Rent out your subscription (Netflix, Spotify, etc) through web3
Optimize subscription revenue while maximizing user flexibility. Web3 is the way.
Let’s delete the concept of NFTs = million-dollar jpegs for a second. NFTs are unique things in the blockchain. It’s like a digital fingerprint. For example, unique NFT 0x2abc containing the following data points: image, date, time.
On the other hand, a subscription is a unique customer account for software. For example, account number XYZ123 containing email, name, and credit card data.
What if your subscription was an NFT in the blockchain?
Think about some of the interesting things you can do with NFTs:
Trading in an open market
Renting NFTs
Earn royalties from each trade of the NFT
Historical data is publicly available in a standard format
Composable across different apps out of the box
Applying those cool things to the typical SaaS subscription, imagined as an NFT:
Trading my sub in the open market
Renting out my sub when I’m not using it (on vacation, etc)
The software can still earn royalties from people trading subs
Data about the user is in a standard format and possibly public
Use the subscription NFT from another app as a basis for your new sub
You might be asking, ‘Why bother? Subscriptions are fine without the blockchain!’
One subscription is annoying; 10+ subscriptions make you go broke!
Sure, your phone and internet subscription may be ‘inevitable’. But everything is becoming a subscription now. They try to lock you in with freebies and addons, but do you really get value from all of them?
A few problems the current subscription model. I’ll be specific to paint a picture.
From the user perspective:
Annual subs. Pay $99 upfront for a one-year subscription which is 20% cheaper than a month-to-month sub. 3 months later, you’re sick of it but you’re stuck with a sub you can’t refund. Would be nice to be able to sell this…
Unwanted addons. Cough up $120 to upgrade and get 1,000 points to the rewards shop, access to exclusive lounges, and priority support! You don’t care about the freebies, but there’s no other way to get the white label domain. Would be nice to be able to sell or rent out the stuff I don’t need…
Too expensive. I want to use the software, but $50 per month is out of my budget. Would be nice if someone would be willing give me a bit of a discount…
Inconsistent usage. I only need to use the app every other month. Would be great if I could easily turn the subscription on and off…
There are also problems from the company perspective:
Freedom to customize vs ease of operations. Making subscriptions fully customizable and giving customers exactly the features or add-ons they want is ideal, but it’s just too much overhead to execute that. Would be great if the market can just figure out (at least the pricing) for themselves…
Sharing accounts. When users share accounts, we lose potential revenue. Let’s just ban them. Would be great if we can somehow earn revenue when people share accounts (or trade them; we get royalties)…
Analytics. We can understand user behavior within the app, but it’s difficult to predict beyond that because we don’t have any data on the account when they are not in the app. Would be ideal if it was easy to access and digest data outside of the app related to the user…
Optimize revenue by enabling subscription trading
As an experiment, let’s just follow through one example to see if a user and a company both comes out better if subscriptions adopt the simplest feature of an NFT, trading.
Example: $50 monthly subscription for a software. A user is free to trade/rent out their subscription in the open market, so the subscription could actually be ‘rented out’ for lower than $50. But, for every trade the SaaS provider gets a 10% royalty fee of the trade price.
That is, if a user ‘rents out’ their subscription for a month for $40:
Original user still pays $50 for the month
Renter user pays $40 to the original user
Original user gets $36, with $4 royalty going to the SaaS provider
Everyone wins because:
The original user can reduce their expense for the month to just $14. This is useful if they are on holiday, want to manage expenses temporarily, or just don’t expect usage for that month
The renter gets access to an app they may not have been able to at a $50 price point
The SaaS provider gets $4 on top of their revenue, in addition to exposure to a user who never would have purchased the subscription in the first place (with no additional operational overhead like creating a new subscription package)
NFTs aren’t just jpegs
Contrary to popular news, NFTs are beyond overpriced images. It’s new tech that’s just waiting for someone to disrupt old ways of working.
Dive into web3.
Thanks to this post by Peter Yang, Are NFTs the Future of Subscriptions, for inspiring this article.
Disagree with something in this article? Hit me up! I love to learn through discussion and debate.
I also post web3 stuff in Twitter: @nigelwtlee
There is nothing in the ideas mentioned above that a business cannot implement without blockchain. Furthermore, the idea of the secondary market for software use is not commercially sound. A consumer is unwise to purchase a subscription they don’t intend to use. They need to look at total length of use and factor in periods when they don’t use it. Passing on to others just cuts into subscription sales opportunities. Sure give the existing a discount they can offer people that bring to a subscription and that is their reward.
Also, at the end of the day the subscriber wants to use the product they have purchased and I think those that want to pass it on to other users are not very valuable customers.
In summary, why bother.
What about the existing revenue optimization strategy of Netflix to convert users on the verge of subscribing? Isn’t the point of current pricing to prevent price discovery so that certain premiums can be added on top of the actual utility of the platform to maximize revenue?
I think the graph makes sense for a commodity, but a paid viewing experience is too nuanced to be a commodity. Hence pricing scheme can’t be as transparent as a commodities index as well? Wdyt?