MonthSeptember 2017

Next Steps for the Subscription Model?

It’s no secret that a ton of services and software have moved to a subscription-based model and are having amazing success with it. A subscription-based model, when talking about products or services, basically means that you pay a subscription fee (monthly, usually) to access the product or the software you want to use. Traditionally, software was sold in a packaged bundle: pay $199.99 for this accounting software and have it forever. I’ll talk quickly about why the shift is happening, and then expand on some ideas of where I think it might go.

Why the shift away from the traditional model?

Updates

Back in the day (i.e. a few years ago), you had to buy a CD with a software on it, put it in your CD-ROM drive (ha!) and install the software. When an update came out, you had to buy the new version… Office 2003, Office 2005, etc. This made sense, because updates weren’t super quick, and it was like buying a new pair of shoes; you buy what you need now, and by the time you’re ready for a new pair, new technology has come out.

Nowadays, patches for software are coming out on an almost weekly basis, and new features are being added to existing products all the time. There’s no longer a need for CD-ROM drives as you can download the newest version from the web, and this means that companies can update their products quickly and efficiently. This can work with the traditional model; you buy a license key and then sign in to your account online to download the updates, but it comes with security risks and a logistical hassle when you need to manage users and keys.

 

Less Risk for the Buyer

For the customer, there’s less risk in trying out a product for $30 for a month as opposed to buying it for $720 and expecting to use it for two years. This is pretty obvious, and makes it easy for consumers to make an educated choice.

 

Increase in Product Quality

This isn’t an argument that directly helps the service providers or product creators, but I think it’s something that naturally evolved due to competition. You can no longer sell your product based on bullet point descriptions and images, because people get to try it without committing a huge amount of money. That means that the quality bar is raised, and now when people start using your program or software, they need to be presented with a fully functional, easy-to-use solution.

What’s Next?

We’ve already seen a ton of games move to a subscription model, as well as the online play portion of console games. Our accounting software that we use at Clever Endeavour Games (the games company where I work) is subscription based, as is our website hosting, email management (Google for business), the game engine we use, etc. Almost all of these things used to have a fixed price that you would pay at once, and they’re all moving away.

But what happens after this? What industries can you think about that are currently selling products in a traditional way, that might move to subscription models soon?

The first one I’m thinking of is transportation. There’s already a lease system, which is somewhere between rental / subscription and purchasing. But with things like Communauto (here in Montreal), people can register to the service for a monthly or yearly fee, and take a car wherever they want. They don’t own anything, just a license to take the car from point A to point B and forget about it. Imagine a world where you could take any kind of car you’d like, have it pick you up and drop you off where you’d like, and all it required was a monthly subscription… I think this is next once we have consistent self-driving cars.

Next thing is clothing. Wait what? Why would you want to wear clothes used by someone else? Well… you already do. People rent tuxedos for weddings, ball gowns, and elaborate Halloween costumes. If you’re looking for the perfect outfit for your night out, why be limited to the clothes you own? Imagine being able to pick up whatever you wanted from a huge catalog, and the clothes were clean every time you wanted to wear them? This wouldn’t be for every day of course, but I could definitely see its potential for special events in the future.

Flights might also be something that could be subscription based… if you’re someone who flies often or in some sort of consistent manner, it might be easier to simply pay a yearly or monthly fee and be free to fly wherever you want.

This all came up because I’m going to soon be starting to pay a subscription for a virtual instrument pack for music production, which costs $25/mo. This is instead of a software which costs around $900, and requires a $200 update every year. The goal of the subscription-based model is that they can update the instruments more often, and as long as you’re signed up, you can open projects which use those instruments. For me, I get to try it for $25 and see if I want to continue. For them, they can rope me in by offering me over $900 of value worth of instruments, and keep me longer term if I like it.

Anyway, just some food for thought. It’s incredible how obvious this kind of thing seems, but it took a while since the internet was a thing to actually start taking over. Let’s see what the future has in store for us!

Thoughts from my Peru Trip

I don’t want to make this a blog post like any old travel blog, because there are enough of those around, and there are people who have documented similar Peru trips with more eloquent writing and captivating tales. But I did jot down some of the things that struck me about my trip, some things that aren’t the usual “wow mountains are beautiful” thoughts. Below are some of my findings / thoughts about some things I noticed on my Peru trip. And here’s a llama.

The Rich and the Poor

The difference between the rich and the poor in the cities in Peru (Lima, Arequipa most noticeably) was massive. You can look at a beautiful house in the city with barbed wire and an electric fence surrounding it, with heavy gates and iron bars on the windows, then look across the street to where you see a shack made of scrap metal and a tarp. From Mercedes cars and brand name shoes to dirt floors and no running water, and you literally need only to look across the street. This might be the work of corruption in government, exploitation of the poor for work, or some other causes that I won’t claim to be able to explain. But it really puts in perspective the complaints about the discrepancy between rich and poor here in Canada, and the disappearance of the middle class. I don’t believe we have anything close to what they have in Peru, and I’m sure that we never will, because the government does a good job to try to protect and give opportunity to the middle class in my opinion.

Catholicism… but Why?

Peruvians are super Catholic. Most of South America is super Catholic in fact, which of course came from the Spanish when they invaded / colonized in the 13th and 14th centuries. My initial response to this was “Why?? Didn’t they come in and kill all of your people and destroy your religion? Why do you like them?” The answer is twofold. The first reason is time… it’s been many generations since the first conquistadores (conquerors) and people have learned over time to appreciate the Catholicism that was forced upon them before. The second reason, which I find way more interesting, was the way in which the Spanish convinced the native South Americans to follow them.

You’ll notice in the churches in Peru, that the vast majority are more focused on the Virgin Mary than they are on Jesus. This was odd to me, after having seen churches in Europe where there’s a huge focus on Jesus. What was explained to me is that the Spanish told the natives (Inca, mostly, in this case) was that their gods (Pachamama: Mother Earth, Inti: the sun god, etc.) were represented in Christianity, but represented differently. For example, the Virgin Mary was Mother Earth because she gave life, and this was one of the Inca’s most important gods. Instead of praying to Pachamama, they could now pray to the Virgin Mary and their prayers would still be heard. Another great example of this, which I find fascinating, is the link between the thunder god Illapa and the Catholic St. James. It’s said that during a battle, a certain Spanish conquistador riding a horse came through a city and killed hundreds of Incas. I asked how anyone could erect a statue or sanctify a man who slaughtered their people, and the answer was this: apparently, there was a great thunderstorm when the battle took place and the Incas believed / reasoned that this man was the image of Illapa, the thunder god, who punished the people for their wrongdoings.

I found this really interesting… I’m not sure if they had forced Catholic schools like the English set up in Canada and Australia, but this was some interesting knowledge to acquire.

The Indigenous People and Traditional Wares

There are indigenous people who still live in small villages in the mountains, and still keep their traditions and their clothing. It’s wonderful, and being able to see some of those people and how they go about their daily lives is great. But did I actually see that? I’d guess not. I’d guess that very few tourists have ever seen that. What we see is a dramatization, by people who might actually be authentic villagers, but they’re doing it mostly for tourist money. That’s not to say that the learning isn’t important, but we do have to consider that “authenticity” in these situations.

A good example of this is the markets. There are traditional markets in certain cities, and they’re full of stuff. Scarves, hats, gloves, paintings, everything you’d imagine seeing at a crafts market. One problem… they all have the same stuff. ALL OF THEM. The markets in Lima are the same as the ones in Cusco, which are the same as the ones in Arequipa. Same stuff, same “handmade, 100% alpaca wool” stuff. I learned from a Peruvian business owner there that they are indeed handmade, and they are indeed made in Peru, and that they’re definitely not alpaca. Well, not all of them are handmade… but when they are, it’s not in a small village in the mountains. It’s in a massive factory owned by one of two companies that share practically 100% of the market.

I think the trip helped make me aware of what’s true and not true, and that even if you speak Spanish, tourism makes a ton of money for the people and it doesn’t need to be authentic to make money. But there are two more important things that I realized. First,

EVEN IF THE MERCHANDISE IS NOT AUTHENTIC, BUYING IT STILL HELPS THE LOCALS LIVE, AND THE MEMORY OF THE COUNTRY WITH WHICH YOU’VE ASSOCIATED IT IS NO LESS MEANINGFUL.

Second, in most situations when a Canadian has the money to travel to Peru, the people selling the merchandise need the money more than you (we) do. That is to say, haggling to get something for $6 instead of $8 makes a much bigger difference in the lives of the merchant than it does to you, and it’s something to consider when shopping in those places. Of course if people are charging ridiculous prices there’s a point where it becomes unfair and exploitative, so you just need to know when you’re getting screwed vs. when you’re helping someone put food on their table.

Some Slightly More Random Thoughts

The roads in Peru… in fact the roads everywhere I’ve been, are still better than in Montreal. Basically, if a road in the world is paved, or has ever been paved, it’s better than Montreal roads. You’d think side-streets in a small town in Peru, or in Cambodia for that matter, would be bad. Nope. Montreal is still the worst.

Every city has sketchy areas, but it’s not a big deal! People warned me about the danger in Peru, and I can honestly say that at no point during my entire trip did I feel even the slightest bit uncomfortable or like I was in danger. Keep your wits about you, do some research, and you’ll know to avoid the dangerous places. It’s the same thing in any city… there are dangerous areas of Montreal too but no tourist would ever go there unless they’re clueless.

Stray dogs are super cute. Well all dogs are super cute, but the strays in Peru were super cute, and looked to be significantly healthier than some of the dogs I’ve seen on other travels. It made me think about the dog situation and whether it’s actually better to euthanize tons of animals every year to avoid the situation getting out of control. I’m kind of torn on the matter; having strays leads to more strays which leads to more strays and eventually areas of the city can become dangerous to walk your own, non-stray dog. It also means that disease can abound and can make its way to your dog, not to mention the fact that strays won’t be spayed or neutered and your dog could be at risk of getting pregnant. Still not sure where I stand, but personally I liked the fact that cute dogs roamed around all over the place and didn’t pose a threat to anyone (except for maybe eating their garbage).

 

That’s all for today! Hope you enjoyed 🙂