Another Weekday morning, I was sitting at the computer.. reading some blog post on lobste.rs about computer science... drinking coffee. What made this morning different was an email from Spotify. "Dear User, we are increasing the subscription cost of the Spotify service from $11 a month to $12." Oh man, what tragic news, another dollar gone to subscription services.
Another sip of the coffee... Wait a second... I remember this email... Didn't I receive a price increase notification last year? Yes, Yes I did.
Holy smokes, so you're saying Spotify just increased it's Sale's Revenue by 20% over the course of 2 years and laid off 1,500 workers?! That's one way to reach profitability. In some aspects I respect the business savy-ness of the leaders at Spotify. As a consumer though, I'm annoyed and concerned about this trend. Are we really just going to allow software companies to demand we pay an extra 10% every couple years?
The Subscription based business Model
I remember begging my parents for $15 a month so I could play Pirates of the Carribean online and World Of Warcraft. The Subscription based business model has been around for some time now. Truthfully, I have no idea if subscription based software existed for enterprises back in 2000, but I do remember it in gaming. Dare I say Netflix was the company that introduced this type of software business model to the masses at the start of the digital-streaming era. What hurts is that previously 'Buy once and install it on your PC' software transformed into subscription based software. (I'm looking at you Adobe and Microsoft Office).
Subscription based software MAKES SENSE when all users of a platform need to be in lock-step in terms of updates/patches in order for the software to work.
Subscription based software DOES NOT MAKE SENSE when a standalone release can work autonomously with an individual.
How did we end up in a world where the only option is to rent software?
Think of the Shareholders!
Software is a tricky business. A majority of software-based businesses require Venture Capitol funding to get started. I have a 'loose belief' that the moment a Software Company has to start answering to investors, the more likely it is that a subscription based model will take hold. The reason behind this is relatively simple, it's profitable and guarantees passive income. A subscription based model approach is what investors are interested in, its becoming increasingly rare that this is a favorable approach for consumers.
Continuous Updates and Delivery (CI/CD)
Software is now released differently than it was in the 2000s. Almost any device comes with some form of internet connectivity -- different from those days of Windows XP. This does legitimize the need for a subscription based model, I mean, we consumers are paying developers to continuously update software. It's relatively easy to publish updates to software and lock users out of the application without updating first.
I think this is a 'shallow' and 'simple' way of maintaining software. I've worked on projects that work this way -- and I will state that it is much easier to tell someone 'just update to version xyz' instead of maintaining 8 different versions of software. So many CVE's to patch.
That being said, are we over complicating things when it comes to releasing simple tools and services? When we release software, in an ideal world the product should come standalone -- and some minor things fixed up here and there. Does every user really need the latest and greatest features AND maintenance patches? Can we release software features and maintenance updates separately?
What do we do with this?
I do believe that this creates some excitement for small development studios just or solo entrepreneurs. A different way of marketing and selling your product all together, 'One-Time-Purchasable Software'.
Whether there is a market need or not, there is a clear lack of 'One-Time-Purchasable' software. I think this presents an opportunity for new organizations to build something cool and sell it in a way that is unique. Imagine selling a service that has 80% the functionality of a subscription based tool -- and selling it as a One-Time-Purchasable thing! Sell the software by Major version releases instead of a continuous update-able service!
You could even still have a monolithic release that everyone is required to be updated on -- and abstract the 'major release features' with Feature flags. That is, code logic + licensing software that lets users do certain things based on the type of subscription they purchased.
Creating an installable executable & managing software licenses will be the only headache going forward with a 'One-Time-Purchasable' software. Especially if you want to have a 7-day free trial period.
Conclusion
While the subscription-based model isn't going away anytime soon for the companies we cherish, it's worth noting that our industry could benefit from more creativity in marketing solutions to consumers. Personally, I would have been perfectly content continuing with my original $10 Spotify subscription, even without the fancy 'DJ', 'Daylist Playlist Creation', and 'A Day in Review' features. Offering software in alternative ways, such as one-time purchases, might be the key to breaking into the market share dominated by industry leaders. By exploring diverse sales strategies, we can create more competitive and consumer-friendly options.
Main Takeaways:
Subscription based software MAKES SENSE when all users of a platform need to be in lock-step in terms of updates/patches in order for the software to work.
Subscription based software DOES NOT MAKE SENSE when a standalone release can work autonomously with an individual.
Let me know your thoughts below!
