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Subscriptions: the new way to pay

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With consumers becoming used to paying a subscription for Netflix, Amazon Prime and even to use ASOS, media companies are turning from advertising to subs. And Carrier Billing holds the key as it can not only collect money easily at the point of use, it can also be used to build a relationship. Paul Skeldon reports

In an age of rapid digital disruption and transformation, businesses are continuously evolving their business model to meet the growing demands of their audience and stay ahead of their competition. A subscription based recurring revenue model has proven to be beneficial and provide value for both businesses and customers – providing increased brand engagement, loyalty and ongoing commercial success.

“Subscriptions are a long-standing business model with newspapers, magazines and food delivery companies offering the earliest online services,” says Shannon Dority, senior marketing executive at Abacus Media. “But the growth of the digital world has opened up the potential of this business model and it has since transitioned into mainstream society.”

Today, says Dority, the subscription model is everywhere and can be found in many different industries – video streaming on Netflix, Tesco’s grocery delivery saver, monthly prescriptions from Boots, music on Spotify or Apple Music, and a treat box for your dog at Barkbox.

There is even an American based website dedicated to helping consumers find the right monthly subscription box. The model is now so common in our everyday lives that it is estimated today that 9 out of 10 UK consumers hold a subscription to their favourite store, brand or service.

“As the digital economy continues to grow, businesses are evolving and exploring different pricing and access models to differentiate themselves from their competition,” she says. “These options can include pay as you go, free or weekly trials, quarterly access, student access, tiered based and premium membership models.

“The engagement opportunities that a subscription model can provide organisations can be beneficial to the ongoing relationships they have with their customers,” continues Dority. “And as competition continues to grow within the digital space, being able to provide for the needs of your audience is becoming more critical to ongoing success.

The power of carrier billing

And this is where carrier billing comes into play. Thanks to PSD2, carrier billing is becoming more prevalent in consumer markets – and subscription services for media and content are a ripe ground to sew its seeds.

And many publishers of everything from games, to magazines to newspapers are starting to see the power of DCB, not just to extract payments from consumers, but to also engage them. Subscriptions are repeat business and being able to handle that through carrier billing – and hence direct to the phone, the most personal of all the devices a user has – is key to both paying and engaging.

“Carrier billing is an excellent outreach mechanism for getting initial subscriptions,” Tim Green, features editor at the Mobile Ecosystem Forum (MEF) said a Fonix media and carrier billing workshop in April.

Warren Mills, client partner at Weve told the audience that DCB is proving to be a excellent way for [Weve] to understand what its customers are purchasing and to use that data for better marketing.

The engaging and convenient nature of carrier billing is also being seen at Microsoft. It has been using DCB in its online store in the US for nearly two years, and it is now floruising in the UK and Europe. It provides customers with a really quick and easy way to engage at the point of purchase, and it gives Microsoft a whole new dimension in payments.

“We are seeing revenue growth month on month as people realise that direct carrier billing is available on the store,” Grahame Riddell, global director, operator billing at Microsoft Digital Store said at the Fonix event “We are seeing more people using it and we are starting to see some interesting customer lifetime value numbers with it compared to credit and debit card.”

Subscriptions are becoming the natural way to engage – and monetise – consumers around content and carrier billing offers a clear path to do both. As Cornelia Callugar -Pop, manager, Telco, media and technology (TMT) at Deloitte put it at the Fonix event: “media companies need to move away from ad funding to ads plus something else – subscriptions, memberships and donations are the key to that and carrier billing is an easy way to do it for snackable content”.

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Editor and content creator for Telemedia – for 18 years and counting

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