternative at all and instead seems to snidely be sniping at non-mainstream journalists and creators.
I am deeply unimpressed.
Moreover, online creators don't always have one source of revenue. This practice is employed widely by YouTubers: they supplement their ad revenue with merch, patreon, Twitch streaming, and so on.
The average earnings on a single platform mean absolutely nothing.
Subscriptions are nothing new. Those subscriptions (short of cable tv) would be nothing unusual 100 years ago.
His examples of beer and cinema are odd as I current consume both, neither through a subscription, however mail order wine clubs date back 100 years.
What is new is the subscription to things you already own, the “heated seat” debacle for example.
Yep, and that is what’s going away. BMW recently decided to stop offering heated seat subscriptions.
Enabling additional functionality (or limiting it) for hardware you've already purchased isn't unheard of in business products--including computers--where the unit margins support it. But consumer unit margins are usually thinner and most consumers don't really accept it as a "fair" practice.
And when I was an analyst, many people were always surprised to hear all the games that IBM played with mainframes (and to a lesser degree with POWER servers) to sell you the same compute capacity that was cheaper when only used for certain workloads (like Linux) or that was inaccessible until activated "on demand."
Heated seat subscriptions are bad because by not paying for them, the heated seats are objectively costing you. You are paying for extra weight, streets are paying for extra weight, materials are extra mined and produced so the environment is paying for extra weight. Etc.
It is directly and indirectly objectively negative for you to have heated seats that you don’t want and are not subscribed for.
There are also new truly useful features that people have come to expect that doesn’t work well with packaged software. Online collaboration, syncing across devices, etc.
Supports the latest iOS version...
Meanwhile, Windows and Linux focused a lot on backwards compatibility. Not perfect, but you can trust that 99% of software from Windows XP onward will work on Windows 11 with zero tweaking. Microsoft Word '00 and Adobe's CS1 suite (2003) were complete packages sold at a single cost and should still do their job in 2023.
>There are also new truly useful features that people have come to expect that doesn’t work well with packaged software. Online collaboration, syncing across devices, etc.
That is one fair point. Featues that require upkeep of a server make sense to monetize as a subscription.
Subscribe to software that is an ongoing part of my regular workflow(s) and is regularly being enhanced? I'm mostly OK with a subscription to that--see Lightroom/Photoshop for me.
Subscribe to some utility I maybe pull out for a task once a year? Nope.
An ongoing stream of smaller payments just seems like a natural way of paying for an ongoing service, even if the benefits are weighted to the vendor.
I have no problem paying for updates, as long as the product would keep working without an active subscription (what happens if there’s no connectivity, servers are down, the provider goes bakrupt or change its terms?)
Be honest.
But I guess Pandora's Box was long opened on that.
Some credits based system where you purchase hours or articles and if your account has a rebuy threshold, it auto charges you. The rebuy would be opt-in.
Brave content creators. https://creators.brave.com/
> Why hasn’t it taken off?
I wish it would gain more website adoption because it works well to tip content creators and is convenient for me as a consumer.
At a low interest rate, the time value of capital is low - a company can defer revenue almost indefinitely with minimal cost. Hence, a subscription business like SalesForce can spend handsomely on onboarding, and expect to make money back over the course of 5-10 years. To a certain extent, the same applies to ad supported business models.
If interest rates are higher, then a lump sum upfront payment may be a better bet. This may effect how software is written as well as how it is purchased.
Or we'll just see a steady increase in subscription costs.
Maybe it's location dependent...
I live in an European city, I have multiple butchers, bakeries and fruits and vegetables shops within walking distance.
My area is most certainly not an upscale area, quite the reverse in fact.
I mean, it should matter. if you can't make a profit off a subscription, you don't do business. Hence, the "end of the subscription era"
>This is not an indication that subscription doesn't work, just that it's going to end up looking like acting, music, and professional sports. Those are all real careers that have persisted for a very long time where the "average" wage is extremely low.
it was low but still livable. The bigger problem is that minimmum wage itself isn't a living wage anymore, and subcriptions aren't even close to meeting that anymore. This may not matter to hobbyists, but if you ever had hope of high quality content then you're going to end up in a desert. Or fixated on professional organizations who have negative incentive to properly deliver that content.
"Markets can remain irrational longer than you can remain solvent."
While I think the author does a good job pointing out how unsustainable this business model is, predicting the end of the subscription model seems a large leap. Given that the author doesn't frame the discussion with a solid prediction, this article comes across as a "it doesn't make sense to me" rant with a little bit of embellishment to predict a downfall at some unstated time in the future.
[1] https://quoteinvestigator.com/2011/08/09/remain-solvent/
The writers constantly writes about averages. Digital economies almost always follow heavy tailed power law distributions for which the mean is a completely worthless statistic.
The top 100 or whatever creators in any market are clearly making it work nicely. The rest of the chumps are merely trying the market. How the game works is: you invest person time/money to try something. If it catches (which it almost surely will not), you will do very very well. If it doesn't, you go do something else. It's akin to playing the lottery, but maybe with a bit higher odds at succeeding.
More people will never make a profitable career out of writing simply because there aren't any more readers to read all the stuff that's being written. If the top 1000 or so writers can approximately satisfy the reading needs of all the people in the world, the rest of the writers are not needed and they will not make any money no matter what monetization system is being utilized.
Not so sure I agree with you 100% on your police-work there, Lou.
What substacks and podcasts have shown is that some "thought leaders" can make a massively lucrative living independent from the newspapers, and more than they could make with the newspapers. But none of this applies to writers of news. News writers still need the news organizations, and the subscribers of the newspapers, to support them.
The author talks about "writers" in general without making that crucial distinction. Hard news writing is mostly a thankless job. It rarely provides the opportunity to build a "personal brand" like opinion writing does, unless you're Woodward and Bernstein breaking Watergate. Even someone like Glenn Greenwald, who has broken some huge stories like Snowden, makes most of his money from spouting his opinions online rather than from breaking hard news.
you're close. Ads don't make money, ads do.
To clarify: Being sponsored directly by an ad can make you almost as much money as tha ads you get from the Youtube system. So all those RAID SHADOW LEGENDS ads you see from gaming youtubers? Yeah, odds are even the tiny (10k subscriber) channels can make a few hundred off of that pitch.
Patreon is decent, but it's another stream of income you need to put work into to really pay off with. Those who treat it as a donation box don't get too much. Swag is really nice but you need a decent following first. You probably already make a decent side hustle from YT ads alone by the time you consider merch.
Yes, yes, no. Folks' perception of Substack/ Youtube/ Twitch aren't shaped by looking at 100% of the producers, or even 50% of the producers: folks are overwhelmingly focused on the top 10% (and narrower), so their perception is shaped by the disproportionate success of the few.
To rephrase, the bottom 50% of the production group do not have 50% of the audience -- they may not even have 5% of the audience. Their lack of success isn't being seen broadly enough to shape folks' perceptions.
Also, millions of people buy lottery tickets when only a handful win more than $20.
(possibly combined with some or all of the options operating on a token model rather than a 'get exactly all of this' one)
Note that I'm only endorsing this so far as it seeming -possible- and not necessarily -good- or -successful-, and assuming somebody does try it your guess is at least as good as mine as to how it'll turn out.
I think there’s a lot of value in being able to delegate to someone who knows a particular field the ability to say “hey, these are the people you should be paying attention to”. I could totally see this being used both from a “here’s people who think like I do” perspective, and others providing a more adversarial version with commentators from all sides of a field.
I'm sure if substack actually do something like this, they'll give it a little more thought than I just did, of course.
It's a model I'd be more willing to try than subscriptions to individual apps, although its OS and app offerings do not align with my interests.
Micropayments and tokens will gain more adoption but it'll be more like a Costco Membership.
Companies still love the fact that subscriptions give them longer lead time insight into consumer behavior. That part isn't going away anytime soon as investors love that data.
Yeah, I'm thinking no, the era of the subscription is just getting started.
I mean, who needs to subscribe to a newspaper that is crammed with unactionable whitterings or the views of a single author?
Maybe if it was £1pa and the author managed to write something useful each month it might represent value for money, but the thought of paying any more for the opinion of a single person seems absurd.
Amazon Prime is probably mostly workable model as long as you keep raisin price and making offering worse and including the actual costs in item costs. Or simply don't pay enough to where ever you get content.
It kind of seemed like they were saying "it is [or will soon be] unsustainable to try and make a living out of being a Substack writer," but I would want to know how many people enter the platform with that goal in the first place.
Twitch, YouTube, Soundcloud, good-old-fashioned blogging, I'm sure you could name several other pursuits that are in a similarly unprofitable position for the average content creator. I would wager most people don't start out trying to make a living on these platforms.
Maybe the point is that there are people who are just scraping by on these platforms who will soon have the rug pulled from under their feet when consumers wise up to how much money they're throwing away to subscriptions? That didn't come across too clearly to me, though.
That aside, I’m fine with paying a yearly subscription that is roughly 10% of the price I would be willing to pay for a one-time purchase, based on my average personal operational lifetime for an unchanged piece of software. The issue is subscriptions whose prices exceed that.
So ... don't?
It's just one model for selling software. Another one is once-off purchases.
If you can find people to pay you a monthly fee for your application (whether phone, desktop or other), good on you! Someone else may decide to just charge that once-off fee, that you get over 12 months.
After all, even with a subscription model, you aren't going to maintain something forever unless a significant portion of your subscribers remain.
Even if someone is paying you to maintain something forever, be honest, how long will you take their $1.99/m? You need a large enough number of someone's to pay you monthly to maintain that software.
There's risks and trade-offs for both sales models. Charging a small monthly fee makes it easier to acquire users, but that ease means that someone else charging a small monthly fee is losing those users (and one day you'll be that someone else losing users too).
Charging a once-off fee means that you get your money upfront, you have no further costs for that product, and the customer gets no additional value over and above the value they got on day 1. The downside is that you'll make less money off a good product than with a subscription model.
> . Mobile platforms really forced the hands of developers here. Windows will happily run 30 year old software — you could actually “finish” software and move on to the next project. iOS and Android won’t run apps from 5 years ago. Their store policies constantly change and you have to frequently keep up with new agreements lest your store listing be removed. And of course your app will be downranked into oblivion on the store search if you’re not charging a fee — why would the App Store promote apps that don’t make money for the App Store owners, and why would they promote one-time payment apps over subscription apps?
It sounds to me like your biggest beef with once-off sales has to do with products that are mobile apps. Maybe you don't already know this, but mobile apps are the worst place to try to make money with creating software products. Mobile apps are complementary to some other product (your bank provides a free app, etc).
If you want to sell software, mobile apps are not the product with which to make money, because you can't count on being the lottery winner that manages to get 10% of whales on your app.
best place for games, though. You get a good "subscription" model and you get whales paying you hundreds before dropping off. Oh, and also you can use actual subscription items like Battle Passes on top of that.
But I guess that is a whole other conversation. I agree for any other software that the race to the bottom has long finished. it is extremely hard to monetize a premium app, even if you only charge $1.
combine that with +47% being "almost doubling" and graph having one axis going "from easy to hard", while the other "from hard to easy"... and I get totally lost
New sites are the worst at this. They've pandered to their sub base at the expense of the average reader. I just find it funny that all the journalists finally got off Twitter and every story that's been hiding in plain site for the last decade is now in their Sunday edition ever week.
One of the things I hate about the media industry is the constant "we're dying" or "this is going to die."
Go to a local news conference that's supposedly about the future and it feels a lot like a funeral.
Some other way of doing things will come along. Help figure it out or get the fuck out of the way and stop trying to spread your shitty dark version of the future - because you have no idea what happens next.
given the motivation of those at top, that doesn't make me sigh in relief. The "other way of doing things" in the 2010's was ads everywhere and abuse of SEO to get people's eyes on what they want to see, not what's important. And that's not even going into the social media dark patterns.
Now we have tech CEO's owning newspapers... so maybe those social media dark patterns will seep in in the end regardless. I don't think dismissing these possibilities is any more helpful.
"Anyway, we all already know this because we all experience human life in 2023."
Electricity too.
Equipment less so, but often it's leased.
Bug fixes, patches, updates, scaling.
Lifetime SaaS sales don't really last.
Subscriptions might change (or return less margin), but it's hard to imagine other ways.
mostly consumers and disposable income, I imagine. you can only keep up with so much content, and if each content is a cost stream, you will be selective after a while. This is what's happening with the TV streaming wars as we speak.
as for disposable income; spending power has been on the downfall for decades now, and there's speculation of an upcoming recession. Both of those also start to make consumers focus less on spurious entertainment
Subscriptions increase valuation of companies
This made me WTF. Crikey.
And newsstand prices for most periodicals have long been multiples of the subscription price. I'm always a bit surprised there's a big enough market for magazines at grocery stores and airports but impulse purchases I guess.
[1] https://store.nytimes.com/products/print-newspapers?variant=...
Perhaps I'd feel better if I knew that 800% markup went to paying writers, but I've also become much more cynical in those 20 years.
I checked home delivery to the Bronx and the regular price is $20/week ($1,040/year). There was a default offer of 50% off to bring it to $520 for the first year, but maybe he saw $845 the last time he looked. Regardless, it's very expensive.
It's already here for decades; each time you use Google or Facebook, you are giving in your privacy for free use of those services. But casual users don't care about their privacy so the ad based business model for Web services will prevail for a very long time.
You decide to use Google or Facebook once or infrequently. That’s the transaction cost. After that, it’s effortless.
Micropayments involve constant transaction costs. They don’t work. A defining pillar of luxury is freedom from transaction costs; excluding those who can pay from your market is garbage economics.
Clay Shirky basically called it a couple decades ago that there's a mental transaction cost to buying things.
I guess it's sufficiently indirect sometimes that it works. "Hmm. Is it worth it to turn on this light given that it's going to cost me $X cents to have light for the next hour?"
But $1/song only lasted as long as that was the only legal model relative to buying a disc. And 5 cents for an article wouldn't work either.
Minimum normal price is 0.99 and minimum transaction price is 0.49. All things considered they are reasonable limits as those might be actual singular payment transactions.
The only true way around this is a token model. You make a large payment, but you use it for proprietary tokens that you can then "shop" around with for goods that you normally couldn't pay $0.50 for otherwise.
But it's not a very popular model. I imagine the issue comes from the fact that many consumers will simply buy 1-2 key things and then never come back. So in comes a subscription model, where they can use those 1-2 key things to cover the cost of the other 90 niche items. It may even create a new cult following out of some niche if there's no additional resistance to consuming a niche item.
Another interesting category is books; some publishers allow you to purchase certain chapters that interest you but the price of those chapters is obnoxious[0]. 30 euros for one chapter?!
I think the content producers and publishers need to embrace micropayments first and then demand will follow.
>The only true way around this is a token model. You make a large payment, but you use it for proprietary tokens that you can then "shop" around with for goods that you normally couldn't pay $0.50 for otherwise.
I had the same idea; for example you would deposit $5 and then use it for micropayments like 1, 5 or 50 cents.
Like somebody already mentioned, Steam does it already in a sense that you can for example buy skins for 50 cents.
Btw one of the ideas of Satoshi's Bitcoin was micropayments where you could pay for instance one thousand of a cent for some service. So called "cryptocoins" can very much be the future of payments and micropayments in particular.
>I imagine the issue comes from the fact that many consumers will simply buy 1-2 key things and then never come back.
That's why companies like subscriptions, they provide them with forward recurring revenue.
[0] https://link.springer.com/chapter/10.1057/9781403932754_1
Consumers like it enough. This is just as fruitful as fighting a commodity.