The subscription business model is a business model in which a customer must pay a recurring price at regular intervals for access to a product or service. The model was pioneered by publishers of books and periodicals in the 17th century,[1] and is now used by many businesses, websites[2] and even pharmaceutical companies in partnership with the government.
Rather than selling producoffers periodic (daily, weekly, bi-weekly, monthly, semi-annual, yearly/annual, or seasonal) use or access to a product or service, or, in the case of performance-oriented organizations such as opera companies, tickets to the entire run of some set number of (e.g., five to fifteen) scheduled performances for an entire season. Thus, a one-time sale of a product can become a recurring sale and can build brand loyalty.
Industries that use this model include mail order book sales clubs and music sales clubs, private web mail providers, cable television, satellite television providers with pay television channels, providers with digital catalogs with downloadable music or eBooks, satellite radio, telephone companies, mobile network operators, internet providers, software publishers, websites (e.g., blogging websites), business solutions providers, financial services firms, health clubs, lawn mowing and snowplowing services, pharmaceuticals, renting an apartment, property taxes, as well as the traditional newspapers, magazines, and academic journals.
Renewal of a subscription may be periodic and activated automatically so that the cost of a new period is automatically paid for by a pre-authorized charge to a credit card or a checking account. A common variation of the model in online games and on websites is the freemium model, in which the first tier of content is free, but access to premium features (for example, game power-ups or article archives) is limited to paying subscribers.
In publishing, the subscription model typically involves a Paywall, Paysite or other "toll-access" system (named in opposition to open access). As revenues from digital advertising diminish, a paid subscription model is being favoured by more publishers who see it as a comparatively stable income stream.[5]
In the field of academic publishing, the subscription business model means that articles of a specific journal or conference proceedings are only available to subscribers. Subscriptions are typically sold to universities and other higher education institutions and research institutes, though some academic publishers also sell individual subscriptions or access to individual articles.