science

Subscription business model

Subscription business model is a science topic covered in the lgStudy science library. This page brings together a partial reference excerpt, illustrations, worked examples, real-world applications and a short study plan, so you can understand Subscription business model rather than just read about it. In short: The subscription business model is a business model in which a customer must pay a recurring price at regular intervals for access to a product or service. The model was pioneered by publishers of books and periodicals in the 17th century.

Key takeaways

Subscription business model belongs to science; place it in that map before memorising details.
Learn the definition first, then one example that makes the definition concrete.
Connect Subscription business model to a quantity you can measure, compute or draw — that is where exam questions come from.
Reproduce the core statement of Subscription business model from memory before moving on to harder problems.

Reference excerpt

The subscription business model is a business model in which a customer must pay a recurring price at regular intervals for access to a product or service. The model was pioneered by publishers of books and periodicals in the 17th century. It is particularly common now for digital products, which lend themselves more naturally toward a subscription model. Subscriptions can be a more convenient, hassle-free transaction for consumers. However, due to inertia among some consumers, they may inadvertently pay for subscriptions that they no longer value because they do not realize that they are subscribed.

Subscriptions Rather than selling products individually, a subscription offers periodic use or access to a product or service, or, in the case of performance-oriented organizations such as opera companies, tickets to the entire run of some set number of (e.g., five to fifteen) scheduled performances for a whole season. Thus, a one-time sale of a product can become a recurring sale and build brand loyalty. Industries that use this model include mail order, book sales clubs and music sales clubs, private web mail providers, cable television, satellite television providers with pay television channels, providers with digital catalogs with downloadable music or eBooks, audiobooks, satellite radio, telephone companies, mobile network operators, internet providers, software publishers, websites (e.g., blogging websites), business solutions providers, financial firms, health clubs, lawn mowing and snowplowing services, pharmaceuticals, renting an apartment, property taxes, as well as the traditional newspapers, magazines, and academic journals. Renewal of a subscription may be periodic and activated automatically so that the cost of a new period is automatically paid for by a pre-authorized charge to a credit card or a checking account. A common variation of the model in online games and on websites is the freemium model, in which the first tier of content is free. Still, access to premium features (for example, game power-ups or article archives) is limited to paying subscribers. In addition to the freemium model, other subscription pricing variations are gaining traction. For instance, the tiered pricing model is frequently used in software as a service (SaaS) platforms, offering customers different access levels and features based on their subscription tier. This model is particularly effective for tailoring services to customer requirements. Another approach is the usage-based pricing model, which calculates charges based on the extent of service or product utilization by the customer. This model is becoming increasingly prevalent, especially in services where customer usage varies significantly. A subscription service may offer a free trial, allowing customers temporary access to the service in order to increase the likelihood that the customer will convert and commit to a paid subscription. Sometimes, publishers will send out free copies of a publication through mail without the recipient requesting one in the form of a forced free trial.

Types and examples There are different categories of subscriptions:

A subscription for a fixed set of goods or services. Periodicals, such as a newspaper or magazine, have several types of subscriptions: Paid circulation Non-paid circulation Controlled circulation Subscription boxes contain a variety of consumables Community-supported agriculture Meal delivery service Meal kit delivery service A subscription for unlimited use of a service or collection of services. Usage may be personal and non-transferable for a family or, under certain circumstances, for a group utilizing a service simultaneously. In the publishing industry, a subscription to a bundle of several journals, at a discounted price, is known as a "big deal". Software as a service A pay-as-you-go subscription where a consumer subscribes to purchase a product periodically. This is also known as the convenience model because it is convenient for the customer not to have to remember to find their product and buy it periodically. This model has been popularized by companies like Dollar Shave Club, Birchbox, and OrderGroove. Based on their success, many other retailers have begun to offer subscription model services. For example, a company's subscription to a rail pass may not be individualized but might permit all firm employees to use the service. Subscriptions of this type are rare for goods with an unlimited supply and many luxury services. A subscription for basic access or minimal service plus some additional charge depending on usage. A basic telephone service pays a pre-determined fee for monthly use. Still, it may have extra charges for other services such as long-distance calls, directory, and pay-per-call services. When the basic service is offered free of charge, this business model is often referred to as Freemium. An online subscription supports content creators using crowdfunding. Fans can interact and send tips to the content creator but also have access to exclusive paid content. Popular examples are Patreon and OnlyFans.

Publishing In publishing, the subscription model typically involves a paywall, paysite, or other "toll-access" system (named in opposition to open access). As revenues from digital advertising diminish, a paid subscription model is being favoured by more publishers who see it as a comparatively stable income stream.

Academic journals

In the field of academic publishing, the subscription business model means that articles of a specific journal or conference proceedings are only available to subscribers. Subscriptions are typically sold to universities and other higher education institutions and research institutes, though some academic publishers also sell individual subscriptions or access to individual articles. In contrast with other media such as newspapers, subscription fees to academic publishers generally do not go towards supporting the creation of the content: the scientific articles are written by scientists and reviewed by other scientists as part of their work duties. The publisher does not pay the paper authors and reviewers. In this light, the subscription model has been called undesirable by proponents of the open access movement. Academic publications that use the subscription model are called "closed-access" in opposition to their open-access counterparts.

Effects

… excerpt ends here. Continue reading the full article.

Worked examples

Example 1 — a first encounter with Subscription business model

Start with the simplest possible case. Write down what Subscription business model claims or describes in one sentence, then invent the smallest concrete situation in which that sentence is true. In science, the smallest case is usually a single object, a single equation or a single measurement. Check that every symbol or term in your sentence has a meaning in that case.

Example 2 — changing one variable

Take the situation from Example 1 and change exactly one quantity: double it, halve it, or set it to zero. Predict what should happen to Subscription business model before you calculate. Comparing your prediction with the result is the fastest way to find out whether you understand the idea or only the words.

Example 3 — an exam-style question

Typical questions about Subscription business model ask you to (a) state it precisely, (b) apply it to given data, and (c) explain a limitation. Practise writing all three answers in under five minutes; the third part is what separates a full-mark answer from an average one.

Applications of Subscription business model

In research: Subscription business model appears in science research whenever the underlying quantities have to be modelled precisely. Papers usually cite it as a starting assumption and then explore where it breaks down.
In technology and industry: Engineering practice reuses Subscription business model in design rules, simulations and safety margins. Knowing the idea lets you read a specification sheet and understand why the numbers look the way they do.
In the classroom: Subscription business model is common in secondary-school and first-year university syllabi. It links to neighbouring topics Bundled products or services, Business models, Mass media industry, so understanding it makes those chapters shorter.
In everyday life: Look for Subscription business model outside the textbook — in sport, cooking, traffic, electronics or the sky above you. An example you found yourself is remembered far longer than one you were given.

Affiliate

Preply — study more efficiently by working with a personal tutor. 50% off.

How to study Subscription business model in 20 minutes

Read the reference excerpt below once, without taking notes.
Close the page and write down what Subscription business model means in your own words.
Compare your version with the excerpt and mark what you missed.
Work through the three examples above with pen and paper.
Explain Subscription business model out loud to somebody else — or to Teacher Smith in the lgStudy chat.

Frequently asked questions

What is Subscription business model in simple terms?

Why does Subscription business model matter?

Because it connects several science ideas at once: it gives you a definition you can apply, a quantity you can calculate, and a way to check whether a result is plausible.

How should I study Subscription business model?

Read the excerpt, restate it from memory, then work through the examples and applications listed on this page. The five-step study plan above takes about twenty minutes.

What does this page cover?

It gives you a compact reference excerpt plus original lgStudy explanations, examples, applications and study material on Subscription business model.