“Risk-Free” Subscriptions to The Celestial Jukebox? (A Working Draft)

  • Business know that consumers like simplicity.
  • They also know that consumers hate surprises.
  • So subscriptions are made simple: unlimited, flat-rate, all you can eat (AYCE).
  • But AYCE distorts incentives — it overcharges light users and undercharges heavy users. It limits risk at the high end, but not at the low end or the middle.
  • They have difficulty acquiring customers, and so offer introductory discounts (jam yesterday)
  • They have difficulty retaining customers, and so offer retention discounts, but only after you try to cancel (jam tomorrow)
  • But there is rarely any discount in normal times (never jam today).
  • But micropayments just change the pattern of risk: how many nickels will I need?
  • This reduces risk at the low end, but not at the mid end — and dramatically raises risk at the high end.
  • Get “run of the house” access to whatever items you want
  • If your usage for the month is zero, your bill is $0
  • As your usage for the month grows, your bill grows, but with declining cost per item. Your bill will go from $0 to $7, depending on how many items (and how many of them are premium items).
  • To avoid the risk of bill-shock when you used more than you intended, you never have to pay more than $7.
  • add nuance to our usage metrics to move us closer to a value-based metric that understands that some clicks are more valuable than others
  • layer on options to more fully support the ongoing investment of publishers and creators.
  • Will I use enough to justify the monthly price — now, in the past, and going forward? Am I using the service often enough?
    Am I happy with my interest level in the selections offered?
    Am I satisfied with the quality of the items I consume?
    Do I just skim many items, or quit part way through?
    Do I get the desired value (or enjoyment) from the items?
  • Which premium channels should I buy access to?
    How would I know in advance?
    Did I watch enough items on the premium channels I chose and paid extra for?
    Was I happy with the premium channel items that I did consume?
    Did I regret that I could not watch programs on premium channels I did not subscribe to?
  • Is this subscription one that deserves to be in the “portfolio” of sources I pay for unlimited access to (given all the content sources of this kind that I want)?
    Did I find this month that I wanted other services I did not subscribe to?
    Can I afford to add still more subscriptions?
    Is this a subscription I should drop, so I can afford something else?
  • How can I predict any of this reliably?
    Do I know what will be offered in coming months?
    Do I know what alternatives will draw my attention elsewhere?
    Will I be paying for periods where I am on vacation or too busy?
  • What if I run up a huge bill?
    What if I get hooked on a binge?
    What if my kid goes overboard?
  • Will I be sorry I paid per item instead of getting an unlimited subscription?
  • What if I select items but find them disappointing?
  • What if I like to skim, and so access many items but get little value from each?
  • Compared to micropayment/PPI models which are already totally dependent on usage, the risk-free model should not worsen predictability — and might improve repeat activity enough to make predictability much better. Many businesses are hit-based, and deal with it, and all but the smallest publishers can spread that risk.
  • Compared to flat-rate subscriptions, the obvious concern is that the steady stream of monthly payments from each customer might become much less steady. However, the law of large numbers (many customers) will tend to smooth that in aggregate. Also, if the risk-free offering is designed well, there is reason to expect that reduced CAC and churn will dramatically increase the number of subscribers, so that overall revenue and net profit will be much higher, even if it is more variable.
  • At the end of the period (along with the statement that reports on usage, and what the “risk-free” price came to), invite a voluntary bonus to sustain the publisher.
  • Remind the subscriber what they accessed and what they apparently got the most value from.
  • Invite them to add a bonus payment, to reward the publisher, to better enable them to continue to supply more like that.
  • Also, invite them to make this a recurring bonus (that can be cancelled at any time), so the publisher has more certainty of continuing revenue.
  • Think of the base risk-free subscription as the way to maximize market reach, and ensure a base level of compensation commensurate with usage. (A component of price that is controlled by the provider.)
  • Think of the sustaining bonus as the way to nudge consumers to sustain the ongoing creation of services they value. (A component of price that is controlled by the customer, within limits set by the provider.)

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Richard Reisman

Richard Reisman

Author of FairPay | Pioneer of Digital Services | Inventor, Innovator & Futurist