Subscriptions and memberships allow businesses to connect with their audience and avail earning opportunities. Both of these business models share many similarities but have their fair share of differences. Even if they are based on building connections and making money, both utilize different approaches to fulfill their objectives.
Today, we’ll explain how similar and different these two business models are and what their advantages and disadvantages look like. Read till the end, and you’ll be able to determine which one is sound for your business.
What Is A Subscription Business Model?
The subscription model mainly refers to recurring payments in exchange for data such as video content. In the case of video content, the audience or viewers choose whether they want to pay every week, month, or year. For the payment, they receive an extensive library of videos such as movies, web series, documentaries, etc.
The payment works for the audience till the duration of the subscription. Once the duration is over, they need to repay to continue enjoying streaming the video content.
What Is A Membership Business Model?
On the other hand, a membership concept includes only a one-time fee and lifetime access. Some companies or businesses can also provide their memberships for free and let their audience enjoy the benefits forever. These benefits vary depending on the industry or business the audience takes the membership of.
For example, take a membership of an e-commerce website, and you may enjoy free shipping for a lifetime, regular discounts, access to new products earlier than other customers, etc.
The same also clarifies the difference between subscriber and member. Subscribers are those who take the subscription by paying a recurring fee, whereas membership become members of a company or business by paying a one-time fee or joining for free.
Let’s have a look at this membership vs subscription chart-
| Subscription Business | Membership Business |
| It needs customers to pay a regular fee. | It charges a one-time fee or no fee. |
| It might offer a trial period without payment. | There might be no trial period. |
| Anyone can pay the subscription fee and start exploring the content. | Membership benefits must match people’s interests. |
| It’s entirely product-based, where businesses focus on selling products or services. | It’s community-based, where they focus on building a community of people. |
| Subscription models only provide benefits until the subscription period ends. | Memberships might be for a lifetime. |
| The subscription model provides a prediction on revenue generation. | With a membership model, there might be no guarantee of regular revenue. |
Advantages Of The Subscription Model-
You Can Predict Next Month’s Income
With a subscription model, video content creators and businesses can predict their monthly earnings based on the audience who already has subscribed to the channel. With proper advertising of your channel, you can earn more subscribers and hence more earnings.
Build Trustworthiness
Subscription models help build relationships between the subscribers and the content or service providers. Once a person subscribes to a channel, he is more likely to subscribe the next month. This way, a subscriber puts their trust in the quality of content, and the provider fulfills their trust by keeping the content library updated.
Customizable Subscription Options
With the subscription model, service providers can create multiple subscription plans. Multiple plans facilitate multiple options for the audience, which makes them more inclined to choose a plan that suits them better.
Imagine giving your audience only one plan to subscribe to; it might demotivate them and make them run away, looking for better options. Thankfully, it’s not the case with subscriptions, as you can create multiple plans. With GUDSHO, you can customize your subscription plans while providing various options to your audience.
Less Advertising Expenditures
To succeed in the endeavors, you need to market your product/services via different means. A product gets sold only when it reaches the right people via marketing. With subscriptions, however, you need to do the bare minimum. You can predict your monthly earnings even with a few subscribers. By providing quality content regularly, you can win your subscribers’ hearts, and these existing subscribers then spread the existence of your services via word of mouth. Hence, with the subscription model, you need to execute the least marketing practices yourself.
Disadvantages Of The Subscription Model-
High Churn Risk
Initially, you might need help to retain your customers or audience. Churn risk is something a subscription provider has to go through, and this risk stays even higher for new providers who have yet to set foot in the industry so firmly. However, with time, you can reduce the churn rate by improving the quality of your content and studying your audience.
Regular Updation Of The Content
People subscribe to a video channel because subscriptions bring them a lot of movies, web series, and other video content. Subscription is a cheap way to get a lot of entertainment. This also means that as a video content provider, you need to update your library regularly, only then can you retain more subscribers.
Difficulty Maintaining Score
Everyone knows how beneficial subscription models are; this results in increased competition and more effort. You might already find so much competition while starting your subscription services; however, with constant effort and quality content, you can make your place among the competitors.
Further on the membership vs subscription business model, let’s understand the good and bad sides of the membership model.
Advantages Of Memberships-
Instant Support For Your Next Relatable Ideas
If you own a business and already have a good amount of members added to it, you can have their support for any relatable business that you start. Many businesses consider starting a second business based on their first one; here, they can expect that at least half of their current members would support their initiative.
Earns You Loyal Members
Customers take memberships when they want to experience the value a brand adds to their life. When a brand keeps up its promises, it earns loyal customers in exchange for memberships. Such instances increase customer loyalty toward the brand, which leads to increased customer retention.
Potential Customers That Can Become Actual Customers
Memberships provide businesses with potential customers in the form of audiences who take memberships. To market your brand or specific products, you don’t have to start finding your audience from scratch; instead, you can advertise your products to existing members. This will also increase your chance of conversions and to target a completely new audience.
No Limit On Adding Members
Memberships help a business flourish with leaps and bounds since you can add as many members as possible. The more members you have, the larger your community and the more potential customers you acquire.
Disadvantages Of Memberships-
Churning
Like subscriptions, memberships are also prone to customer churn. As a result, customers might consider canceling their membership if they don’t feel any value. They might also opt for competitors providing better benefits free of charge or at reduced prices.
As a service provider, you must keep improving your services, test out all the aspects, and keep an eye on the competitors doing better.
Needs Regular Value Maintenance
Businesses need to maintain their standards and keep providing value to their members. This must be followed if you want your members to stay longer. Brands that fail to deliver value after acquiring members lose them over time.
Needs Management Tools And Resources
Managing the concepts of subscriptions and memberships is not an easy peasy. These things need solid management to handle payment cycles, recordkeeping, billing cycles, and resolution of customer queries. For this, businesses should always opt for video hosting platforms that provide such management of memberships.
Which Model To Choose For Your Business?
When you want to start a business, but have no idea whether to go with memberships or subscriptions to make it grow, consider these quick points to make a decision.
Membership model would work fine if:
- You want to build a community and keep the communication alive
- You want to create a sense of belongingness among your visitors
- You want to offer exclusive benefits that are limited to members only
The subscription model would work if:
- You want to earn a regular income in exchange for your products or service
- The only way for people to become connected is via making a purchase
- You’re okay with a lower level of involvement with your audience
To Conclude
Both memberships and subscriptions have their benefits, and you should choose the one that suits your situation the best. Find out your objective, such as if you want to create a community of people or want them to pay you every month. Determining an intent will decide whether you should go with subscriptions or memberships. We hope you get answers from the article and will use the knowledge to gain insights.
Want to grow your Membership or Subscription-based Video Business?
Great comparisons between membership and subscription especially with the revenue stability, customer retention, and scalability, offer valuable insights into their long-term viability and impact on organizational growth. Thanks
I’m a youtuber constantly uploading videos and revenue is very less. I need to start my own streaming business. Which model is more profitable: Membership or Subscription?
My manager tasked with exploring membership and subscription options for our streaming business, I found this blog to be very insightful. The breakdown of key considerations, such as pricing strategy, content access, and member engagement, provides a clear roadmap for evaluating the pros and cons of each model. Thanks for the valuable time to share knowledge.
Creative articles for video-driven businesses which highlights the importance of aligning their business goals with the right revenue model to maximize profitability and customer satisfaction. Definitely will share this blog to many.
Finding the right balance between membership and subscription is essential in monetization. I have got a clear clarity now to choose the best option to improve my monetization. Thanks for the great resource.
I have now clear understood of difference between membership & subscription. But I don’t know which is opt for my business model. I’m creating & publishing a shortfilms occasionally. Can anyone help me which model is works fine for me with platform suggestion?