I’ve spent a lot of time covering the subscription and billing space – vendors like Zuora, Aria Systems and Vindicia at the enterprise level, and SB vendors like Chargify and Recurly are all trying to provide modular solutions for businesses that want to move to a subscription model of commerce. In fact Zuora founder and CEO Tien Tzuo has spent years preaching about “the Subscription Economy” and using examples like Netflix and Zipcar to prove his point. But often the examples that these vendors use to illustrate their point come from industries that already follow a subscription model The news that Adobe is moving to a subscription service is interesting from a software and strategy perspective, but isn’t quite so exciting for observers of the subscription billing space in particular – I’m more interested in example of subscription models truly revolutionizing an industry (or a part of it).
As someone who spends time looking at the future – and how organizations will react to the underlying changes they’ll encounter along the way – the move to subscription models, and the ensuing challenges that raises for businesses used to monetizing in a non-subscription way is fascinating. There’s lots of ways that businesses can deny that subscription models will be relevant for them, but essentially they’re all about denial of a future which is, in my view, inevitable. More enlightened businesses embrace the change however and deliver upon one of the basic tenets of business playing out today: cannibalize your own business or risk someone else doing it for you.
Which is why I was interested to hear from Aria Systems recently about a couple of great examples of the move to subscription models – two carriers, United Airlines and Surf Air recently announced some interesting subscription models. United Airlines, the carrier that seemingly everyone loves to hate, announced they will now offer a subscription option for premium services while start-up regional airline Surf Air has plans to base their entire revenue stream on flat monthly fees for any number of flights between the communities they serve.
This is particularly interesting for me – I’ve spent time working with some airlines and appreciate firsthand the pressures they’re under. While it’s de rigeur to criticize airlines like United (and yes, I do it myself frequently) it’s hard when you’re in an industry which is massively capital intensive and, in recent years has been very limited in terms of margin generation – fighting for survival sometimes makes it difficult to spend time blue sky thinking about opportunities out o left field. But of course when you’re fighting for survival is precisely the time that new models, new approaches and new strategies become even more important. And this is why the United and Surf Air moves are so interesting.
Tagged as Economy Plus, United Airlines’ new subscription program offers air travelers a variety of formerly pay-per-use additional services for a flat monthly fee, including pre-paid checked baggage and seating with extra legroom. An interesting option for frequent flyers is to pay for their subscriptions with accumulated miles. Surf Air, a regional California airline offering an executive travel experience out of small terminals in California, offers its services only through a monthly subscription.
There’s lots of ways that subscription models can be sliced and diced – subscription, usage or combinations of the two – but whichever approach businesses take, the very fact that they’re looking to subscription services as a new opportunity is fascinating to watch.