Have you noticed that people tend to use the word ‘subscription’ less often nowadays? Instead, most of the talk and marketing is about ‘service’ or ‘as-a-service’. We don’t hear so much about ‘subscription revenue’, if we ever did, now it’s all about ‘recurring revenue’.
Why is that? What’s wrong with ‘subscription’? It’s a much more familiar word to most of us than ‘recurring’ or the phrase ‘as-a-service’. We’ve had subscriptions for ages. Many people will have grown up in houses where the adults subscribed to magazines, for example. They never once believed they were signing up to magazine-as-a-service when they did so. For most of us, subscription is a concept that’s fairly easy to grasp, so it’s strange that people in IT have been so reluctant to use it.
Back in the old days (about 20 or more years ago), the term first popularised for the practice of providing computer-based services over a network to customers for a monthly fee was application service providers. Note the use of the word ‘service’ in there and the absence of the word ‘subscription’.
The ASP phenomenon was followed by software-as-a-service (SaaS), a term we’re all familiar with. Again, this involved paying a subscription, via a monthly or annual fee, to access a vendor’s application in the cloud. Notice, however, that the word ‘subscription’ is nowhere near the name given to this model.
You could be forgiven for thinking that, for the IT industry at least, there’s something wrong with the word itself. And you’d be right.
One of the problems with ‘subscription’ is that it suggests organisations might have to make significant changes to the way they account for their IT purchases and cause some inconvenience to their backend systems in the process. Service ought to imply something similar but, ironically, it’s a word people are much more comfortable with in an IT context than they are with subscription, even if the latter is much more familiar in real life.
And why wouldn’t they be? They’ve been talking about service for many years, as the usage of terms such as ASP and SaaS amply demonstrates. The fact that, for the most part, the word ‘service’ in this context is another way to say ‘subscription model’ is neither here nor there.
Using the ‘as-a-service’ nomenclature also suggests a more natural evolution from the traditional licensing and purchasing model, so it feels more comfortable for many people buying and using IT. All that’s happening is that the thing they have bought for years is now being delivered to them as-a-service with support attached, albeit for a recurring monthly, quarterly or annual fee. What could be simpler?
Of course, underneath it all, customers and vendors are still more or less adopting a subscription model, but they’re doing it in their own way and giving it their own name. They might never decide to use the word subscription to describe it, but that’s what it’s going to be.
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