The Subscription Pay Model Question

by | Technology

A funny thing happened to my favorite text editor, Ulysses. It’s my go-to text editor I use these days to write my freelance articles … a slick, no-nonsense and distraction-free text editor that helps you concentrate on one and only one thing, getting your thoughts down to written form, as quickly and efficiently as possible.

I first read about the developers of Ulysses changing their payment model for Ulysses from the one-time payment model to a recurring, subscription-based payment model.

Their decision to do this was a big enough event, it captured the attention of many bloggers and news agencies on the internet.

Why such a big deal? After all, there are plenty of other subscription-based services that many of us already pay for.

Companies like Spotify, Pandora and Apple Music all offer streaming music to millions of subscribers in exchange for paying a recurring monthly or yearly fee.

And then there’s the cornucopia of internet streaming services like Netflix, Hulu, Amazon, Vudu, YouTube and others, which let you watch movies and tv shows on demand, for the price of a recurring subscription.

Single Payment vs. Software Subscription Model

Many organizations are moving their IT infrastructure and applications into centralized cloud systems like Amazon’s AWS and Microsoft Azure. It takes the burden of maintenance and support of computer hardware server infrastructure off of these organizations and lets companies like Amazon and Microsoft shoulder the responsibility of 24/7 uptime availability … all for the price of a recurring payment subscription.

The world of video games has embraced the recurring subscription payment model for quite some time now. Big persistent online gaming worlds like World of Warcraft have millions of eager subscribers willing to pay a monthly fee for the privilege of playing in their world.

Microsoft’s Xbox Live gaming service allows Xbox games to use their gaming network to connect with other Xbox gamers all around the world.

Microsoft has become quite the fan of subscription-based services. They are pushing hard to change the payment model for their flagship products, the Windows operating system, and Office business productivity suite.

Their traditional payment model has been one of the single payment… for a one time fee, you’d purchase a copy of Windows or Office and install it to your computer. And included in the price of this one-time payment, would include software patches and revisions and upgrades you could download.

But their new CEO, Satya Nadella, knows the future lies in recurring payments. From a business perspective, recurring revenue creates longer-term profit over time than the one-time payment model. It helps a company amortize the expensive cost of continuing to maintain and upgrade a software product over time.

Nadella is pushing hard to lure consumers to pay for their Windows and Office products on a recurring yearly subscription plan.

It’s clear the recurring subscription payment model is already well underway and proving to be a quite successful revenue model for many companies. From a business perspective, the recurring payment model is the holy grail of revenue.

So why all the fuss that consumer-oriented software applications like my favorite text editor, Ulysses, are heading towards the same recurring payment model?

I think it boils down to human nature. We don’t like change. Software always used to be a one-time payment model … you’d go to the store (a brick & mortar store, mind you), pick up a box of shrink-wrapped software, go to the cashier and pay a one time fee, and then bring it back home.

And that software was yours forever. As long as the underlying operating system of your computer could continue running that software, it would continue serving your needs for as long as you wanted.

I grew up in that software payment model and grew quite fond of that model… I could pay for software once and theoretically use it forever, as long as I had a capable computer device to run it.

I think this is part of the reason why my Ulysses text editor software going the way of the recurring payment model is making news.

It’s a new way of trying to force consumers to change the way they think about paying for software. Only time will tell if it ends up being successful.

From a software development perspective, the creators of Ulysses and other software vendors will now need to continually have to come up with value-added features and enhancements to the software to justify the cost of the recurring payment model.

Could it potentially lead to unnecessary features or software bloat? It’s a distinct possibility. As a software developer, I know only too well, the danger of “feature creep”…adding features to a software application, not because it’s useful, but because it helps the marketing and/or salespeople put new bullet points in their marketing and sales literature that all these new whiz-bang features are worth the cost of upgrading.

It’ll be interesting to see how this turns out. Whenever I fire up my Ulysses text editor nowadays, it flashes messages up on my screen to convince me to subscribe to their new recurring payment model.

Single payment versus recurring payment… round 1…. fight!

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