We know that subscriptions are now rife-growing up like mushrooms after the first whiff of the rains. I am linking this write up only to show the economics behind the scenes. We never get the break up from the academic publishers, for example, but everyone seems to agree that a subscription to the “Red” and the “Green” journal is a must-have.
Consumers and businesses have found an unlikely alignment through subscriptions. Merchants can see revenue months down the road, while customers get convenience, customization, and the promise of ongoing service upgrades for one, all-you-can-eat price.
“The entire $80 trillion economy is up for grabs,” Tien Tzuo, CEO of subscription-billing platform Zuora (ZUO), writes in his new book, Subscribed. Zuora’s stock is up 30% since it went public in April. Its revenue is expected to grow 39% this fiscal year, to $234 million.
Investors, somewhat belatedly, have discovered the subscription payoff. The market now values Microsoft at $23 for every dollar of profit it generates, while Apple’s price/earnings ratio is mired at a hardware-like 13 times.
We also need to access the value those subscriptions provide. It is debatable.