Ownership vs. Subscription Economy

I’ve realized lately the entertainment industry is undergoing a pretty radical shift.

Duh.

OK, so this isn’t ground-breaking territory. But I’m seeing the implications in my daily life much more than I have before.

So there are a few ways to get entertainment content, which vary slightly depending on medium:

  • Experience – You go somewhere and you experience your entertainment. This happens primarily with music and movies. You go somewhere and either watch a movie or see a concert. You’re paying for a one-time experience. I suppose this method has pre-dated all technology.
  • Broadcast – The entertainment is free, but you have to watch ads. This is the commercial-supported model of TV and radio. Again, you’re only getting a one-time experience.
  • Ownership – As media has become cheaper and smaller, ownership has become a relatively recent option. You can purchase your entertainment in your preferred medium and enjoy it as long as you like.
  • Subscription – This is the newest model championed by Netflix and Hulu Plus for movies/TV and Spotify for music, among others. You pay a monthly fee and get access to a nearly endless archive of on-demand music, TV and movies.

Now I’m horribly simplifying everything. I’m ignoring cable TV, commercial-supported on-demand options like Hulu, public radio, etc. It’s also interesting to see how books fit in, since there’s no real book broadcast or experience situation, though there is a free subscription option (the library!).

I think generationally we find ourselves in different spots on this continuum. My parents tend to be primarily in the broadcast camp. While my dad will go to the movies still and does own his share of DVDs, he primarily watches broadcast TV. He’s more likely to watch whatever movie is on as opposed to picking a DVD he owns.

I’ve always found myself in the ownership camp. I don’t like watching TV or movies on a broadcast schedule. I’d rather own the TV show and watch it whenever I feel like it. I want to watch Star Wars when I feel like it, not when SpikeTV decides it’s a Star Wars holiday.

I have friends who are in the subscription camp. They see no need to own anything when they can have instant access to it through a subscription. For them, it’s simple math. They get way more entertainment from a subscription than if they spent the same amount buying content to own.

I’m rambling on about all of this stuff because I’m seeing myself begin to question the ownership option and consider subscriptions. I’m a cheapskate and I hate spending money on monthly fees, but for the past month or so I’ve been listening to Spotify (the free version, where I have to listen to minimal commercials). I found myself wondering why I should bother buying songs when I have them here at my fingertips. Access is a primary issue with subscriptions and those barriers are starting to come down. Spotify at my desk is only so helpful, but getting access on the go through my phone makes it a lot more appealing.

This all raises a lot of questions for me, and that’s really where I’m going with this:

  • A big question with all these options is sustainability. Can content creators continue to make a worthwhile living as people transition through these options. In other words, if people stop buying CDs or digital downloads and just subscribe to Spotify, will your favorite musician still get paid enough?
  • In short, is subscription a sustainable business model?
  • If an artist gets paid every time their song is played on Spotify, I wonder if I should play my favorite artists through Spotify instead of buying their stuff. Initially they’d make a lot more with the ownership model, but overtime, as I play a song hundreds of times, would they make more with a subscription model?
  • In short, which option is the greatest benefit to the artist?
  • One of the reasons I’m in the ownership camp is because things change and I want to be in control. If I own the content, I’m in control. What happens when your subscription service jacks up the price or goes under? Is that just the price we have to pay for access to everything?
  • Ownership is beginning to feel limited in the realm of TV and movies. Music is pretty transferable, but you can’t [easily] rip a DVD or play your Blu-Ray disc on a regular DVD player. As technology changes, it’s hard to keep your library of content current. Especially when the DVD of your favorite movie gets scratched up. Will ownership ever become format agnostic? Could I ever just get a new copy of the DVD because I own the movie (ownership of the content itself as opposed to the format)?
  • In short, will I ever be able to own a piece of content and have access to it in the format of my choice? (i.e., buy a physical book and have the ebook and audiobook as well, or buy the DVD and get the digital and Blu-Ray versions) There’s currently some experimentation with this, but it’s still limited to a few formats—will it ever become future proof?
  • This gets especially interesting with books, since there’s much less need to read a book multiple times (it happens, but not nearly the way it does with music, movies or TV). You’d think an on-demand subscription service would have a lot more appeal because of that. Amazon offers a limited version of this through their Amazon Prime membership model were you can borrow one Kindle Select book for free per month. I wonder if there’s a greater future in book subscriptions with ebooks?
  • How does our free time and daily schedules play into which option we land on? Broadcast works best for people with standard 9 to 5 lives. I wonder if subscription and/or ownership have become more popular not because of ease of use, access or other reasons, but simply because of schedule?

These kind of questions fascinate me, both as a content creator and a content consumer. I think it’s especially interesting to see which option people tend to choose and how they justify it economically.

As an ownership person, I have no problem paying $30 for a DVD of my favorite TV show because I’ll watch it endless times whenever I want to.

A subscription person will laugh at me because for the same amount, they can watch almost any TV show or movie they want for three months.

And a broadcast person will laugh at both of us because but over a season they’ll see all the episodes I just paid for without spending a dime.

Finally, I wonder how thoroughly entertainment companies have explored these different options and what happens when one option declines and another rises? Surely they have to have studied these things. If broadcast dies will an increase in subscribers allow the price to stay the same, or will the economics change somehow? And is that better for us as consumers or the content creators themselves or the gatekeepers?

4 thoughts on “Ownership vs. Subscription Economy”

  1. I pretty rarely re-watch movies or tv shows. I like to re-read books, but I like to shift format when I do, so if there were better options for subscription on books I would probably use them. I like to buy to support authors rather than use the library (although I do use the library for trying new authors.)

    I think you need to not attach the idea of subscription to particular expressions of that model. Spotify is great for users, but pays almost nothing. However, the creation of spotify has drastically lowered illegal downloading (and spotify is one of the most cited reason why people have reduced or stopped illegal downloads.)

    I think smart content creators will continue to allow users to access content via all methods. Although it does make sense to shift use around. So have a time delay to subscription if people will buy first. Or focus on subscription if you are a new content creator that does not have a following.

    I know I am unusual, but it is not at all unusual for me to spend $100 or a month on new books. because that is what I like. I would probably be happy with broadcast and Amazon prime as my tv source if I didn’t have a brother in law living with us that wanted cable. But that is what he wants.

    I think most people, will pay for what they value. I know there are lots of people that think we are destroying the perceived value of books by offering so many for free or cheap. But if you looked at the most common prices I pay, you would see that I mostly buy $9.99 books or more. I can get cheaper, but for me books are not replaceable with a cheaper option.

  2. I’m curious if Spotify doesn’t pay a lot because their subscription base is still small and growing, or if that’s just the model? (in which case, it would collapse if everyone subscribed instead of buying)

    Value is definitely key. It’s interesting seeing how different people value different things.

  3. I think spotify doesn’t pay a lot because that is spotify’s model, not that a subscription model inherently doesn’t pay a lot.

    Most people that listen via spotify don’t pay anything (so it is ad supported for them). Some people pay subscription fees, but according to the articles I have read, more than 80% of their revenue comes from premium subscriptions, which less than 20% of the listeners have.

    I don’t listen to a lot of music, so for me, paying more than $5 a month doesn’t make sense. I am not that big of a listener. But I think that a lot of people would pay around $5 a month for some type of music subscription.

    Personally the only time I listen to music is in the car on my phone. So I would have to pay $10 a month. That just doesn’t make sense for me.

    On the other hand $10 a month for an audiobook subscription would be less than half what I average now just on audiobooks. If someone had that I would be all over it. But no one does so I buy.

  4. Yeah, I haven’t been able to justify paying for Spotify, but I’m tempted. Right now the free version with minimal ads is rivaling my iTunes library as my default.

    An audiobook subscription would be great–those things are pricey.

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