By k | January 12, 2018 - 6:00 am - Posted in New Business Development

With the success
of KU (Kindle Unlimited),
Amazon’s subscription program,
I suspect, if at all possible,
other industries
will try this same model.

Subscription programs
have been around
for a while.
The customer pays one monthly fee
and has access to everything
included in that program.

Subscription programs
especially appeal to heavy users.
(Some subscription programs
don’t expect this
and they swiftly go out of business.)

A newer aspect of the KU subscription program
is how vendors (publishers/writers)
are being paid.
They are paid a percentage
of the pooled revenue.

This means
the business offering the subscription program
is guaranteed a profit.
It makes a percentage of the pooled income.

The vendors, in contrast, have very little control
over what they’re being paid.

If subscribers use X amount of their products
and use 9X amount of the other vendors’ products,
the vendor receives 10% of the remaining pool.

If subscribers use the same amount of their products
but use 99X amount of the other vendors’ products,
the vendor receives 1% of the remaining pool.

The vendor has no control over
what it is being paid
because there’s no visibility.

The business running the subscription program
has the information about the subscriber numbers
and the data on the amounts
the other vendors are selling.

If you have a choice
(and if there is no such
subscription program
in your industry right now,
you might have a choice),
I recommend
being the business
running the subscription program.

If you are a vendor
in a subscription program right now,
prepare for the day
when the program switches
to pooled earnings.

There will be more
pooled earnings subscription programs
in the future.

This entry was posted on Friday, January 12th, 2018 at 6:00 am and is filed under New Business Development. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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