The Future Will Be Paid For On A Monthly Subscription
The way in which we buy products and services has changed forever and companies need to establish how to survive in a very new world order.
Spotify was perhaps the first sign of the incoming change. When it launched back in 2008 the concept wasn't universally popular. Buying music? What's the point when you can have (almost) all the recorded music that exists in return for one small monthly payment?
The idea of renting music was alien to many commentators who believed that customers would rather own what they listened too. Seven years on and 20 million people pay to subscribe to Spotify, with who knows how many other subscribers spread across rival services from Google, Microsoft and Apple amongst others.
In the same year as Spotify launched Netflix pivoted its DVD rental business into a streaming one. It also has a subscription model, one that is so successful that it accounts for a third of all internet traffic in the US. Worldwide 70 million customers pay a monthly subscription to Netflix for access to movies.
In business we have seen the rise of SaaS, IaaS, Cloud storage, etc. As these components of an IT strategy move to service based solutions so businesses are moving from big capital payments to smaller monthly service fees.
Microsoft has successfully moved its biggest product to a subscription model with Office 365, whilst also having a hugely successful gaming subscription with Office 365.
Smartphones have always been supplied via a hidden subsidy in a carrier agreement. The cost of the phone spread over the length of the contract. Recently there has been a move to separate out the cost of the phone from that of the line rental, making the costs more transparent to end users. Apple's decision to create an iPhone subscription program fits into this model well.
What about the industries that haven't yet managed to find a way of moving to the new way of doing business? There is, as yet, no successful subscription service which provides readers with access to the wealth of publishing. Library services take up much of the slack on this one though, even if they don't always carry the most recent titles.
Car ownership has usually been a result of some form of credit agreement, however the possibilities opened up by services like Uber and CityHop can break that model into a much more palatable subscription cost. Pay a small membership fee and then a by-the-hour rental to use a car when you need it. Or just make use of a cheap and convenient taxi service.
Between finance agreements, subscription models and leasing we own less and less of the things that we use day to day. We move further in this direction every day.
In a world where all possessions are transient, never owned only borrowed, how does the future really look?
When John Lennon sang "Imagine no possessions / I wonder if you can / No need for greed or hunger / A brotherhood of man / Imagine all the people sharing all the world" I imagine the sort of sharing he had in mind probably wasn't of the status update variety.
Image: Sierra Blanca Mountains By Jay Phagan [CC BY 2.0 (http://creativecommons.org/licenses/by/2.0)]