The Automatic Customer: Creating a Subscription Business in Any Industry
by John Warrillow · 5 Feb 2015 · 186pp · 49,251 words
2014 U.S. Retail Banking Satisfaction Study 190: Dmitry Buterin LIBRARY OF CONGRESS CATALOGING-IN-PUBLICATION DATA Warrillow, John, 1971- The automatic customer : creating a subscription business in any industry / John Warrillow. pages cm Includes bibliographical references and index. ISBN 978-0-698-17633-1 1. Entrepreneurship. 2. Business planning. 3.
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Introduction PART ONE Subscribers Are Better than Customers 1 WHO WINS IN THE SUBSCRIPTION ECONOMY? 2 WHY YOU NEED AUTOMATIC CUSTOMERS PART TWO The Nine Subscription Business Models 3 THE MEMBERSHIP WEBSITE MODEL 4 THE ALL-YOU-CAN-EAT LIBRARY MODEL 5 THE PRIVATE CLUB MODEL 6 THE FRONT-OF-THE-LINE MODEL
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return. WhatsApp founders Jan Koum and Brian Acton wanted to offer a cleaner, more private messaging experience. Instead of selling advertising, they opted for the subscription business model. A dollar a year as a subscription fee may not sound like much, but when you have 450 million users and are picking up a
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. It chose the right business model for success by asking users to subscribe to its service. This book will show you how to apply the subscription business model to your own business. When people think of subscriptions, they often think of cloud-based software, gaming, or media companies. While readers from those
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industries will benefit from this book, you can also apply the subscription business model to your company—no matter what your size or industry. WhatsApp is only one example of how powerful automatic customers can be for the growth
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also look at eight ways your business will be more valuable and less stressful after you adopt the subscription model. You’ll learn how the subscription business model dramatically increases the average value of each of your customers, and how to smooth out demand in your company so that it matches your ability
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more than one-shot customers and why subscription revenue is stickier than a one-time purchase. Part Two is divided into minichapters on the nine subscription business models. As you’ll see, you have a variety of choices when it comes to building a recurring revenue stream for your business. Whether you
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get started. PART ONE Subscribers Are Better than Customers Why are Amazon, Apple, and many of the most promising Silicon Valley start-ups leveraging a subscription business model? In Part One we’ll look at how automatic customers make your company more valuable . . . and a whole lot more enjoyable to run. CHAPTER
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is nothing new. In fact, it’s been around for quite a while. A (Very) Short History of the Subscription Model The history of the subscription business model dates back to the 1500s, when European map publishers would invite their customers to subscribe to future editions of their maps, which were evolving as
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for the online product.9 Around the same time that the Wall Street Journal put up its paywall, Silicon Valley fell in love with the subscription business model. In the late 1990s, application service providers such as Onvia offered access to computer applications on a subscription basis rather than requiring users to load
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software as a service (SaaS) businesses and in “cloud-based” companies such as Salesforce.com and Constant Contact. The Subscription Model Renaissance Basically, while the subscription business model has been around for centuries, over the last two decades it has been revitalized by technology and media companies. Most recently, a confluence of four
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, delicious data, and the long tail—have led some of the world’s most successful companies and promising start-ups to shift their business models to a focus on subscriptions. Take Apple, for example. Apple used to be thought of as a product for consumers, not a product for businesses. Businesses shunned
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. Big companies like Apple, Time Warner Cable, Amazon, Target, Microsoft, and Google are not necessarily walking away from their traditional business models entirely. In many cases, they are adding a subscription business to build recurring revenue, expand their relationships with existing customers, and understand what customers want. Research firm Gartner estimates that “by
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mortar stores across Canada. Køge is also a vitamin retailer, but instead of following in his dad’s footsteps, Hyssen has opted to use the subscription business model. For $49.99 per month, you can subscribe to a monthly regimen of daily essential vitamins delivered to your doorstep. Once you sign up and
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of buying vitamins is checked off your to-do list for good. Many of the world’s most promising start-ups are now leveraging the subscription business model to win new customers, romance their existing fans, and improve cash flow. According to a 2013 study by the Economist Intelligence Unit, over half
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are switching to new consumption models like sharing or subscribing. Of the companies changing the way they price and deliver goods, 40% are adopting the subscription business model. But the market for any given commodity is a zero-sum game. For every customer who decides to subscribe to a vitamin regimen from Køge
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you pick up the wrong book? No. I think Mike McDerment, CEO and cofounder of the subscription business FreshBooks.com, said it best when we spoke about the subscription business model back in 2014: “It’s the best damn business model in the world . . . it’s got great predictability for planning, which helps you as an
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companies named Zane Tarence. Tarence is a partner with Birmingham, Alabama–based Founders Investment Banking; the company specializes in selling software companies that use the subscription business model. Tarence estimates the valuation ranges he sees as belonging in one of three buckets: 24–48 × MRR (2–4 times ARR) These are typically
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about when the layoffs will come, while your profit margin shrinks because you’re paying for people to sit on the bench. By contrast, the subscription business model smoothes out demand so that you can plan your business effectively. Knowing within a few percentage points how many customers you will have next month
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automatic service is exchanged for their future loyalty. Rather than buying once without returning, subscribers stick around—hopefully for years. 7. Subscribers Buy More A subscription business model allows you the opportunity to talk to your customers on a regular basis as they enjoy the benefits of your subscription. This means you get
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from subscribers who add something to their order for a special occasion. You don’t need to throw away your entire business model to start a subscription service. By adding a subscription offering, you create a legion of customers who interact with your company each month. Every touch point represents another opportunity for
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decided to standardize around a specific offering and develop a core set of methodologies to follow while offering our standard service on subscription. Steve felt the standardization of our business model was going to turn our company into “McConsulting” because we were developing a systems culture like a McDonald’s franchise. Steve
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your company be better off without these employees in the long run? You now have my business case for building a subscription offering. Whether you plan to rethink your entire business model or just add a small annuity stream adjacent to your main business, your subscription offering will: Drive up the value
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can decide which one has the most potential for your business. PART TWO The Nine Subscription Business Models Part Two of this book is divided into nine small chapters, each of which describes one of the nine basic subscription business models. My goal is to show that savvy companies in every industry—from restaurateurs to
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home builders to dance studio owners and psychologists—are creating recurring revenue streams by leveraging the subscription business model. Not every example may seem immediately relevant to your
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industry. Some of the most interesting and lucrative subscription companies borrow ideas from a variety of industries or business models. As you read, I encourage you to ask the questions “How
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successful dance studio. That’s when Kathy’s daughter, Suzanne Blake Gerety, realized they were sitting on a valuable asset. After researching the membership website subscription business, Suzanne and Kathy decided, in 2008, to launch DanceStudioOwner.com. They would offer their insights into building a successful dance studio to subscribers, who
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they’re getting something of value from her, so they’re more than happy to pay 20 times the cost of a subscription to attend an event. Holland’s business model for WhichTestWon comes from years of being on the frontier of the subscription economy, first by founding MarketingSherpa, which supplied case
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to jump the service queue. Doubling Down on the Subscription Model Salesforce.com is a subscription business that provides software that sales teams use to manage their contacts online. The company has doubled its bet on the subscription business model by also offering subscription-based service packs they call Success Plans. At Salesforce .com,
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and simply enjoy their home without the hassles of a daily to-do list,” he said. For his part, Vagonis enjoys the predictability of the subscription business model. Typically, contractors lead a roller-coaster life defined by periods of 16-hour days followed by spells of underemployment. By contrast, Hassle Free Home Services
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as a platform to ensure you’re the first person they think of for other jobs. CHAPTER 10 The Network Model One of the first subscription business models dates all the way back to January 28, 1878, in the town of New Haven, Connecticut.1 A new device called a telephone had
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law practice, a coffee shop, or a day-care center. Next, let’s dig into the hard work of actually building a subscription business. PART THREE Building Your Subscription Business Many traditional businesses become successful based on the sheer force of the owner’s personality. When sales are down, the owner leverages his
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radio production business, a design agency, an events company, a quantitative research business, and a software company. I’m involved in my second subscription business, and while subscription businesses are in many ways more rewarding than the others, they are also more challenging in many respects. Metaphorically speaking, a traditional business requires more
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brawn, while a subscription business requires more brain. In a subscription business, any decision you make affects your entire base of subscribers all at once. Sending a single e-mail can trigger an avalanche
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something David Skok does all day long. Skok is a general partner at the venture-capital firm Matrix Partners, where he evaluates potential investments in subscription businesses and advises the management team of his portfolio on existing investments; he works with companies such as HubSpot.com, Digium, CloudBees, Enservio, GrabCAD, OpenSpan,
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just over 3:1 ($247.50 divided by 80). Per Skok’s estimation, this is a viable business model. There may be many reasons to build subscriptions into your business. You may offer a subscription as a loss leader just to build a relationship with a customer who will buy more from you because
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you can crest the 3:1 milestone. Either way, there is one more essential ingredient you’ll need in order to build a subscription business. Cash is to a subscription business as oxygen is to humans. If you don’t have it, no matter how healthy you are on other measures, you’re
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your MRR per customer is almost certain to be a lot less than your CAC, you’re going to need cash to grow your subscription business. Most successful subscription businesses also need to invest heavily in systems and branding up front, which is why a lot of them go outside to raise capital.
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time when people would subscribe just to say they had a subscription to something novel like razor blades or condoms. Those days are over. The subscription business model has gone mainstream, and people are demanding that their subscriptions offer better value than the alternative. In short, we’re buying more rationally. Take
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Day sales pitch. They explain how flowers get from the farmer’s field to a spa owner’s countertop. Because of its volume and its subscription business model, H.Bloom offers hundreds of flower types, unlike the typical flower store, and bypasses the middlemen so customers receive their flowers within 48 hours of
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bought, but most just listened politely and went back to doing business with us the old way. To them, it probably sounded as if the subscription business model was just another idea we were testing rather than an all-in bet on a new way of doing business. After six months or so
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of the hardest sales of all. Andrew Gray, a partner at the Reading, UK–based accountancy Kirkpatrick & Hopes, was keen to move to the simplifier subscription business model for billing clients. Instead of billing by the hour, Gray wanted to switch his firm over to billing based on a fixed annual fee each
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charge five-, six-, or seven-figure subscriptions on a credit card. In addition, most procurement departments want fixed-term contracts. From your perspective, most subscription businesses selling to large enterprise companies want the opportunity to renegotiate terms every year or two, so it generally works out better for subscriptions to have
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meet with a soft-spoken Russian named Dmitry Buterin. Though Buterin and I had never met before, he took the time to patiently explain the subscription business model as he saw it in his company, Wild Apricot. With candor and humility, he detailed his journey to success in the subscription economy. Buterin
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explaining to me why subscribers are better than customers. Recommended Resources AutomaticCustomer.com Visit AutomaticCustomer.com to download a variety of resources about building a subscription business, including a work sheet of the nine different subscription models and a description of whom they work best for. SellabilityScore.com Whether you want
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ONE: Subscribers Are Better than Customers CHAPTER 1: Who Wins in the Subscription Economy? CHAPTER 2: Why You Need Automatic Customers PART TWO: The Nine Subscription Business Models CHAPTER 3: The Membership Website Model CHAPTER 4: The All-You-Can-Eat Library Model CHAPTER 5: The Private Club Model CHAPTER 6: The Front
Subscribed: Why the Subscription Model Will Be Your Company's Future - and What to Do About It
by Tien Tzuo and Gabe Weisert · 4 Jun 2018 · 244pp · 66,977 words
all the stuff I learned at Salesforce—not just the technology, but also the innovating, marketing, and selling—would be valuable to all kinds of subscription businesses, in all kinds of industries. Today Zuora has a thousand customers in dozens of industries. We work with streaming media companies, publishers, newspapers, manufacturers,
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document (sub script): a name, a note, an addendum. When two parties are involved, that constitutes a mutual agreement, an accord, a relationship. As a business model, subscriptions have been keeping journalists, authors, illustrators, historians, and cartographers paid for hundreds of years. Subscriptions also sold a lot of bad CDs in the eighties
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with junk they didn’t want. Sadly, lots of companies still depend on customer neglect in order to sustain their zombie business models. So what’s changed about the monthly subscription services today? Well, the smart ones realize that if they really want to retain their subscribers, they need to focus on
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building a great service, without relying on lame tricks like hiding the cancel button. “If you are in the subscription business for the long term, especially in an age of lightning-fast communications among dissatisfied customers, you want to follow the golden rule,” says Robbie Kellman
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seen companies like Fabletics (a Lululemon competitor fronted by actress Kate Hudson) and Adore Me (designer lingerie) come under fire for poor management of their subscription businesses. Unclear billing practices, difficult cancellation processes, poor communication—these subscription retail issues (and customer complaints) all flow from this idea of the “negative option”
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sorts of cool ways. b8ta, a retail store that sells trendy tech gadgets, doesn’t make any money from product sales. Its business model is entirely based on paid subscriptions from the product vendors themselves, which keeps it laser focused on boosting their return on investment. What’s more, that steady, recurring
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same kind of thinking that caused newspapers to launch free sites twenty years ago?). Why are readers and publishers alike embracing paid subscriptions for content services over ad-based business models? There are several reasons, but the dismal state of advertising is a big one. Of the thousands of potential reasons why
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said Angus MacKenzie, chief content officer of TEN, to Digiday. “There are fewer and fewer instances where you are only in an ad-supported business model. A subscription platform gives us a consumer-supported business model—it’s roughly analogous to what the magazines used to be.” Like all successful subscription services, TEN
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’re wondering why they should even bother when there are so many cheaper, smarter SaaS alternatives on the market. These days, everyone understands that subscriptions are the dominant business model for the technology industry. Gartner predicts that by 2020, more than 80 percent of software providers will have shifted to
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subscription-based business models. As a recent Deloitte paper notes, the big technology firms simply can’t afford not to offer subscription models: “As more and more customers
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a steep uphill climb, you have to understand the Fish Model. In their excellent book Technology-as-a-Service Playbook: How to Grow a Profitable Subscription Business, Thomas Lah and J. B. Wood refer to this transition period as “swallowing the fish,” as the revenue curve temporarily dips below the operating
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compelling travel experiences, not just putting their names on big resort properties, so they’re diversifying into apartment rental platforms. Subscription-based digital services are a big part of the business models powering these sites, whether you’re signing up directly with HomeAway or your real estate agent is taking advantage of
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by definition the way companies function as a whole is changing as well. To help us visualize how much transformation is needed to become a subscription business, let’s run through a thought experiment involving a fascinating industry that we haven’t talked about yet—video games. Games are arguably bigger
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, how you approach your fundamental business model, if teams are separated by walls? Let’s take a closer look at the new rules for subscription businesses, starting with the heart of your organization—the designers and inventors who are now tasked with turning a great product into a great service. CHAPTER
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like? PRICING (AND PACKAGING) “Pricing and packaging” is an old-fashioned-sounding term that might remind you of stocking grocery store shelves, but for subscription businesses it is one of the most powerful growth levers you have. I can’t emphasize this enough. For those unfamiliar with the term, “pricing” means
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new stuff. If you’re just managing expectations, instead of creating new opportunities, you’re not doing it right. Given the nature of subscription’s recurring revenue business model, it’s no surprise that the fastest-growing companies are the ones that are most successful at growing revenues from existing customers. Upselling
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acquisition, it can be a smart move to reinvest that cash into future growth. But access to capital is only one of many requirements for subscription businesses contemplating strategic acquisition. In addition to cash, an acquiring company also needs a strategic plan that fits in with its business model and day-
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that upsells and cross-sells across service lines are workable and the customer experience across service lines is seamless. Successful acquisitions can help a growing subscription business increase its market visibility and market share while enhancing its offerings to build out a more comprehensive solution. You need an integration plan. You’
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platform for improved accuracy and efficiency of its back-office systems. OPTIMIZE YOUR PRICING AND PACKAGING Over the course of the entire lifetime of a subscription business, do you know how much time the average management team devotes to planning their pricing? According to business intelligence platform ProfitWell, the average amount
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huge impact that pricing has on your bottom line—it can be much more impactful than similar amounts of effort spent on acquisition or retention. Subscription businesses need to constantly be optimizing revenue through pricing. In our experience, we see this philosophy reflected by companies that, generally, update their pricing at
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presentation of decline. There was some serious cognitive dissonance in the room. What a shame. What a lost opportunity. Because if the Subscription Economy is about adopting new business models, then what better function to lead the company through that shift than the finance department? THE DAY I ALMOST GOT FIRED But
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to the board, we realized that this model may have worked fine for the last five hundred years, but it was entirely wrong for a subscription business, for three key reasons. First, the traditional income statement does not differentiate between recurring and nonrecurring dollars. It’s like saying there’s no
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difference between a dollar and a dollar that keeps happening every year for the next ten years. Recurring revenue is the cornerstone of subscription businesses, but traditional accounting concepts were never designed to recognize this fact. Second, sales and marketing is matched to past goods sold. It’s essentially
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a sunk cost. I’ll get into this later in the chapter, but subscription businesses need to think strategically about sales and marketing spend going toward driving future business. And finally, this is a backward-looking picture—it’s all
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about money already earned, expenses already paid, actions already taken. Subscription businesses are all about forward visibility: how much money I know I can count on over the next twelve months, so I can account, plan, and
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spend accordingly. So we decided to come up with something new. INTRODUCING THE SUBSCRIPTION ECONOMY INCOME STATEMENT Every smart subscription business I know focuses on something called ARR, or annual recurring revenue. What is ARR? Simply put, it is the amount of revenue that you expect
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subscribers to pay you every year. It is the revenue that recurs, as opposed to the revenue that gets booked only once. Every quarter, subscription businesses look at how much their ARR has grown, using the following formula: Based on this formula, Tyler and I constructed a Subscription Economy income statement
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board sixty days later. Since then we’ve shared this model with countless other companies, as well as a number of financial analysts who cover subscription businesses. Given the formula above, a Subscription Economy income statement should look more like this (revenue in millions): ARR $100 Churn (10) Net AA 90
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—Your recurring profit margin is simply the difference between your recurring revenues and your recurring costs. This number gives you the intrinsic profitability of your subscription business, as there is certainty in your recurring revenue, as well as certainty in the costs to service that revenue. In the example income statement
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it’s $40 million, which represents a very healthy margin. There’s a lot of hand-wringing around how profitable subscription businesses can be. When we look at a subscription company’s financials, Tyler and I always look at the recurring profit margin first to get a
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point—200x future earnings. We knew that operating profit was essentially meaningless to measuring our value. Honestly, as an investor, I would ding a subscription business that brought operating profit to the bottom line, seeing it as a signal from the company that it’s cutting sales and marketing spending because
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it can’t efficiently acquire new bookings! Here’s the key takeaway—it is perfectly rational for subscription businesses to spend all their profits on growth, as long as their bucket doesn’t leak. Remember, as long as you are growing your ARR
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for example, the dividends we generate from our business model will be worth it. This is also why recurring profit margins are so important for subscription businesses in terms of their ability to grow. Third, we use this chart to govern our sales and marketing spend with a concept called the Growth
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s latest monthly recurring revenue numbers. He got two wildly different figures. And as it turns out, the sales team numbers were more accurate! Huh? Subscription businesses live or die by their ability to measure the ways that bookings, billings, cash flow, and revenue are interrelated. Unfortunately, this data lives in
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inspired. It’s that “digital transformation” experience that everyone is always talking about. It’s also a much happier business. Why? Because subscriptions are the only business model that is entirely based on the happiness of your customers. Think about it—when your customers are happy, then they’re using more of
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of the Subscription Economy. As I’ve mentioned previously, by 2020, we should expect to see more than 80 percent of software providers shift to subscription-based business models (according to Gartner) and 50 percent of the world’s largest enterprises depend on digitally enhanced products, services, and experiences. Recurring revenue-based business
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that the most recent two years, 2015–17, appear to represent a “Goldilocks” period of both high net account growth and solid ARPA growth. SUBSCRIPTION REVENUE GROWTH BY BUSINESS MODEL The following figure shows the relative growth of B2B, B2C, and B2A (Any) business model subindices. Each subindex “branches” from the primary SEI
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pricing. Their biggest challenges include systems constraints and conflicting systems of record. SEI Growth by Business Model SEI subindices for business models B2B, B2C, and B2A (Any). B2A companies offer subscriptions to both individuals and businesses. Each subindex is launched starting from the value of the main SEI when twenty-five constituents
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saw their growth rates decline slightly. Average annual growth rates (last twelve months): < $1M: 17% $1M–$20M: 21% $20M–$100M: 15% $100M+: 31% SUBSCRIPTION CHURN RATES BY BUSINESS MODEL, INDUSTRY, COMPANY SIZE, AND REGION At its most basic level, churn refers to the proportion of total subscribers who leave during a given time
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that are aligned with perceived value, easy to understand, and easy to track (and thus predict costs). And yet, only about 27 percent of subscription businesses use some sort of usage-based pricing today. This is a mistake. Usage models give companies many levers to drive engagement and customer value. Depending
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achieve the same or faster growth rates covered in this study. SUBSCRIPTION ECONOMY INDEX METHODOLOGY The Subscription Economy Index (SEI) tracks the organic growth of subscription businesses by reflecting aggregated, anonymized, system-generated activity on the Zuora subscription management service between January 1, 2012, and September 30, 2017. Zuora updates this
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-transition-strategies.html. tumultuous period of costs exceeding revenue Thomas Lah and J. B. Wood, Technology-as-a-Service Playbook: How to Grow a Profitable Subscription Business (Seattle: Point B Inc., 2016). you don’t have to go all in Jaakko Nurkka, Josef Waltl, and Oliver Alexy, “How Investors React When
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growth, 211–13 North American growth, 220–21 SEI growth and GDP growth, correlation between, 210–11 subscription business sales versus S&P 500 sales and US retail sales, 210 subscription revenue growth by business model, 213–15 subscription revenue growth by industry, 215–16 subscription revenue growth by revenue band, 217–18 usage
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company of shift to, 126–31 marketing and, 130–31, 143–55 production team and, 128–29 sales and, 130–31, 156–73 subscription revenue growth by business model, 213–15 by industry, 215–16 by revenue band, 217–18 subscription video on demand (SVOD), 42–46 cable industry, opportunity cord cutting
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See subscription video on demand (SVOD) Symantec, 90 Symmons Industries, 112 Target, 34 Tarkett, 112 Technology-as-a-Service Playbook: How to Grow a Profitable Subscription Business (Lah and Wood), 85–86 technology industry, 80–96 fish model and, 85–86 growth in, since Great Recession, 96 hardware companies, 93–96 software
Television disrupted: the transition from network to networked TV
by Shelly Palmer · 14 Apr 2006 · 406pp · 88,820 words
G’s”: girls, God, games and gambling. (A fifth “G,” gay, has developed a significant following in recent years.) But, you can simply place the subscription businesses into their actual business categories: pornography, religion, video games (casual and console) and gambling. Pay-per-view Pay-per-view (PPV) has been around since
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over the Internet. Then, we shall focus on the disruptive qualities of wireless networks and devices. Key Takeaways • There are two basic television business models: free (ad supported) and subscription. • There are approximately 110 million television households in the United States. Between 85 and 88 percent are covered by cable and satellite, while
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possible to restrict viewing of any video to a particular daypart, it generally doesn’t make sense to do so.) Other types of on demand business models include subscription video on demand (SVOD), free video on demand (FVOD) and near-video on demand (NVOD). NVOD is commonly found on satellite systems and older
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network. An HFC consists of fiber optic trunks ending at neighborhood nodes, with coaxial cable feeders and drop lines downstream of the nodes. Hybrid subscription A business model where subscribers pay for content but also see commercial advertising messages. Hyperlink a hypertext link or link in a graphic or text string which, when
Lean Analytics: Use Data to Build a Better Startup Faster
by Alistair Croll and Benjamin Yoskovitz · 1 Mar 2013 · 567pp · 122,311 words
back repeatedly, exhibiting sticky behavior Engagement, time since last visit, daily and monthly active use, churns Revenue Business outcomes (which vary by your business model: purchases, ad clicks, content creation, subscriptions, etc.) Customer lifetime value, conversion rate, shopping cart size, click-through revenue Referral Viral and word-of-mouth invitations to other potential
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worth in the entirety of his relationship with the company—the customer lifetime value (CLV). CLV and CAC are the two essential metrics for a subscription business. In Backupify’s case, the ratio of CLV to CAC is 5–6x, meaning that for every dollar the company invests in finding a customer
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’re also paying for the anticipated revenue from customers. Balancing acquisition, revenue, and cash flow is at the core of running many business models, particularly those that rely on subscription revenue and paying to gain customers. As you play with the numbers to strike that balance, there are really four variables you work
The Network Imperative: How to Survive and Grow in the Age of Digital Business Models
by Barry Libert and Megan Beck · 6 Jun 2016 · 285pp · 58,517 words
person really is probably only going to come around once or maybe twice if you have a really high repeat order rate. But in a subscription business, you’re going to see them by definition, over and over and over and over again. And you’re going to have an opportunity to
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for you to form and develop a positive, two-way relationship provides many advantages on top of more revenue. Customer contributors (principle 5) and the subscription business model are complementary ways of inviting your customers into a mutually beneficial, long-term relationship with your organization. Take Every Opportunity to Delight Your customers’ lives
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time your customers interact with your organization, you have an opportunity to increase awareness and hopefully affinity. Amir Elaguizy, founder of Cratejoy, a platform for subscription businesses, says, “Every single month you have another opportunity to say, ‘Hey, delighted customer, why don’t you tell your friends about how awesome this subscription
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for repeat sales, but they do not have standard, ongoing two-way dialogue. On the right side of the spectrum are the companies whose business models rely on subscriptions—ongoing, revenue-generating (and also insight- and affinity-generating) interactions with their customers. In the middle of the spectrum are companies that keep their
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on Demand of +11 (a perfect score is +100). Start Today, Small Is OK Vitally engaged customers are essential to the valuable network orchestration business model. A subscription model of interaction will help customers return repeatedly. Orchestrated well, with ongoing development of customer relationships—and not customer transactions—as the key performance indicator
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://www.innocentive.com/about-innocentive. Principle 6, Revenues 1. Brent Leary, “Amir Elaguizy of Cratejoy: Good Subscription Business Models Focus on Relationships Not Transactions,” Small Business Trends, August 14, 2015, http://smallbiztrends.com/2015/08/elaguizy-cratejoy-subscription-business-models.html. Principle 7, Employees 1. Travis Kalanick, “The Charms of the Sharing Economy,” Economist, The World
The End of Ownership: Personal Property in the Digital Economy
by Aaron Perzanowski and Jason Schultz · 4 Nov 2016 · 374pp · 97,288 words
to the public. Even the film industry shifted toward selling home videos, despite its frantic objections to the VCR. Television, because of business models premised on advertising and cable subscriptions, was less concerned with selling tangible copies. But toward the end of the hard copy era, even TV studios profited from DVD and
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competitors in this space. That allows users the degree of portability the cloud helped teach them to expect. You might look at the basic business model of the subscription streaming service and wonder how different it is from familiar twentieth-century approaches to distribution. Consumers pay, either by ponying up a monthly fee
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-sleepsense-loved-ones-mattress/, accessed November 20, 2015. 8. Rob Price, “The Smart-Home Device That Google Is Deliberately Disabling Was Sold with a ‘Lifetime Subscription,’” Business Insider, April 5, 2016, http://www.businessinsider.com/revolv-smart-home-hubs-lifetime-subscription-bricked-nest-google-alphabet-internet-of-things-2016-4, accessed April
The Powerful and the Damned: Private Diaries in Turbulent Times
by Lionel Barber · 5 Nov 2020
a bigger audience, maximising their personal reach with no return to their employer. We agree the best way forward is to build the FT’s subscription business. Right now, online subs have stalled around 80,000, while the newspaper still accounts for circulation of more than 400,000, albeit in a shrinking
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resounding endorsement of our return to the gold standard, pledge one in my manifesto as editor. It vindicates our shift to digital subscriptions, a decisive change in our business model underpinned by higher prices. My only concern is complacency amid the gathering storm in the markets. We’re sitting on a huge story
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newspapers are finished, that there’s no way they can survive.’ SS (seething but listening) LB: ‘The FT has built a new business model based on people paying for subscriptions. We’ve worked really, really hard to show people that they’re wrong to write off the FT.’ SS (still seething) LB: ‘So
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, 357–8; publishing system 15–16, 26; ‘rebrush’/redesigns 34, 58, 254–5, 272; self-regulation, system of 257–8, 258n; sponsors 166, 243, 262; subscription business 26, 92, 118, 119, 229, 285, 312, 322, 339, 346, 379, 401, 406–7, 431; ‘thought leader’ brand 172; union members 202–3, 202n; US
Blitzscaling: The Lightning-Fast Path to Building Massively Valuable Companies
by Reid Hoffman and Chris Yeh · 14 Apr 2018 · 286pp · 87,401 words
both music (Spotify, Pandora) and video (Netflix, Hulu, Amazon) also enjoy lower overhead and greater distribution by using the subscription business model. Another, less obvious benefit to this model is that once a subscription business achieves scale, the predictability of its revenue streams allows it to be more aggressive with long-term investments, since it
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far more valuable, but to prove that argument we had to demonstrate our ability to earn significant high-margin revenues. The first business model pattern we tried was a freemium subscription service. The free LinkedIn.com service limited the number of requests a user could send to friends of friends (InMails), and when
Side Hustle: From Idea to Income in 27 Days
by Chris Guillebeau · 18 Sep 2017 · 206pp · 60,587 words
a larger brand. He had what he thought was a great idea: to change the call to action on the order page for a software subscription business. His change resulted in a major increase in click-throughs—more than 40 percent! Before he congratulated himself and booked a trip to Vegas, though
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as a membership site, and sometimes by some other terms) is easy enough. The hard work lies in acquiring and retaining customers. BUSINESS MODEL: Establish sustainable, predictable income through a subscription service. WHY: People are used to paying for monthly services, and they’ll pay for them for a long time if you
The Hacker and the State: Cyber Attacks and the New Normal of Geopolitics
by Ben Buchanan · 25 Feb 2020 · 443pp · 116,832 words
be responsible entrepreneurs and nothing more. More significantly, they announced yet another change in their approach to making money: they would move to a subscription service. Their new business model, as they put it, was “being like wine of month club. Each month peoples can be paying membership fee, then getting members only
Extremely Hardcore: Inside Elon Musk's Twitter
by Zoë Schiffer · 13 Feb 2024 · 343pp · 92,693 words
his name. CHAPTER 59 “You’re Welcome Namaste” Even before the deal closed Musk was entranced with the idea of shifting Twitter’s business model away from advertising and toward subscriptions. The move fit neatly into his worldview—that advertisers sucked, that Twitter’s legacy verification system was biased, that Twitter’s former
5 Day Weekend: Freedom to Make Your Life and Work Rich With Purpose
by Nik Halik and Garrett B. Gunderson · 5 Mar 2018 · 290pp · 72,046 words
to drive traffic, from search engine optimization and pay-per-click advertising, to paid links and affiliates. Revenue Subscriptions A recurring revenue subscription is the holy grail of all business models and is indeed one of my favorites. I have several subscription memberships for people investing in the financial markets. If you can
Traction: How Any Startup Can Achieve Explosive Customer Growth
by Gabriel Weinberg and Justin Mares · 5 Oct 2015 · 232pp · 63,846 words
in cash. Instead, you can use the features of your product as currency. For example, if your startup has a freemium business model, you could give away certain features or extend subscriptions. Earlier, we explained how Dropbox’s referral program involves giving people free storage space. Another example is QuiBids, a top penny
Better Living Through Criticism: How to Think About Art, Pleasure, Beauty, and Truth
by A. O. Scott · 9 Feb 2016 · 218pp · 65,422 words
of apparently frictionless and instantaneous communication on the Internet have had a calamitous impact on older ways of distributing information. As hundred-year-old business models based on advertising, subscriptions, and retail bookstore and newsstand sales—an infrastructure of distribution built on a bedrock of copyright—have crumbled, so has the morale among
The Currency Cold War: Cash and Cryptography, Hash Rates and Hegemony
by David G. W. Birch · 14 Apr 2020 · 247pp · 60,543 words
much easier to understand and navigate. I do not want to reopen the e-cash micropayment debate here, but, personally, I do feel the subscription-based business model might be peaking. I also agree with the noted venture capitalist Fred Wilson, who wrote in his review of the last decade that ‘a subscription
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over Bitcoin’s usability issues and find ourselves with more user-friendly digital options, of course). The combination of technological limitations and the rise of subscription-based business models meant none of these first attempts to create something truly new went anywhere. The cryptographic solutions were too complex, the commercial solutions did not
American Marxism
by Mark R. Levin · 12 Jul 2021 · 314pp · 88,524 words
. Kristof continues: “That can mean pressure on advertisers to avoid underwriting extremists (of any political bent), but the Fox News business model depends not so much on advertising as on cable subscription fees. So, a second step is to call on cable companies to drop Fox News from basic cable TV packages.”85
The Misfit Economy: Lessons in Creativity From Pirates, Hackers, Gangsters and Other Informal Entrepreneurs
by Alexa Clay and Kyra Maya Phillips · 23 Jun 2015 · 210pp · 56,667 words
his or her popularity. Video-sharing companies like Hulu and Netflix have also stayed true to this etiquette, paying content providers through adapted business models built on revenue from subscription memberships. As of December 2013, Hulu had five million subscribers to Hulu Plus, its premium service, and was projected to reach $1 billion
Lurking: How a Person Became a User
by Joanne McNeil · 25 Feb 2020 · 239pp · 80,319 words
Link users, and CompuServe users alone could use the CompuServe forums. These companies sold the originality of their content—a sensible enough business model in an era of magazine subscriptions—even if it wasn’t always clear to new internet users what GEnie had over The Source, or what made Prodigy any different
The Millionaire Fastlane: Crack the Code to Wealth and Live Rich for a Lifetime
by Mj Demarco · 8 Nov 2010 · 386pp · 116,233 words
a medium you can control (unfortunately, most don't), and its barriers are still strong enough to prevent “everyone” from entry. Internet business models (roads) fall into seven broad categories: 1) Subscription-based Offer users access to data, information, or software, and charge a monthly fee. Data can be leads, sales information, a
Masters of Scale: Surprising Truths From the World's Most Successful Entrepreneurs
by Reid Hoffman, June Cohen and Deron Triff · 14 Oct 2021 · 309pp · 96,168 words
become part of their customers’ everyday wardrobe—and that was a much bigger business. Jenn pivoted from an à la carte business model, renting one dress at a time, to a subscription service that let users rent several pieces at a time and rotate them out. This “closet in the cloud” became the
That Will Never Work: The Birth of Netflix and the Amazing Life of an Idea
by Marc Randolph · 16 Sep 2019 · 334pp · 102,899 words
would doom everyone else in their category—no matter how tangentially. Fortunately, unlike Dr. Koop, Boo.com, or Webvan, we actually had a business model that made sense. A subscription to Netflix cost a user $19.99 per month—on average, $4 more than it cost us to actually provide the service. We
Billion Dollar Loser: The Epic Rise and Spectacular Fall of Adam Neumann and WeWork
by Reeves Wiedeman · 19 Oct 2020 · 303pp · 100,516 words
. Salesforce, which offered back-end technological solutions for corporations, was at the leading edge of the software-as-a-service movement. The new business model centered on selling subscriptions to a variety of computer applications that could be accessed through the cloud. Masa had built his fortune selling floppy disks and CD-ROMs
The Connected Company
by Dave Gray and Thomas Vander Wal · 2 Dec 2014 · 372pp · 89,876 words
their stores to check out products and then ordered them online at a lower cost. When Netflix offered DVDs as a mail-based subscription service, it changed the business model for movie watching. Instead of renting films one at a time, customers could pay a flat fee and keep movies as long as
Do More Faster: TechStars Lessons to Accelerate Your Startup
by Brad Feld and David Cohen · 18 Oct 2010 · 326pp · 74,433 words
corporate formation, founders’ equity, employment and consulting projects, stock options and other equity incentives, trademark and patent protection, trade secret and confidentiality issues, licensing, subscription or business model agreements, and financing strategy, including seed capital. Don't try to do everything at once. Ask your lawyer what needs to be done now, and
The Great Fragmentation: And Why the Future of All Business Is Small
by Steve Sammartino · 25 Jun 2014 · 247pp · 81,135 words
-quality production assets is no longer a media strategy when everyone owns them. The difference between self-publishing and publishing is moving towards unnoticeable. Subscription television is doomed Business models that are no longer working manage to hang around for a long time. Just because a business model isn’t dead, doesn’t
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mean it hasn’t got terminal cancer. Subscription television is one such business model. We’re in the middle of a disruptive change to television. The cable television business model that emerged from the US in the
Thank You for Being Late: An Optimist's Guide to Thriving in the Age of Accelerations
by Thomas L. Friedman · 22 Nov 2016 · 602pp · 177,874 words
publications, including The Guardian, Vogue, BBC, and BuzzFeed, attract more than half of their online traffic from foreign countries. By expanding its business model from mailing DVDs to selling subscriptions for online streaming, Netflix has dramatically broadened its international reach to more than 190 countries. While media, music, books, and games represent the
The Internet Is Not the Answer
by Andrew Keen · 5 Jan 2015 · 361pp · 81,068 words
were to turn his interest to other things.”57 Netscape, in spite of its transformational role in Internet history, pursued the very orthodox business models of either selling software subscriptions or advertising on its Web pages. eBay, which grew from 41,000 users trading $7.2 million worth of goods in 1995 to
Future Crimes: Everything Is Connected, Everyone Is Vulnerable and What We Can Do About It
by Marc Goodman · 24 Feb 2015 · 677pp · 206,548 words
has become democratized with all necessary information readily available at Crime U. Modern criminals are innovating not just technologically but in their business models as well. Crime, Inc. has incorporated subscription models for malware services, gamification for staff members, and open-source software development for banking Trojans. To drive sales, Crime, Inc. offers
Powerful: Teams, Leaders and the Culture of Freedom and Responsibility
by Patty McCord · 9 Jan 2018 · 130pp · 43,665 words
the business was so dramatic, I had to focus very intensively on two things. First, I had to deeply understand the new business model and what was at stake. Subscription is a numbers race, and revenue occurs only over time after an up-front investment. I appreciated what a very big bet it
MONEY Master the Game: 7 Simple Steps to Financial Freedom
by Tony Robbins · 18 Nov 2014 · 825pp · 228,141 words
, I aimed to do three things: (1) create a new computing model for enterprises now called “cloud computing”; (2) create a new business model for enterprise software based on subscriptions; and (3) create a new philanthropic model that tightly integrates the success of a company with its ability to give back. What has
Mood Machine: The Rise of Spotify and the Costs of the Perfect Playlist
by Liz Pelly · 7 Jan 2025 · 293pp · 104,461 words
be reported for other streaming start-ups throughout the mid-2000s. “By the time Spotify came along, there was a quite well-established business model for how we would license subscription services,” one major label digital director, who was close to the first license negotiations, told me.5 But for all of the
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a paid version of the service would be the only way to appease the majors. By the end of 2007, the freemium business model—which included ad-supported and subscription-based tiers, with the goal of funneling users from free to paid—was created as a deep collaboration between Spotify and the labels
Power and Progress: Our Thousand-Year Struggle Over Technology and Prosperity
by Daron Acemoglu and Simon Johnson · 15 May 2023 · 619pp · 177,548 words
not enough, however, because it leaves unchanged the business model of internet platforms. We advocate a nontrivial digital advertising tax to encourage alternative business models, such as those based on subscription, instead of the currently prevailing model that largely relies on individualized targeted digital advertising. Some companies, such as YouTube, have taken some
The Joys of Compounding: The Passionate Pursuit of Lifelong Learning, Revised and Updated
by Gautam Baid · 1 Jun 2020 · 1,239pp · 163,625 words
you must use it sparingly. Having pricing power doesn’t mean you exercise it right away. Consumer surplus is a great strategy, especially for subscription-based business models in which management should primarily focus on habit formation and making renewals a no-brainer. Most businesses fail to appreciate this delicate trade-off between
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prepayments. Best of all, the interest rate on this financing is zero percent, which is tough to beat. Negative working capital is common in subscription-based business models in which customers pay up front for recurring service or access. Because revenue is recognized when the service is performed, which is after the cash
How to Fix the Future: Staying Human in the Digital Age
by Andrew Keen · 1 Mar 2018 · 308pp · 85,880 words
that would be priced higher than the regular subscription.11 But ad-blocking technology doesn’t seem to have hurt the New York Times business model of selling subscriptions of its high-quality content. Since the election of Donald Trump in November 2016, the rate of sale of Times subscriptions is up more
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a “mass scale” starts blocking ads with disruptive services like Tim Schumacher’s Adblock Plus, then all the companies with advertising-based business models, particularly YouTube, will be forced into offering subscription-based services to their users. So, in the end, the market and consumer demand will drive a shift back to a
The Jobs to Be Done Playbook: Align Your Markets, Organization, and Strategy Around Customer Needs
by Jim Kalbach · 6 Apr 2020
of a single product relevant. Instead, you have to build an ongoing relationship with the people you serve over time. If you have a business model based on subscription, making customers successful in their job is of paramount importance. The field of customer success especially focuses on helping people get the most value
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job to be done directly. Markets are conversations. It’s no longer viable to sell customers products without developing a relationship with them, particularly in subscription-based business models. Recipe 5: Build a Corporate Innovation Strategy JTBD theory is based on the simple observation that people don’t purchase products, they hire them
In the Plex: How Google Thinks, Works, and Shapes Our Lives
by Steven Levy · 12 Apr 2011 · 666pp · 181,495 words
room. “We thought it was too fundamental to let somebody else control it,” says Eric Schmidt. So Google bought it, changed the business model from a $1,000-a-year subscription to free, and integrated it into its Google Maps application—and into its mirror world. By 2009, 300 million people routinely peered
Zucked: Waking Up to the Facebook Catastrophe
by Roger McNamee · 1 Jan 2019 · 382pp · 105,819 words
. Human-driven social networks would enable sharing with friends, but without massive surveillance, filter bubbles, and data insecurity. They would require a different business model, perhaps based on subscriptions. Given the ubiquity of social media and the threats posed by Facebook and Instagram, I think it is worth considering more aggressive strategies, including
How to Build a Billion Dollar App: Discover the Secrets of the Most Successful Entrepreneurs of Our Time
by George Berkowski · 3 Sep 2014 · 468pp · 124,573 words
for the growth and revenue-generating capabilities of a lot of apps. From pay-per-download to in-app payment and subscriptions, I am counting these as a grouping of business models that work great, especially for gaming apps, and anything virtual that can absorb the 30 per cent commission charged by Apple
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software or services. WhatsApp is the first ‘mobile-first’ company with this model, charging some users $0.99 per year as a subscription via app-store payments, though its business model has evolved a number of times. A number of companies – which are not mobile first, but still have heavily used apps, such
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as Evernote (a note-taking app), Dropbox and Box (two document storage apps) – have this business model, whereby they charge subscriptions either via app-store payment channels, or bill you directly via your credit card. 5. ENTERPRISE. This is where bigger companies pay for larger
Dual Transformation: How to Reposition Today's Business While Creating the Future
by Scott D. Anthony and Mark W. Johnson · 27 Mar 2017 · 293pp · 78,439 words
it, “A recession is a terrible thing to waste.” So in 2008 Adobe launched Photoshop Express as a way to test a subscription-based SaaS offering. Although the business model was jarring to a company based on selling packaged software, it had advantages. Recurring monthly revenue provides greater predictability compared with a boom
Behind the cloud: the untold story of how Salesforce.com went from idea to billion-dollar company--and revolutionized an industry
by Marc Benioff and Carlye Adler · 19 Nov 2009 · 307pp · 17,123 words
–20; thinking bigger, 20–21; venture capital and, 205 Steele, Jim, 89 Story: developing for reporters, 40–41 Street Team concept, 49–52 Subscriptions: advantages of, 10, 90; business model based on, 76; converting to contract model, 82–85, 207–208; donating to nonprofits, 156–158, 166; free trial, 67–68, 96; licensing
Brick by Brick: How LEGO Rewrote the Rules of Innovation and Conquered the Global Toy Industry
by David Robertson and Bill Breen · 24 Jun 2013 · 282pp · 88,320 words
for leveraging feedback from fans. (LEGO subsequently expanded on Farshtey’s example and uses it extensively today.) • Business innovations consisted of new business models (such as new pricing methods or subscription plans) and new channels to market. Since its debut in 2001, Bionicle had already delivered minor but noteworthy innovations in both areas
The Wealth of Networks: How Social Production Transforms Markets and Freedom
by Yochai Benkler · 14 May 2006 · 678pp · 216,204 words
.com was the first major music distribution site shut down by litigation. From the industry's perspective, it should have represented an entirely unthreatening business model. Users paid a subscription fee, in exchange for which they were allowed to download music. There were various quirks and kinks in this model that made it
The Business of Platforms: Strategy in the Age of Digital Competition, Innovation, and Power
by Michael A. Cusumano, Annabelle Gawer and David B. Yoffie · 6 May 2019 · 328pp · 84,682 words
allay privacy concerns, GE enabled users to retain ownership of all their data processed on Predix, while GE would own the algorithms.73 Monetization—Subscription and Hybrid Business Models: Finally, to build a successful platform, GE needed a monetization strategy. Building Predix was costly: In 2015 alone, GE spent half a billion dollars
Rentier Capitalism: Who Owns the Economy, and Who Pays for It?
by Brett Christophers · 17 Nov 2020 · 614pp · 168,545 words
asset was ring-fenced; licensees were commercially constrained. Thomas Hazlett and his economist colleagues cite the example of terrestrial television broadcasters: ‘Transmission technology, business model (ad supported, not subscription), service (broadcast video, not two-way broadband), and even the location of transmitters were specified by regulators.’62 Since its creation as the UK
Reinventing Discovery: The New Era of Networked Science
by Michael Nielsen · 2 Oct 2011 · 400pp · 94,847 words
we’ve just seen, journals supplement those fees by charging for one-off access to articles on the web, typically $10 to $50. This subscription-based business model has been used by scientific publishers for hundreds of years. It’s a model that has served both science and society well. But the internet
Applied Artificial Intelligence: A Handbook for Business Leaders
by Mariya Yao, Adelyn Zhou and Marlene Jia · 1 Jun 2018 · 161pp · 39,526 words
be analyzed if you possess audio or video data. Customer Churn Churn occurs when customers fail to complete a critical task for your business model, such as renewing a subscription, pressing the checkout button in their shopping cart, or sharing content with a friend. Supervised learning methods, such as analyzing the difference between
New Power: How Power Works in Our Hyperconnected World--And How to Make It Work for You
by Jeremy Heimans and Henry Timms · 2 Apr 2018 · 416pp · 100,130 words
Ideas of What Is ‘Handmade,’ ” Forbes, October 10, 2015. Their network allows anyone: Meetup, July 2017. www.meetup.com. So now Meetup’s primary business model: Meetup, “Organizer Subscription Pricing,” July 2017. www.meetup.com. “Kickstarter is not a store”: Yancey Strickler, Perry Chen, and Charles Adler, “Kickstarter Is Not a Store,” The
The Measure of Progress: Counting What Really Matters
by Diane Coyle · 15 Apr 2025 · 321pp · 112,477 words
renting of external capital services, such as autonomous vehicles if these take off at scale, or likewise access to 3D printing machines. Business models of this kind are as-a-service subscription offers for h ouseholds rather than t hose provided to companies as described in the previous chapter. Gig Work here
Hacking Capitalism
by Söderberg, Johan; Söderberg, Johan;
in yearly releases, is dissolving into a continuous process where the application is upgraded every two weeks. Point-of-sale is replaced with subscription services as the favoured business model. The experimentation with novel ways of doing business in the computer sector shows that the reasoning of Tessa Morris-Suzuki, that surplus value
Hacking Growth: How Today's Fastest-Growing Companies Drive Breakout Success
by Sean Ellis and Morgan Brown · 24 Apr 2017 · 344pp · 96,020 words
growth levers. This equation is different for every product or business. Here’s an example for the company Morgan runs, Inman News, which is a subscription business: (WEBSITE TRAFFIC × EMAIL CONVERSION RATE × ACTIVE USER RATE × CONVERSION TO PAID SUBSCRIBER) + RETAINED SUBSCRIBERS + RESURRECTED SUBSCRIBERS = SUBSCRIBER REVENUE GROWTH For eBay the formula is: NUMBER
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in markedly different monetization rates for each country. By the same token, certain business models may be better understood in one country compared to another. Subscription businesses are well understood in the United States, for example, but may be less well received in other countries. Growth teams can experiment with offering different
Zero to Sold: How to Start, Run, and Sell a Bootstrapped Business
by Arvid Kahl · 24 Jun 2020 · 461pp · 106,027 words
revenue. The optimal situation is when you grow every month, and your revenue consistently increases. You will have reached that state when you create a subscription business with negative churn. In a subscription-based business, churn is the percentage of customers that discontinue their subscriptions month over month. Churn hurts your growth
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when the customers who stay with your business spend more time on upgrades than you lose from customers canceling. That is the holy grail of subscription businesses: when your churn is negative, you don't even need to add more customers to grow. Every new customer is a bonus! But before you
Binge Times: Inside Hollywood's Furious Billion-Dollar Battle to Take Down Netflix
by Dade Hayes and Dawn Chmielewski · 18 Apr 2022 · 414pp · 117,581 words
mainstream customers, it’s over.” Hastings told investors that Netflix planned to straddle both worlds, physical and digital, focusing on aggressively growing its profitable DVD subscription business even as it launched its streaming service. The lucrative rental business would sustain the company until Netflix could overcome the barriers that prevented consumers from
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cord. Mounting a pure subscription offering to challenge entrenched players like Netflix, in Burke’s view, seemed daunting. “The math is very challenging. With a subscription business, the one thing you know is you start with zero and then at the end of the year you might have three million subs or
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whatever. And then the second year, you go from three million to six million. It’s a slow ramp for a subscription business. . . . You have to show up with the product and cost of it on day one, despite the fact that you haven’t yet built the
Netflixed: The Epic Battle for America's Eyeballs
by Gina Keating · 10 Oct 2012 · 347pp · 91,318 words
to attract attention. Even though they’d had no real competition since launching the subscription plan, Netflix had nevertheless continued smoothing out kinks in its subscription business and was pushing ahead in all areas: consumer satisfaction was high; cancellations were low; and finally the service was being noticed by regular Americans, who
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meager subscriber base. The talks that night went nowhere, mainly because Fleming was trying to negotiate a partnership with Yahoo! in hopes of making the subscription business work. As luck would have it, a young Netflix executive ran into a female acquaintance who worked for Walmart.com at a San Francisco Bay
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the company a few years later, and Kaltschnee stayed on to create a second subscription service for the buyers’ stock photography collection. He knew about subscription businesses from that experience, and he wanted to learn how Netflix had been so successful. In November 2003, he launched the blog HackingNetflix.com, in keeping
Free Ride
by Robert Levine · 25 Oct 2011 · 465pp · 109,653 words
month to eliminate the restrictions and commercials, or pay £9.99 to use it on a mobile device. The major labels like the company’s subscription business—it has been reported that they own shares in the company99—but they’re concerned that its free service is good enough that consumers won
Inner Entrepreneur: A Proven Path to Profit and Peace
by Grant Sabatier · 10 Mar 2025 · 442pp · 126,902 words
) business sells software that customers access over the internet through a subscription. Popular SaaS businesses include Dropbox, Slack, Salesforce, and many others. As with any subscription business, a SaaS business can generate significant recurring revenue if you find product-market fit and add value to users. It’s also an asset-light
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to compete. As these skills become more commoditized and their functionality easier to copy, a strong brand and story become even more essential. Like any subscription business, retaining customers while adding new ones is challenging. SaaS businesses can also require a lot of money and be stressful to operate, especially if you
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is significantly lower than your CLV is a positive indicator of profitability. Growing a Recurring Revenue Business If you’re running a recurring revenue or subscription business, you should track your average revenue per user (ARPU), churn rate, and net dollar retention (NDR). Average Revenue per User Average revenue per user (ARPU
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your brand. Net Dollar Retention Net dollar retention (NDR), also known as dollar-based net retention or net expansion rate, measures the health of your subscription business. NDR assesses the revenue growth from existing customers over a specific period, taking into account expansions, contractions, and churn. It reflects the percentage of subscription
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trouble. If it’s over 100 percent, you’re acquiring more new net revenue than you are losing. The higher the percentage, the stronger the subscription business. Some of the most profitable examples are Software as a Service (SaaS) businesses, which, of course, are digital software. Slack, the project management software, had
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, 93–95 website as vehicle for, 114–25 strategic planning, 220, 257, 268 Stripe, 125, 135, 205 Student Loan Planner, 26, 65, 72, 113, 213 subscription businesses, 64, 66–67, 86–87, 245 sustainability of businesses and author’s entrepreneurial background, 203–4 and business-management systems, 206–11 and cash-flow
Working Backwards: Insights, Stories, and Secrets From Inside Amazon
by Colin Bryar and Bill Carr · 9 Feb 2021 · 302pp · 100,493 words
and later Game of Thrones—and had exclusive movie licensing deals with the studios. At that time, no other company was in the internet-delivered subscription business, so HBO had the field mostly to themselves. They could license and accumulate a lot of great movies and TV shows with very little competition
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the $30–40 million figure we had heard was off. By the time we got started, Netflix was spending twice that on content. In the subscription business, it’s no good to come out second with a copycat offering. We had to offer movies and shows that Netflix didn’t have available
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NBC. In the TVOD business, differentiation based on selection wasn’t possible—Amazon, Apple, Microsoft, and Sony all had the same titles—but in the subscription business, a unique catalog was key. We brainstormed countless concepts. One approach was to go deep in specific genres like horror or documentaries. Another was to
Battle for the Bird: Jack Dorsey, Elon Musk, and the $44 Billion Fight for Twitter's Soul
by Kurt Wagner · 20 Feb 2024 · 332pp · 127,754 words
on the debt Musk took out to finance his deal. On top of that, his plan to diversify X’s revenue by building a major subscription business never materialized. It turns out very few people wanted to pay $8 per month for a blue checkmark. By the time Musk rebranded to X
It's Not TV: The Spectacular Rise, Revolution, and Future of HBO
by Felix Gillette and John Koblin · 1 Nov 2022 · 575pp · 140,384 words
want to put that at risk you’d better be sure if you go over the top what it’s going to do to that subscription business. We weren’t really sure.” HBO was, in a sense, caught in a trap of its own success. Its position in cable was just too
The Personal MBA: A World-Class Business Education in a Single Volume
by Josh Kaufman · 2 Feb 2011 · 624pp · 127,987 words
reply, they’ll send another message every few months until you resubscribe or request to be removed completely from their system. Since Netflix is a Subscription business, every reactivated customer means a new monthly stream of income, which greatly enhances the Lifetime Value (discussed later) of each customer. Reactivation is typically a
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business. One of the reasons Subscriptions are so profitable is that they naturally maximize Lifetime Value. Instead of making a single sale to a customer, Subscription businesses focus on providing value—and collecting revenue—for as long as possible. The longer a customer remains Subscribed and the higher the price they pay
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with the program. The first sale is sometimes called a “loss leader”—an enticing offer intended to establish a relationship with a new customer. Many Subscription businesses use loss leaders to build their subscriber base. Magazines like Sports Illustrated offer gimmicks like football phones and spend a fortune on their annual Swimsuit
Nothing but Net: 10 Timeless Stock-Picking Lessons From One of Wall Street’s Top Tech Analysts
by Mark Mahaney · 9 Nov 2021 · 311pp · 90,172 words
2018 quarter miss were largely at play here—lack of a robust new content slate, summer seasonality, the inherent challenge of forecasting a global consumer subscription business where users can sign up and sign off at a click’s notice. But there were two new plausible factors that worked to spook the
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what could well be a very good stock going forward. And you don’t need to worry about missing the big move. Especially with subscription businesses like Netflix. Second, subscription businesses are wonderful because when they are reasonably successful, two things happen. First, they provide an enormous amount of revenue visibility—as more and
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per month X 12 months), before adding any new subs or implementing any GCIs (growth curve initiatives). The second thing that happens with a successful subscription business is that marketing expenses can show leverage—that is, they decline as a percentage of revenue. Because marketing expenses are primarily focused on bringing in
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by 2017. And it almost doubled again to $2.7 billion by 2019. There was always a silver lining in this marketing spend cloud. Successful subscription businesses almost always show leverage in their marketing spend (i.e., it declines as a percentage of revenue), because that marketing spend is largely geared toward
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acquiring new subscribers. As subscription businesses grow, their existing customer bases grow, and their new customers become a smaller percentage of their total subscriber base. That marketing spend was depressing near
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then continued to improve a powerful consumer value proposition, which in turn gave it pricing power, which fed further revenue growth. And Netflix was a subscription business, which meant that there was normally a lot of visibility into future revenue. All of this, along with that operating margin expansion, did in fact
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to sell, 282–290, 292 (See also Bad stocks) Stone, Biz, 134 Stone, Brad, 206 Story stock, 254 Streaming services, 119–123 Streep, Meryl, 135 Subscription businesses, 41–43, 101, 237, 270 Sun Basket, 20 Szkutak, Tom, 192 Taleb, Nassim Nicholas, 18 TAMs (see Total addressable markets [TAMs]) Tarrant, Brenton, 36–37
The Open Organization: Igniting Passion and Performance
by Jim Whitehurst · 1 Jun 2015 · 247pp · 63,208 words
paid” would send some groups scurrying, while others would feel it was not relevant to their area. Renewals are a great example. Obviously, for a subscription business, renewals are a key value driver. Much of what drives renewals is hard-core operational work. Because our products are often sold preloaded on a
Upstream: The Quest to Solve Problems Before They Happen
by Dan Heath · 3 Mar 2020
high. The churn rate is the percentage of customers who don’t renew their subscriptions, and it’s a critical diagnostic of health for any subscription business, from Netflix to People magazine. When Saxena joined the company, the churn rate was roughly 30%, meaning that 3 out of 10 customers stopped using
Makers at Work: Folks Reinventing the World One Object or Idea at a Time
by Steven Osborn · 17 Sep 2013 · 310pp · 34,482 words
happened was there was an inflection point. We consistently grew—we were growing linearly every year, getting more customers, getting more subscribers, because with the subscription business, some percent renew every year, and then you keep adding more people. Then a bunch of things happened all at the same time. Kickstarter launched
Hit Makers: The Science of Popularity in an Age of Distraction
by Derek Thompson · 7 Feb 2017 · 416pp · 108,370 words
Club, born in 1926, promised to handpick only the best works for its select members. The very next year it got competition in the book subscription business from the Literary Guild of America. Neither organization is praised as an innovator today, but their business model anticipated a century of selling bundled content
European Founders at Work
by Pedro Gairifo Santos · 7 Nov 2011 · 353pp · 104,146 words
operation. So when I funded the company, the company was already cash-flow positive. I wanted to hire some more people. Since it's a subscription business, we had the issue of that we have liabilities on the one side. You can't book the entire revenue you get into the months
…
offering them a good service, you've got a good business.” People at the time really understood, this was in a down economy, that a subscription business was a very good, predictable revenue model. People looked at mobile phone companies. People looked at cable companies and said, “Okay. I understand the economics
The Messy Middle: Finding Your Way Through the Hardest and Most Crucial Part of Any Bold Venture
by Scott Belsky · 1 Oct 2018 · 425pp · 112,220 words
would be best building or running their own portfolio network rather than partnering with one. They were right to feel this way because, as a subscription business, Adobe needed to build relationships with the creative community. Online services like community and portfolio management were becoming a more central part of Creative Cloud
Traffic: Genius, Rivalry, and Delusion in the Billion-Dollar Race to Go Viral
by Ben Smith · 2 May 2023
Social. Meanwhile, The New York Times and Washington Post were hoping a new surge of interest as Donald Trump reemerged into public life would revive subscription businesses that had flagged in his absence, as Democrats again turned to them to understand what they feared. But the Times was still awash in cash
No Rules Rules: Netflix and the Culture of Reinvention
by Reed Hastings and Erin Meyer · 7 Sep 2020 · 317pp · 89,825 words
passion, energy, and ideas. A few months later the holidays arrived. DVD players were popular that Christmas, and by early 2002, our DVD-by-mail subscription business was growing rapidly again. Suddenly, we were doing far more work—with 30 percent fewer employees. To my amazement, those same eighty people were getting
Startupland: How Three Guys Risked Everything to Turn an Idea Into a Global Business
by Mikkel Svane and Carlye Adler · 13 Nov 2014 · 220pp
if you optimize for profitability, you sacrifice growth. And for a startup, it’s all about growth. Being a SaaS company, and therefore technically a subscription business, makes the need for cash even more urgent. A good small-business customer would pay us something like $500 a month. Considering the expansion and
Broad Band: The Untold Story of the Women Who Made the Internet
by Claire L. Evans · 6 Mar 2018 · 371pp · 93,570 words
would be among the first. To say there was no business model is an understatement. Word’s backers assumed that online publishing would be a subscription business: like traditional magazines, readers would subscribe, and because there’d be no printing or distribution costs, the profit margin would be huge. They’d be
Brotopia: Breaking Up the Boys' Club of Silicon Valley
by Emily Chang · 6 Feb 2018 · 334pp · 104,382 words
revenues by billions of dollars (total YouTube revenues could surpass $12 billion in 2017, according to one third-party analyst) and launched a new TV subscription business to take on Netflix, streaming services, and cable companies. Forbes recently ranked her as the eighth most powerful woman in the world. Nevertheless, the media
Exponential: How Accelerating Technology Is Leaving Us Behind and What to Do About It
by Azeem Azhar · 6 Sep 2021 · 447pp · 111,991 words
or more. This horizontal expansion is hardly unique to China. Apple, which started making computers, now makes phones, tablets and watches. It has a media subscription business and an App Store. Its products provide health information. And Amazon, a retailer, has moved from selling books to peddling virtually every type of tchotchke
An Ugly Truth: Inside Facebook's Battle for Domination
by Sheera Frenkel and Cecilia Kang · 12 Jul 2021 · 372pp · 100,947 words
reinvention of the revenue-generating part of the company. “What business are we in?” she asked the leaders while scribbling furiously on a whiteboard. A subscription business or an advertising business? Did they want to make money by selling data through payments or through commerce? There wasn’t much deliberation. Of course
Measure What Matters: How Google, Bono, and the Gates Foundation Rock the World With OKRs
by John Doerr · 23 Apr 2018 · 280pp · 71,268 words
of nearly forty full-time hires—to a mechanical process that created no discernible value. Adobe was transitioning full speed ahead to a cloud-based subscription business model, which it needed to keep winning. But even as the company moved its products and customer relations into a contemporary, real-time operation, its approach
Exponential Organizations: Why New Organizations Are Ten Times Better, Faster, and Cheaper Than Yours (And What to Do About It)
by Salim Ismail and Yuri van Geest · 17 Oct 2014 · 292pp · 85,151 words
service at no cost, while also enabling users to pay a fee to upgrade to more storage, statistics or extra features. Advertising, cross-subsidies and subscription business models are other ways of layering profit-generating operations on top of what is essentially free baseline information. Kevin Kelly expanded further on this idea in
Don't Be Evil: How Big Tech Betrayed Its Founding Principles--And All of US
by Rana Foroohar · 5 Nov 2019 · 380pp · 109,724 words
model in key markets.19 Even Netflix, which is in some ways the Teflon FAANG, one that comes in for less criticism because of a subscription business model focused on less sensitive data about our entertainment preferences, has bowed to foreign censors. In early January 2019, it emerged that Netflix had pulled an