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I have no way of knowing whether 37signals is actually profitable or not, but perhaps Salesforce is a real example. You found ONE. Your gym membership does not

by cek 15y ago

I have no way of knowing whether 37signals is actually profitable or not, but perhaps Salesforce is a real example. You found ONE. Your gym membership does not count: Physical asset. Amazon Prime is not a business. And I guarantee you it is NOT profitable anyway. It's a marketing program. Hosting does not count: It's a physical asset. Costco is not a subscription biz. It's a retailer that uses membership as a marketing ploy to drive loyalty.

Klinky 15y ago
You said, subscription based businesses. I am not sure what physical assets have to do with anything. Even ignoring Netflix's physical DVD library, if you consider hosting a physical asset, then I think you'll also have to qualify Netflix as a "subscription service which provides automated hosting & licensing of select content for subscriber's convenience".
lsc 15y ago
>Hosting does not count: It's a physical asset. If, instead of 'subscription business' you mean "businesses that rent access to software without much by way of per-user physical infrastructure" then yeah, I think some people would agree with you. I would. businesses think that because they have a low marginal cost per user, they think they can rest on those high margins. This might be what you are talking about, and if so, I agree. I mean, if you have a business with margins that are very high, investors notice, and they start trying to horn in on your market; either investors are willing to throw gobs of cash at re-writing all your software then saturating the market with marketing, or maybe someone open-sources something that can do a lot of what you can do, and suddenly you have a bunch of small competitors using the open-source software willing to compete with you at a more reasonable margin. I was thrown off by your use of apple's hardware business as an example; I mean, selling intellectual property divorced from infrastructure is a hard problem, really, it's a different problem from the subscription vs. one time payment business models.

by cek 15y ago

Klinky 15y ago

You said, subscription based businesses. I am not sure what physical assets have to do with anything. Even ignoring Netflix's physical DVD library, if you consider hosting a physical asset, then I think you'll also have to qualify Netflix as a "subscription service which provides automated hosting & licensing of select content for subscriber's convenience".

lsc 15y ago

>Hosting does not count: It's a physical asset. If, instead of 'subscription business' you mean "businesses that rent access to software without much by way of per-user physical infrastructure" then yeah, I think some people would agree with you. I would. businesses think that because they have a low marginal cost per user, they think they can rest on those high margins. This might be what you are talking about, and if so, I agree. I mean, if you have a business with margins that are very high, investors notice, and they start trying to horn in on your market; either investors are willing to throw gobs of cash at re-writing all your software then saturating the market with marketing, or maybe someone open-sources something that can do a lot of what you can do, and suddenly you have a bunch of small competitors using the open-source software willing to compete with you at a more reasonable margin. I was thrown off by your use of apple's hardware business as an example; I mean, selling intellectual property divorced from infrastructure is a hard problem, really, it's a different problem from the subscription vs. one time payment business models.