Consumer demand for the seamless online purchasing and management of subscriptions like telecom and cable plans, software, business services and digital content is poised to skyrocket. Companies that successfully overcome the strategic, technical and user experience hurdles that come with this model will be rewarded with revenue predictability, new monetization opportunities, and long-term, high-bandwidth relationships with more satisfied customers. www.elasticpath.com

1. Elastic Path Software
Winning With Subscribers
Top trends and best practices for selling and managing
subscriptions online
Featuring: David Chiu, Digital commerce strategist at Elastic Path
Software
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2. Introducing Elastic Path Software
Digital Commerce for Innovators
• We help the world’s biggest brands sell digital goods and services
• We provide a flexible digital commerce platform and expertise in
commerce strategy and implementation
• #1 ecommerce blog www.getelastic.com
• For more on-demand digital commerce resources
www.elasticpath.com/resources
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3. Agenda
 Everything changed – or did it?
 Rewards and risks of the subscription model
 Best practices in the subscription space
 Key features in a successful implementation
 Get going: Subscription alternatives
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4. Everything changed – or did it?
 Apple in-app subscriptions – February 15, 2011
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5. Everything changed – or did it?
 Google One Pass – February 16, 2011
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6. Rewards and risks of the subscription model
 Recurring revenue, LCV
 Predictability and loyalty
 Billing information on file
 Increased customer insights
 Easier up-sell opportunities
 Tier and loyalty possibilities
 Ancillary revenue streams
 Marketing benefits
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7. Rewards and risks of the subscription model
 Recurring revenue, LCV  High customer expectations
 Predictability and loyalty  Consistent content quality
 Delivery service levels
 Billing information on file  Customer service and CRM
 Increased customer insights
 Easier up-sell opportunities  Packaging and distribution
 Tier and loyalty possibilities  You will compete with “free”
 Ancillary revenue streams  You need to sell an experience
 Marketing benefits  Business process complexity
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8. Rewards and risks of the subscription model
Source: GigaOM Pro, 2010 Source: OECD via GigaOM Pro, 2010
Mobile apps  Games and social networking  Digital music 
Ebooks  Film and video  Lifestyle services  News and info 
Business and consumer software  Business services
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9. Rewards and risks of the subscription model
“What will be the most prevalent business model in your sector in the next three years”
Source: Accenture Global Content Study, 2009
“Which factor represents the most important source of revenue growth for your segment in the next 3 years”
Source: Accenture Global Content Study, 2009
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10. Best practices in the subscription space
When do subscriptions succeed over other monetization models?
 Ubiquity coupled with experience (frictionless)
“I will subscribe if you can get it to me in a way that I cannot imagine living without.”
 Exclusivity
“I will subscribe if I want it, but absolutely cannot get it anywhere else.”
 Amortization
“I will subscribe if other ways to get it involve spending a huge pile of cash.”
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11. Best practices in the subscription space
Ubiquity*
Experience
Exclusivity
Amortization
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12. Best practices in the subscription space
Ubiquity*
Experience
Exclusivity
Amortization
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13. Best practices in the subscription space
Ubiquity
Experience
Exclusivity
Amortization
Source: MMOGCHART.com, 2009
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14. Best practices in the subscription space
Ubiquity
Experience
Exclusivity
Amortization
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15. Best practices in the subscription space – maybe
Ubiquity
Experience
Exclusivity
Amortization
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16. Best practices in the subscription space – maybe
Ubiquity*
Experience
Exclusivity
Amortization
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17. Best practices in the subscription space
 Customers subscribe to experiential services, not to content
 Customers pay for access to content, not for the content
 Multiplatform access is a big deal – and getting bigger
 Watch for tension between ubiquity and experience
 Make the recurring payment part as effortless as possible
 Provide clear and responsive customer service options
 Treat your subscribers like the valued members that they are
Successful subscription-based products and services will have at
least one (preferably two) of ubiquity, exclusivity or amortization
plus a customer experience that is market average or better.
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18. Key features in a successful implementation
 Subscription product definition, pricing, and characteristics
 Activation date, duration, tier, tier fluidity
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19. Key features in a successful implementation
 Billing, renewal, and cancellation options
 Payment platform – including recurrence and dunning
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20. Key features in a successful implementation
 Customer account management, customer service access
 Ancillary revenue generation – gift subscriptions
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21. Get going: Subscription alternatives
Apple in-app subscription service
Content types: Periodicals, video, music
Platforms: iOS
Payments: iTunes store platform
Implementation: Low
Recurring cost: High (30% rev share)
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22. Get going: Subscription alternatives
Strengths/Opportunities Weaknesses/Threats
 Premier mobile ecosystem  Limited to iOS platform
 160MM+ devices  iTunes store billing
 Desirable hardware  30% revenue share
 2-9% web traffic/market  Customer data control
 Mobile “plug and play”  “Shuttle” restrictions
 Proven effective funnel  Multiplatform price cap
 Possible antitrust actions  Possible antitrust actions
 Instant platform for  Pain for content licensees
content owners  Restrictive customer data
 Strong multiplatform policies may impact
players could still benefit ubiquity initiatives
 “Need to be here”  “Need to be here”
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23. Get going: Subscription alternatives
Google One Pass payment system
Content types: Periodicals, other media*
Platforms: Web, mobile except iOS
Payments: Google Checkout
Implementation: Low
Recurring cost: Med (10% rev share)
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24. Get going: Subscription alternatives
Strengths/Opportunities Weaknesses/Threats
 Web and mobile spaces  Google Checkout billing
 10% rev share (vs. 30)  10% rev share (vs. 2.5)
 Variety of pricing models  Unproven funnel
 No “shuttle” restrictions  Somewhat less “plug and
 Relatively permissive play” for mobile at launch
customer data rules
 Google brand and trust  Android Market revenue
 Stronger foundation for share details
multiplatform initiatives  Google Checkout track
 More consistent with record questions
programs to increase  10% may still be marginal
channel ubiquity value for licensees
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25. Get going: Subscription alternatives
Outsourced subscription SaaS
Content types: Services, other media
Platforms: Primarily web
Payments: Most types
Implementation: Medium
Recurring cost: Low (2-5% interchange)
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26. Get going: Subscription alternatives
Strengths/Opportunities Weaknesses/Threats
 Strong presence for Web  Limited application/focus
 Extensive monetization in mobile space
models for products and  Mobile may require add
services  Not specialized for
 Service-oriented APIs content publishers (yet)
 Lower interchange costs
 For enterprises with  Issues with mobile market
custom requirements, walled gardens
SaaS provides lower CoE  SaaS sometimes limit
 Solid platform for channel customization possibilities
ubiquity programs  Cost-benefit needed for
 Customer data ownership very high volumes
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27. Get going: Subscription alternatives
Ecommerce platform subscription feature
Content types: Any
Platforms: Web, mobile except iOS
Payments: Any type
Implementation: Medium to high
Recurring cost: Varies (incremental)
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28. Get going: Subscription alternatives
Strengths/Opportunities Weaknesses/Threats
 Full customization  Higher implementation
 Extensive monetization costs than other platforms
models for products,  Potentially higher support
services and content  Longer time to market
 Lowest interchange costs
(almost zero increment)
 Allows very unique and  Issues with mobile market
complex features/models walled gardens
 Single platform for all  Constant upgrade cycle to
customer touchpoints maintain ubiquity
(multi-model enterprises)  Cost-benefit needed for
 Customer data ownership all transaction volumes
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29. Review and takeaways
Winning with Subscribers
 Subscription fundamentals do not change with new services
 Subscription is a demanding monetization model
 Experience and access, not content, are king
 Growth will come from packaging and delivery advancements
 Aim for 2 out of 3: Ubiquitous, exclusive or amortized
 Don’t forget that CRM is amplified in a subscription model
 Look for solutions that provide mobile access to content
 But … consider cost/benefit for each ecosystem carefully
 Innovate “strategic workarounds” to maintain the big three
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30. Questions
For more on-demand digital commerce resources
www.elasticpath.com/resources
sales@elasticpath.com
1.800.942.5282 (toll-free in North America)
www.elasticpath.com
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