From Ownership to Access: The Rise of the Subscription Economy
If subscription had a cover star, it would be Netflix.
At least it would have been before their asinine decision to crack down on password sharing. Ironic considering the rise of subscription is largely due to ownership’s conceptual shift to a much more ‘shared’ model.
Regardless, subscription (believe it or not) wasn’t sparked in 1997 when the big red N started shipping DVDs to its users. The concept’s been around for hundreds of years.
As early as the 1850s, milkmen operated on an early form of subscription model while magazine and newspaper subscriptions really took off around the turn of the twentieth century.
Today, there’s a subscription for nearly everything. From the mundane (phone contracts, cloud data storage) to the weird (letters from dead people) to the controversial (OnlyFans).
Matter Of Form favourites range from Figma and Dash Water to El Tab — an app for Londoners that acts as a daily, digital bar tab where subscribers (A.K.A. us) can get up to four free drinks at a variety of venues across the city.
Subscription economy growth over the past decade has been driven by a number of factors, including digitisation, convenience, variety and gratification. But the unprecedented uptake we’re seeing now is thanks to reimagined ideas of ownership.
Younger generations are becoming more at ease with sharing goods, services, and experiences with total strangers since they’re less interested in owning things and less able to do so.
Why have the stress of owning and upkeeping something, when you can have a monthly upgrade, regularly scheduled servicing or wear the latest runway designs without the cost? Even better, you don’t have the responsibility of the resale. Not to mention the sustainability credentials won through offering a circular economic solution that allows these consumers to shop responsibly without the extra effort.
We’re moving from ownership to access; prioritising connection, belonging and engagement over concrete possession. And subscription is fast becoming businesses’ best method.
What is the Subscription Economy?
A subscription model is a business approach in which customers pay a recurring fee at regular intervals, typically monthly or annually, in exchange for ongoing access to products, services, experiences or content.
The model itself can take many forms, morphing from subscribe + save to build-your-own to sequential subscriptions or anchor dates where customers can schedule specific shipping, either by day or by month.
It’s a departure from the traditional one-time purchase model, instead focusing on establishing a continuous relationship — engaging clientele beyond a purely transactional relationship.
The subscription economy is a concept that reflects the growth of this model (or tool — we’ll get into that later) in modern companies, from software-as-a-service (SaaS) to streaming services to e-commerce.
Why Subscription Models Work
WGSN data projects that by 2030, as many as 75% of direct-to-consumer brands will have a subscription-based offering. And it has its merits:
- Convenience & Cost Savings
- Product/Service Variety
- Limited Edition/Exclusive Product Access
- Personalisation, Customisation & Flexibility
- Ongoing Novelty & Anticipation
- Sustainability & Conscious Consumption
- Unique Clienteling Opportunities
On the flip side, integrating or launching with subscription presents unique challenges:
- Value Perception in Saturated Markets
- Customer Acquisition, Churn & Retention
- Evolving Customer Expectations
- Algorithm Anxiety & Tech Disillusionment
A common misconception when it comes to subscriptions is that they’re an easy option. A one-size-fits-all belief that’s pulling in the laziest of business boardrooms. And as the world watches these haphazard decisions fail, the more cynical are losing faith in subscription.
Why do they fail? Because these boardrooms aren’t seeing subscription for what it is.
If brands want to take pride of place on the cluttered shelves of consumer minds, they have to shift their product-centric mindsets. They have to consider the psychology of their clients, their behaviours and lifestyles. Those are the tenets that dictate what they’re seeking from the brands they buy from.
Are they the lifehacker who wants to put parts of their life on autopilot, instead focusing their attention on reconnecting with the world? Are they the new anarchist who never wants to feel like they’re being sold to? Or are they the cultural trailblazer, selective and pioneering, acutely tuned into new ideas and smart design?
As always it starts with knowing your clientele and your audience. It ends with constant innovation, reiterating your product/service time and again to remain relevant and distinctive.
How The Luxury Sector is Heightening Subscriptions
Instead of wandering through well-known subscription sectors like styling and fashion rental, sports and gaming or the maze that is meal kits, we’re going to look at how luxury is doing subscriptions differently.
Though there are technical differences between them at any level, luxury subscriptions actually look a lot more like memberships than your typical streaming service contract thanks to the often high financial barriers to entry and exceptional service usually attached to them.
The latter of which is heavily leveraged among many emerging leaders.
Modern members’ clubs are redefining the ways we think about membership. But when it comes to concierging, Velocity Black trumps the deck.
A members-only concierge service with 24/7 global coverage, Velocity Black is reimagining service and experience for “high-performance people” who want the most out of life..
In a conversation with Matter Of Form, Velocity Black’s co-founder and CEO, Zia Yusuf, reveals how they feed into the experience economy through a subscription model.
“When was the last time you really looked forward to something? That is what we are trying to fix at Velocity Black. For example, one of the experiences we offer is to design and create a pair of Christian Louboutin shoes with the Head of Design in Paris. [Clients] look forward to it because it’s a showcase of the expertise and craftsmanship which is so core to that brand... then the experience becomes part of them. It’s a natural focus on our customers. We see it as our obligation to innovate on behalf of our members.” – Zia Yusuf, Co-founder & CEO of Velocity Black.
In other avenues of life, subscription’s being used to heighten one’s chances of finding love. And when it comes to Raya — a private, membership-based community for people all over the world to connect and collaborate — that love could come in unlikely forms. Meaning celebrities.
In what The Conversation calls “the Illuminati of the Tinder world”, Raya is among a surprising number of dating apps designed for the rich and famous. With only a small number accepted into the membership (according to a New York Times report, only 8% of applicants make the cut — a higher rejection rate than Harvard Business School), it’s got exclusivity in spades.
Another surprise, subscription to Raya isn’t as dear as you might think with the basic plan sitting at £16.99 for UK members.
Though dating services might seem trite to the traditional, conservative luxurian, they hold a significant place in the modern world. In 2022, 366 million people worldwide used dating apps or dating sites to meet new people. Not a number to be scoffed at.
As Velocity Black continues to elevate high-performance lifestyles across the board and platforms like Raya hone in on matters of the high-net-worth heart, other powerful brands are focusing their attention on one kind of luxury item.
The world’s largest private member supercar club, operated by Auto Vivendi, offers members access to a collection of universally sought-after supercars for an annual fee, as well as invitations to members-only events, creating an exclusive network that elicits some serious envy from non-subscribers.
Luxury German manufacturer Porsche have created their own subscription offering: Porsche Drive, where subscribers can “drive the vehicles of their dreams on their terms” whether it’s the single-vehicle or multi-vehicle subscription. It’s only available to US clientele at the moment, but will likely be rolled out globally due to rising demand for luxury automotive subscriptions as an alternative to rental and leasing.
Lesser known brand HYPR’s USP is a tiered subscription model for exclusively hybrid vehicles. A more purposeful positioning split into three options:
- HYPR Premium gives members access to HYPR’s Prime Cars, this includes Range Rover & Mercedes S Class models.
- HYPR Black gives members access to HYPR’s Super Prime offering. Which includes additional Bentley & Maybach vehicles.
- HYPR Access gives you access to the app & prime cars, with this membership however HYPR & HYPR Black members get priority on bookings & summoning.
Though hybrid vehicle subscriptions are looking a little slower on the uptake, they pose clear success in the next decade or so. Plus HYPR’s digital design is easily the most superior of all its competitors.
As culture and consumerism become more curatorial, it’s unsurprising travel and hospitality have turned their attention to subscriptions.
The world’s first luxury travel subscription service, Inspirato Pass, launched in 2019 to give subscribers all the benefits of the Inspirato Club (an international luxury travel membership) plus the flexibility to choose the frequency of Pass Trips per year.
For $2500 a month, pass holders gain access to a “buffet” selection of luxury vacation homes and legacy five-star hotels on a first-come, first-served basis. Subscribers are able to pick from over 60,000 available trips or properties in more than 150 locations around the world without worrying about highly idiosyncratic nightly rates, taxes, or fees.
Whilst Inspirato’s flagship model remains a members-based luxury destination club, “The Pass gives affluent travellers the freedom to book a wider variety of trips and experiences on a more frequent basis.” – Inspirato Founder and CEO, Brent Handler.
Following Inspirato’s success, international hospitality groups have taken note of the subscription surge. Namely Accor — Europe’s largest hospitality company and MOF client — with their All Plus Voyageur Card.
Designed specifically for the luxury business traveller, a Voyageur subscription offers access to Accor’s luxury and premium destinations at a discounted rate as well as curated experiences and itineraries for groups, couples and families like romantic weekends in Paris or family getaways by the coast.
Another brand opening up borders through a subscription model is Remote Work — the world’s leading remote work community featured in Forbes, The New York Times and Wall Street Journal.
It’s a seemingly simple yet incredible innovative concept. Remote Work’s landing page reads: “Bring your job. Meet our community. Explore the world. Leave the details to us.”
Subscribers (or members) can choose from over 80 destinations across the world, spending one, four or twelve months in new cities, countries and continents. With 5000 Remote Work-ers so far despite still being a relatively young brand, there’s no doubt they’re one leading us into the future of travel and exploration.
What Will Subscription Look Like In The Future?
- Subscriptions will become even more personalised thanks to AI and machine learning, catering to the most unusual preferences, needs and desires. As tech continues to advance (and advance and advance) and data becomes more nuanced, future analysts can level up tailored recommendations, content and experiences.
- As the Internet of Things (IoT) enters popular culture, subscriptions for connected devices, appliances and smart home systems could provide regular updates, maintenance, enhanced functionality and experiential value add.
- Experience-based subscriptions will account for a significant portion of the sector, even for product-based businesses as generations of people turn their attention (and finances) towards things they feel will make their lives richer, often by forming core memories.
- Instead of fixed recurring payments, pay-per-use subscriptions could become more prevalent for the spontaneous and sporadic. Customers would only pay for the actual usage of a product or service, offering flexibility for the untethered (digital nomads, bleisure travellers) and the instinctively impulsive.
- Blockchain technology could play a role in subscription management by providing secure and transparent transactions, ensuring accurate billing, and facilitating seamless switching between subscription services.
- Sustainability is quickly solidifying itself as a key driver in consumer behaviour. In the near future subscription businesses may emphasize eco-friendly practices and offer more and more subscriptions focused on eco-conscious products or services, from ubiquitous sustainable fashion rentals, zero-waste product subscriptions or carbon-offset subscriptions that contribute to environmental initiatives.
- Platforms that curate and aggregate various subscription offerings from different providers may emerge. These marketplaces would allow customers to explore and manage multiple subscriptions in one place, making it easier to discover new services and manage existing subscriptions.
- With the advancement of virtual and augmented reality technologies, there could be subscriptions for immersive gaming, virtual travel experiences, virtual fitness classes, or remote collaboration tools, offering users a new level of engagement and interaction.
Whether these predictions find footing in our collective future, the subscription economy’s continual success in luxury is a certainty. Because timeless brands innovate with people front of mind, not just technology.
If you’re considering the potential of subscription models or similar value-adds for your business, get in touch with one of our consultants at email@example.com to map opportunities to introduce new products and services.