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From streaming music services like Spotify, to video platforms like Netflix, to memberships like Amazon Prime, subscriptions have become pervasive in the modern economy. Many things that individuals once owned or bought outright (movies, software, cell phones, household appliances, etc.) they now access through monthly or yearly subscriptions. The “subscription economy” grew more than 300% from 2012-2019 [1], and the average monthly expenditure per person increased from $237 in 2018 to $273 in 2021 [2].
While the subscription model has become an ingrained part of our daily lives [2], there has been much discussion over the future of the subscription economy [3]. With inflation and the costs of goods and services rising, consumers are becoming wary of subscriptions [3]. Some consumers, having become fed up with how much they spend on often forgotten recurring expenditures, are experiencing subscription “burnout” [4]. An increasing number of apps are being developed to track and automatically cancel an individual’s unused subscriptions [6], and more than 20 U.S. states have laws regulating auto-renewing subscriptions [4]. Industries that once relied heavily on subscriptions, like news organizations, have moved to alternative funding models that incorporate advertising and other monetization strategies.
Q1. Click to Subscribe Model what percentage of a household’s monthly income will be spent on subscription services in the next 10 years. You might consider taking into account how individual income levels can impact how much is spent on subscriptions.
Q2. Click to Unsubscribe Model the impact that apps designed to monitor and cancel subscriptions will have on the future of individual subscriptions. Will there be different levels of impact on the six segments of the subscription economy, as defined in [5]: Subscription Box, Subscribe + Save, Membership, Media and Publication, Digital/Software, and Streaming Video + Music?
[1] Eyal, Nir. 3 Reasons Subscription Services Fail, Harvard Business Review. October 11, 2022. https://hbr.org/2022/10/3-reasons-subscription-services-fail
[2] West Monroe, The State of Subscription Services Spending, August 2021. https://www.westmonroe.com/perspectives/report/the-state-of-subscription-services-spending.
[3] Baral, Annu. The Evolution Of The Subscription Model And What’s On The Horizon. Forbes. September 12, 2022. https://www.forbes.com/sites/forbesbusinessdevelopmentcouncil/2022/09/12/the-evolution-of-the-subscription-model-and-whats-on-the-horizon/?sh=737c134f4737
[4] Edwards, Benj. Why Is Everything a Subscription Now?, How-To Geek. August 20, 2022. https://www.howtogeek.com/817963/why-is-everything-a-subscription-now
[5] The 6 Segments of Subscription. https://subta.com/about-3/6-segments/
[6] 6 Apps to Help You Trim Down Subscriptions—and Save Money. https://www.wired.com/story/6-apps-cancel-subscriptions-save-money/
This problem was written by members of the Problem Development Committee: Dr. Jennifer Gorman, Lake Superior State University; Dr. Neil Nicholson, University of Notre Dame; Dr. Chris Musco, New York University.
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