The latest news indicates that two of the largest technology entities, Microsoft and Google, may be resigned to the fact we’re headed towards a subscription economy. January 29, 2013, the headlines broke that both YouTube and Microsoft Office were planning to move to a subscription-based model.
The announcements seems too well-timed to be a coincidence. It’s clear that the most-powerful minds in business are aware that a subscription economy is imminent.
YouTube, which has soared to a status as the second-largest search engine in the world, has formally announced that they’ve invited several channels to submit applications for paid programming. Subscribers would pay between $1-5 monthly for access, and the platform hopes to move towards hosting second and third-tier cable programs and live events in the future.
Microsoft Office, formally the bread and butter of the technology brand and a key driver of revenue, has ceased being a priority among consumers. As of February 5, 2012, consumers are now able to purchase up to 5 subscription-based versions of Office and 27 gig of storage for $100 a year.
The two headlines are clearly significant for SaaS entrepreneurs. But what precisely do they mean? We’ve outlined several of the ways the announcement holds weight for business owners:
1. Technology is Changing Too Fast For Traditional Licensing
A decade ago, the average consumer of technology typically had two devices: a PC for personal and work use. With the continued explosion of modern technology, entrepreneurs simply can’t expect an early adopter or professional to rely on just a couple of devices.
According to Laura DiDio, Principal Analyst of Consultancy at ITIC, the target consumers’ move to smart phones and tablets means that people are staying with the same version for “five, six or even seven years.” Consumers need a level of flexibility that can only be found through a subscription economy.
2. Consumers Are Willing to Pay for Quality
There’s no shortage of content on YouTube. However, content curation continues to gain value in an era where consumers are hit with thousands of marketing messages a day.
“We have maintained that different content requires different payment models.” states YouTube CEO Salar Kamanger. The internet hasn’t necessarily created a culture where consumers expect free products, but are rather willing to pay for services received through a subscription model.
3. The Modern Experience is Seamless
The concept of work/life balance only emerged in an era where consumers couldn’t walk away from work at 5 PM. Due to the fact that connectivity is universal and uninterrupted, the modern consumer is highly flexible and may perform work and personal tasks on a variety of devices in a given day.
Microsoft Spokesman Jevon Fark acknowledges that consumers are increasingly moving to a subscription economy, where technology can be received-on demand, from anywhere in the globe: “people want a seamless experience across all their devices.”
The recent announcements prove what subscription business owners have known all along: technology has placed control in the hands of the consumer. Your company’s prospects want products and services they can receive at their convenience, from a variety of devices.
What do you think? Do you think it is a smart move by Google and Microsoft? Please share your thoughts using the comments box below.
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