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Experience and access, not content, are king.

The fundamentals of subscription models have not changed with new technology. They provide recurring revenue, have a predictability and loyalty, give insights into consumer behavior, and provide unlimited marketing benefits to aggregated audiences. The growth of subscription based products is being fueled by delivery advancements and ambiguity of new technologies.

Creating a new kind of subscription based product is challenging and entrepreneurs should be aware of the business complexities that can be created through digital subscription services. Customers have a high level of expectation and expect to receive consistent content quality, delivery, and enhanced functionalities. People pay for the experience and access, not content. When content is involved people are paying to access it, not for the content itself. It’s vital to understand that they are subscribing to an experiential service, not to content.

Multi-platform access is a big deal – and TLM think’s it is a must have for those of us creating subscription services today. It’s important that designers create experiences that are ubiquitous and integrate into natural behavior in a way a user can’t imagine living without. Winning strategies will also have a form of exclusivity and provide an experience that it is hard to get anywhere else at the price that is being offered. When created intelligently your service should let users get something for far less cash than they would have to pay through more traditional outlets. To keep people subscribed you must have an above average customer experience and and ubiquity in your market or be a much cheaper option. The best entrepreneurs will figure out how to accomplish all three.

Strategies for pricing subscription based media products.

Consumers will spend more than $36 Billion dollars on subscription based media by 2014. We’ve discussed in the past how entrepreneurs can capitalize on subscription based consumer media products and the various channels available for processing payments.

The pricing used for subscription based media products is almost as important as their design. Product developers and platform designers must design systems that make recurring payment as effortless as possible. It’s important to the characteristics of your brand and the success of your business to think through and then test things like activation date’s, duration of service, tiered pricing, and tier fluidity, recurrence and dunning.

TLM has found that each platform must have easy to use customer service systems and customer service should be clear and responsive. It should be easy to see adjust billing, renewal, and cancellation options. With certain systems, it’s important that the account management system make it easy to gift friends with subscriptions or to purchase additional services.

Your pricing strategy should not only take into account comparable services, but should focus on how to retain and serve users after they have signed up. Pricing strategy should start with the product design and entrepreneurs should be familiar with the risks and benefits of various billing structures and the ease of use their systems provide to customers.

Making money with subscription based apps and services.

There are three viable options for billing smart phone and tablet users for subscription based media. Product developers and platform designers should take these into consideration when making new experiences. Creating product roadmaps and understanding the financial implications presented by these three options can make a big change to the early success of your application or subscription based consumer media product.

Apple iOS has 160MM+ users have opened the market. The iPhone and now iPad have a very active community that provides an unmatched lead funnel for new customers and Apple provides an instant platform for content owners. Apple users have been conditioned to download new experiences and the Apple iOS makes charging these customers virtually effortless.

However, Apple take 30% of all revenue. That is 20% higher than google charges for their Android platform and 26% more expensive than traditional online fulfillment services. Entrepreneurs are equally challenged by Apples limiting terms of agreement and the limit on what a developer can do with each customers individual data.

Google recently launched a service called Google One Pass that only takes 10% and works with every platform with the exception of Apple iOS. Google has easier rules in their terms of service and very permissive customer data rules.

The Google system is still relatively new and is not as “plug and play” as the apple experience. They also have an unproved lead funnel for attracting new customers, and some consumers have had difficulty with the Google Checkout experience. However, many analysis have said that the android platform will far surpass the market share of every other platform in early 2011.

For those who would like to keep transaction fees at a minimum various SaaS models can be integrated into their payment systems. These are often more complex and the technology can be difficult to execute but the total cost is between 1-5% per transaction. This option is most viable for experiences that are rooted in a browser and able to extend into mobility devices. Services such as Zuora, Vindicia, Authorize, and PayPal each have service oriented API’s and low exchange costs. They let you own the customer data which can be very valuable to various types of business.

SaaS models are weakened because there is still a limited focus from these providers in the mobile space and they have not been specialized for content publishers. Businesses have faced issues with mobile market walled gardens and the cost-benefit needed is for very high volumes.

The most important thing is to get all the facts together and be sure to build your product roadmap in a way that will let your service grow naturally and evolve over time. Your development strategy should allow you to rapidly test your ideas and then expand into the larger marketplace. TLM also believes that it should let you get to sustaining profits within one year of launch. When you take these things into consideration, in some circumstances, it can make sense to focus on Android first, HTML5, then iOS.

Google introduces Google One Pass

Google One Pass is a payment system that enables publishers to set the terms for access to their digital content. It offers purchase-once, view-anywhere functionality, so users can view the content they buy across all of their devices. By providing a system for user authentication, payment processing, and administration, Google One Pass lets publishers focus on creating high quality content for their readers. Publishers have flexibility over payment models and control over the digital content for which they charge and the content that is free for consumers.

Google One Pass is easy to implement and simple to manage. The set up is minimal and content will be managed through a simple online interface, so publishers can try out different approaches to selling content with minimal development cost and see what works for their business. It is powered by Google Checkout, so publishers’ e-commerce and payment processing needs are covered, and there is no need to build a third-party payment system into publishers’ sites.

Publishers have control over how users can pay to access content and set their own prices. They can sell subscriptions of any length with auto-renewal, day passes (or other durations), individual articles or multiple-issue packages. Google One Pass also enables metered models, where a publisher can provide some content or a certain number of visits for free, but can charge frequent visitors or those interested in premium content based on the business model that the publisher prefers.

It also allows publishers to grant access to existing subscribers through a coupon-based system — so it is easy to give full online access to current customers. Publishers can give their customers codes verifying their subscription status, or can seamlessly offer content to existing subscribers via solutions enabled by Google One Pass.

Google One Pass operates across multiple sites, so you can easily manage content across all of your online properties. It also offers payments in mobile apps, in instances where the mobile OS terms permit transactions to take place outside of the app market.

 

Android first, iPhone second, and then think hard about HTML5.

Mobile resources are limited and often budgets are unknown. This causes a strange environment for entrepreneurs and companies who want to create a mobile application. While most think about Android and Black Berry devices, iPhone applications normally are the default. In 2009 this made sense, but today the smartest are creating roadmaps that deliver Android applications first, followed by iPhone applications, and when possible a fully functioning HTML5 version of their technology.

While Apple may make more money from it’s marketplace (they charge a 30% transaction fee to developers), they are not the market leader. Take a look at this char from comScore.

Apple currently has about 25% of the smartphone market, but if these numbers are correct then Google will soon have 37%. That is a big difference, especially when considering the 10% transaction fee that Google charges developers.

The second thing working in Androids favor is the lower cost of their devices. And that their devices have a keyboard, which many users still demand. While only one in four mobile subscribers have a smartphone, that ratio is changing fast. You can now buy a smartphone for $30, and that will change the demand for applications, pricing, and everything we know about the mobile space today.

All of these factors should be reflected in your product roadmap. TLM thinks most services need to function cross platform. However, it makes sense to have a release strategy that lets you get it right with one platform before duplicating across the others. It’s important that your strategy thinks through where the bulk of your early customers live and how your able to connect with your audience in the most effective way.