Subscription-based services are changing the game for ecommerce, media, and streaming industries. LettsGroup is paving the way, adopting subscription services for an array of its own ventures.
The evolution of technology has affected human behaviour and shifted business operations and competition accordingly.
Subscription models have seen consistent growth and pickup by businesses as large as Unilever and Walmart as well as many startups and small businesses.
Over the last decade, the subscription ecommerce market has experienced meteoric growth. According to Forbes, there’s been 890% expansion since 2014. Currently, there are 18.5 million subscription box shoppers in the U.S. and 35% of these active shoppers subscribe to three or more services, with a median number of subscriptions per active subscriber being two.
According to Hitwise, the average demographic of this consumer is a younger millennial with a college degree that lives in a college town with an income above $100,000 (£75,000). They are also often an Amazon shopper, a regular reader of online news and more likely to buy online than in-store.
There are three broad types of ecommerce subscriptions:
Replenishment subscriptions (32% of subscriptions) - which allow consumers to automate the purchase of commodity items, such as razors or diapers.
Curation subscriptions (55% of subscriptions) - that attempt to surprise and delight by providing new items or highly personalised experiences in categories such as apparel, beauty, and food.
Access subscriptions (13% of subscriptions) - pay a monthly fee to obtain lower prices or members-only perks, primarily in the apparel and food categories.
The future looks bright for the recurring revenue leaders.
More relevantly, subscription-based media is a major game-changer. With news media diving head-first into the digital world, ad revenues and circulation have been in decline, and an endless series of cost cutting and transformation plans has led to the industry stabilising around paid subscriptions. LettsGroup’s own The Letts Journal has been at the forefront of subscription-based systems, solely reliant on digital circulation with paywalled systems for revenue as an ad-free service. And, based on demographics alone, the internet paywall is becoming a key part of the future of profitable digital content circulation.
While newspaper staff numbers keep falling and print circulation declines, digital media is growing. Based on publicly traded companies, in 2020, ad revenue for digital newspapers stood at 39%. Digital newspapers share of ad revenue has been steadily climbing, as in 2011 it had accounted for just 17% of ad dollars. The trends are similar across the western world. Digital, subscription-based media is here to stay.
The increasingly dominant subscription economy will get tested as we have headed into its first major economic downturn. The effects could be hard to predict, but while the upward trajectory is bound to continue, the likelihood is that short term pressures will dampen new sign ups. Ultimately the sector will probably consolidate around 2-3 leading players in each category. While this could be bad for consumers and content producers, there is an emerging category that could point to the future.
It seems that creators are taking the subscription economy into their own hands. A number of paywall based newsletter platforms have emerged for independent writers and media startups enabling them to charge subscriptions to niche audiences. Some, such as Bankless, have developed subscription audiences in the hundreds of thousands. LettsGroup’s website system for the art world, LettsArt, provides a subscription-based platform for the art world and is free for artists. Artists can easily buy and sell their pieces, in a way that fully enables them to take complete control of the process.
LettsGroup has also launched one of the first online eco-services platforms for the subscription economy called LettsSafari. Environmentally conscious subscribers pay so that trees get planted, wild animals released and new rewilding safari parks are created and supported.
Just as new platforms will drive the emerging creator economy, we can expect Web3, including crypto, NFT’s and the metaverse, to shape big media over the next decade alongside other key technology developments like AI - all of which are factors LettsGroup will account for in the development of incoming ventures. The drive to digital is likely to become pervasive and, if so, micro payments should finally take off. A few cents for a media snippet supported by ads could prove to be an attractive alternative to the limited number of subscriptions we might be willing to sustain.
This article was first published in the Letts Journal.