A Subscription-based App Store?

by Russ Jones on March 2, 2009

in ECommerce, Facebook, Russ Jones, Subscription Management

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If nothing else, the SaaS phenomenon has unleashed a flurry of subscription management companies. Companies like Vindicia, Aria Systems, Zuora, and IP Applications all come to mind. I’m using “subscription management” loosely and should clarify that we’re talking about a superset application category that blends together certain elements of CRM, billing, and payments.

I say “CRM” in that these companies are often the white-labeled face of their client when it comes to managing the online customer relationship. I say “billing” in that they all help define and manage complex subscription plans that have assorted bundles and rate structures. I say “payments” in that they all manage payment data on file and drive recurring transactions as a reflection of how end-users actually use their plans.

Many subscription management vendors have different areas of focus and don’t always compete head to head for new clients. Some are geared toward the high-end of the market; others are geared towards first time subscription businesses. Some are focused purely on online subscriptions; others, such as THINK Subscription, handle subscriptions in multiple channels.

At Glenbrook, we have several ways of gauging the sophistication of these vendors. One way is to look at how they handle expiring card data, which is THE problem in subscription management. They all track expiration dates and send email reminders; the more sophisticated subscribe themselves (love that recursion) to the various “card updater” services offered by card companies. We also evaluate the vendors by the types of tools they provide for fighting subscription fraud, how they manage entitlements, access rights, etc.

In spite of the many differences, all share a passion that the recurring subscription model is the right way to drive online revenue. Nothing illustrates this better than the announcement today from Zuora that it is extending its subscription management capabilities to developers on the Facebook platform. It’s worth nothing that neither Apple nor Google, in their respective app stores, currently support any subscription capability. Both support the one-time paid download. A good start for developers, for sure, but lack support for a 14-day free evaluation, followed by $4.95 per month subscription fee with the ability to add small incremental purchases on to each user’s monthly bill.

Will Google and Apple someday provide subscription support for their app stores? Maybe. But meanwhile it will be interesting to see how app developers react to the Facebook platform — and the ability to monetize their creativity on a month-to-month recurring basis.

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