Sunday, January 3, 2010

The Problem With Content Subscription Models

Yesterday I wrote about the troubles in the television industry. Television’s troubles are all centered around the idea of requiring viewers to pay a subscription fee for access to television programming. More than half of the money a cable system collects for a standard cable package goes to pay these fees, and for premium services, the proportion is higher. If the television industry could get over the idea that it needs to charge subscription fees for content, its problems could be solved rather easily.

It’s worth noting that television is not the only industry that has been having problems with the subscription-for-content model. Last year was a brutal time for newspapers and magazines, which largely depend on paying subscribers. Last year was also the end of the last major U.S. record club, an arrangement that resembled a subscription, and the attempt to replace it with a more pure subscription model fizzled. Every year five or ten startups try to launch music subscription services, and so far, not one has caught on with the public. Satellite radio, which gets virtually all its revenue from subscription fees, is barely limping along, and now must find a way to hold on to its subscriber base while it implements further cuts in service. Hundreds of newspapers have charged annual fees for access to their web sites over the years, only to find that approach costing them more in public presence than they gained in revenue.

Subscription models may simply be too intrusive. Any subscription arrangement demands the customer’s attention again and again over the course of the year. People sign up for subscriptions with the best of intentions only to find that they do not have time to keep up with them. It’s no wonder if, after a few years, they decide they want out.