The rise of micro-subscriptions

Welcome to 2022. That’ll be $2.99 a month.

If it feels like you’re suddenly being charged for everything in your life, it’s because you are. And more often than not, that line item on your credit card statement is a monthly charge.

Subscriptions are everywhere. Dinners, razors, video games, electric scooters, workout apparel: Almost everything can now be bought under a monthly payment model. And, by-and-large, interest in the subscription economy shows no signs of slowing down.

• “It’s the name of the game,” said Stephan Liozu, who has written several books on pricing strategies. “People are now just saturated with subscriptions.”

But now we’re onto the next chapter: Welcome to the age of micro-subscriptions.

• A monthly payment for the latest SaaS offering is too expensive? Switch to consumption-based pricing and just pay for what you use.
• Bored of the existing features on Snap? Sign up for the $3.99 per month premium offering.
• Don’t want to buy a $70 video game? Download one for free and pay for expanded features as you go.

There are indicators of increasing consumer animosity and evidence that companies may be testing the boundaries of the subscription business model.

• Probably the most visible is subscription fatigue with streaming platforms, which is causing a lot of trouble for Netflix and others.

• Software-as-a-service has become the primary method of delivery, creating headaches for some IT leaders who now find themselves with bloated application suites.
• Pasta is basically the nectar of the gods, but do we really need a subscription service for it?
• And in an instantly classic case of jumping the shark, BMW decided to start charging $18 monthly for a subscription to seat heaters. Rightly so, the move was ridiculed.

Companies are constantly looking for new ways to make money off of us, and the lure of the monthly fee model is bound to be too enticing to pass up.

• “There’s definitely a push for greater monetization,” Liozu said. “It’s moving away from freemium. And the recession obviously doesn’t help. Companies are in survival mode.”

Many businesses are used to offering a set of products or services as a bundle, which makes it easier to unbundle and sell as separate subscriptions. Couple that with concerns about an economic slowdown ahead and it’s a low-hanging strategy for businesses to try to both grow and diversify their sales.

• If done right, subscriptions can provide a more stable revenue stream, one that also gives companies the option to hike prices on consumers as a way to bolster revenues. Slack, for example, just raised the cost on its premium tier.
• Subscriptions also provide businesses much more intimate data on their consumers. That helps better personalize marketing to persuade users to spend more, which is becoming more critical in a cookie-less world.

Smaller payments work at getting us to pay for a product or service — something that we might have previously been getting for free or as part of an otherwise bigger package of services, like TweetDeck. They can also help alleviate some of the problems businesses face in managing subscription models.

• Netflix, which is trying to crack down on subscribers who share passwords, is hoping a cheaper tier will persuade those people to buy their own membership.
• And software vendors eager to avoid the central IT office are going directly to users with low introductory pricing options to get them hooked on the product.

Given the success, it’s likely we’ll see even more of this. For example, Elon Musk wants to lower the already rock-bottom pricing for Twitter Blue and charge it all upfront instead of monthly.

• Still, there are some industries where, for now at least, micro-subscriptions seem to be a distant dream. You’d be hard-pressed to find a major publisher that will let you pay to read just a single news article. And car subscriptions still haven’t quite taken off.

Ever since the Cambridge Analytica scandal at Facebook, backlash has grown against the “free” business model, one in which consumers are largely paying for the product with their data or some other non-monetary form of remittance.

But perhaps that wasn’t so bad. Corporations are going to get our information one way or another. Now, they’re also going to get our $2.99 per month. Maybe our only hope now is the hacker community.

SPONSORED CONTENT FROM MICRON

Chip shortage could undermine national security: The global shortage of semiconductors has impeded the production of everything from pickup trucks to PlayStations. But there are graver implications than a scarcity of consumer goods. If the U.S. does not ensure continued domestic access to leading-edge semiconductor manufacturing, experts say our national security could suffer.

Read more from Micron

The best of Protocol

This Al Gore-backed coalition is trying to hold climate polluters accountable— Michelle Ma

• You can’t reduce carbon emissions if you don’t know where they’re coming from. Or as Al Gore put it in a recent conversation with Protocol: “You can only manage what you can measure.” But measuring the impact of the biggest climate “bad guys” wasn’t even possible till now.

Charles Lamanna runs one of Microsoft’s fastest-growing businesses: Helping regular folks build business apps— Aisha Counts

• Microsoft’s Charles Lamanna helped shift Microsoft Office to the cloud with Office 365. Now, he’s all in on low-code software development, and is at the center of “one of the fastest-growing Microsoft businesses at scale.”

Coinbase case could turn crypto tokens into securities— Tomio Geron

• What are securities, and what aren’t? The crypto industry has been trying to answer this for years, but the SEC’s case alleging insider trading by a former Coinbase employee could provide some clarity.

There’s a new push for a right to repair enterprise software— Ben Brody

• Repairing old company software on your own is difficult. But FreeICT USA, a group of companies that fix enterprise software and servers, is pushing for the right to repair in Washington.

Meta’s next big bet: The ‘metaversity’— Kwasi Gyamfi Asiedu

• A chemistry class at Morehouse College became the test subject for a new type of virtual learning: courses based in the metaverse. Now, Meta’s pumping millions into the concept.

How will Big Tech respond to the end of Roe v. Wade? Look abroad.— Issie Lapowsky

• In the wake of the Supreme Court decision overturning Roe v. Wade, how resources were spread online in countries like Poland could serve as a warning for what’s to come in the U.S.

Chiplets helped save AMD. They might also help save Moore’s law and head off an energy crisis.— Max A. Cherney

• AMD’s decision to go small will likely have a big impact. Instead of packing tons of features onto a single chip, it broke up its flagship chip into four separate parts and stitched them together. This approach is called “chiplets,” and it may gain big traction in the coming years.

How I decided to allow remote work forever at Atlassian — Allison Levitsky

• The shift back to the office remains in limbo as companies figure out what would work best for their employees. Though deciding to make Atlassian forever remote was an easy enough decision for co-CEO Scott Farquhar, ironing out the details wasn’t quite as simple.

Security teams are skeptical of AI. Attack prevention products could change that.— Kyle Alspach

• AI-powered attack prevention will likely be a big part of the next wave of machine learning for security. And if the tech lives up to its promise, it could support major advances in cyber defense, experts told Protocol.

SPONSORED CONTENT FROM MICRON

Chip shortage could undermine national security: To ensure American security, prosperity and technological leadership, industry leaders say the U.S. must encourage domestic manufacturing of chips in order to reduce our reliance on East Asia producers for crucial electronics components.

Read more from Micron