Everyone loves the membership model, aka “subscription” model. Businesses love it because it is guaranteed residual revenue. Consumers love it because it is easy for them to get what they want at a fair price with the opportunity to opt out at any time. The also like it because it helps eliminate additional choices. The model is universal and the web facilitates it better than ever.
As an example we have recently launched Web Strategy Workshop – a blog/community site with a business model. That business model is based on a freemium membership model. We give you tons of value and interaction for free. But we will also be providing premium content to paying members. Sounds simple enough and its easy to implement with information products – but how can the model work for existing businesses? Here are some examples I have been thinking of recently…
Record labels and/or artists should create paid membership models. Let’s say my favorite record label, Alive Records, implements a membership model where I pay them $5/mo or $50/yr or whatever – price is arbitrary at this point as it nears marginal cost after production expenses. For this subscription I get a digital copy of every band’s release on the label while I am a paying subscriber – along with discounted tickets to shows and merchandise.
Another example is my local bar – which I go to every once in awhile to eat wings and enjoy a tasty beer while I watch sports. What if they offered a membership model? Let’s say I pay $50/mo to this pub and in return I can eat and/or drink for free there. Some months (aka during patio season) I may be there more often and end up drinking double my membership fee in free beer. The next month – I may not even come in. One thing you can count on – on Fridays when my friends are planning on going out I will be pushing everyone to go to the pub at which I have a subscription – thus bringing all kinds of additional revenue with me. Interesting?
Health Care. A company in New York called Hello Health completely disintermediates the health insurance industry by offering… a membership to their doctors and clinics. For $35/mo you can be a member at Hello Health and talk to your doctor like he’s a pal on Twitter. And when they recommend you need to come in for a visit – you pay a nominal fee.
But don’t worry, we’ve made going to the doctor easy again. Hello Health serves as your old-fashioned neighborhood doctor, remodeled for today’s lifestyle— an experience found nowhere else in health care. And, on top of being accessible and affordable, we focus on you, as a real live, busy person.
We can do all that because we love technology, the Internet, and especially our iPhones. You can talk to us like you’re talking to a friend: through emails, texts, phone calls, instant messages, or face-to-face conversations. Also, everything’s online, from making appointments to accessing your records.
What if Microsoft offered a subscription model where you pay $100/yr and you get access all the consumer software they release? No need to drop $300 when Windows 7 comes out – you are a subscriber. You don’t have to think about whether or not you should upgrade or if it’s worth the cost. It’s easier for the consumer and Microsoft has guaranteed subscriber revenue… Win-Win?
One thing I do want to note is that this model does not work for all industries – especially those whose products have been commoditized – ie newspapers. Or can it?
What do you think of this type of business model? Know anyone that’s using them effectively? What types of interesting membership models have you seen? Let us know in the comments!
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