Micro-subscriptions are here

February 15, 2011

For years, subscription software has been kicking ass. 37signals, Github, and many of my favourite companies support their products this way. It’s the best possible economics for building an app - your revenue is recurring and predictable. If you make something great, people will keep paying. If you don’t, they’ll stop.

However, consumers have never bought in. Businesses do, prosumers do, enthusiasts do, but normal people don’t. For a decade people have tried to make “micro-subscriptions” a reality - a way for normal people to pay a small amount to get a content or service. They’ve all failed utterly.

There is no way people will put in their credit card info into various sites and apps to pay a $1/mo fee. The cognitive pain of creating accounts, entering and maintaining payment info, and being billed for it makes the whole thing a complete non-starter to most consumers. And so, consumer apps continue to be offered as advertising-supported affairs that need giant scale to be profitable, or, more recently, pay-once apps.

iOS subscriptions finally change this. Although Apple takes 30% ((I am aware Apple’s cut makes the “you must offer in-app if you have subscriptions” rule a slap in the face for some business models. Apple can’t really charge much less than 30% because they sell iTunes cards at retail, plus it would provide a way to route around their cut for app sales. Still, forcing everything through them sucks.)), the one-click nature of the process and safety net of the App Store means for the mass market you’ll get way more than a 30% boost in sales.

The same app offering the same value to the mass market is going to get 50x as many customers through one-click subscribing at $1/mo than it would get through sending them to enter their credit card information on some website. I may be wrong - it may be more like 500x.

Entire products that were infeasible before are now feasible. Micro-subscriptions are here. Enough writing - back to writing an app that kicks ass with them.

© Allen Pike. See also Twitter and Steamclock.