Subscription Revenue Models Take Center Stage

By Tien Tzuo May 27, 2009

by Tien Tzuo

 

Open Table’s success is a feather in the cap of subscription businesses and tangible proof that ad-driven revenue models are rusting. The New York Times really hit the nail on the head when it wrote: “Now advertisers have cut back their online spending. So Web start-ups are searching for new ways to make money, like selling real, or virtual, goods or asking customers to buy subscriptions.”

 

But, it’s not just Web start-ups that are moving to subscriptions. Traditional ad-supported businesses like newspapers with online content are offering more subscription pricing and packaging as well. Ads don’t work anymore and companies are moving beyond them. Subscriptions, tiered pricing and premium content are taking center stage.

 

Wired Magazine is talking about “raising the price or straying from the traditional magazine business model with ideas like tiered pricing with different benefit.”

 

Even Rupert Murdoch is distancing News Corp from ads. As Murdoch recently said to CNN.com, “the challenge for media organizations (is) finding a balance between advertising and subscription revenues and figuring out how to charge for content without alienating existing users–which could lead to Web sites offering tiered levels of free and paid-for material.”

 

It’s exciting to have subscriptions in the national spotlight. Of course, here at Zuora, we and our 100+ customers already know that subscriptions are the way to go. We trust that more companies will begin to evaluate subscription-based revenue streams, especially in light of OpenTable’s success.

 

A big congratulations to our friends at Open Table (a fellow Benchmark company).
Jeff Jordan and his team have built a great company and the market certainly agrees with us.