What’s a Subscription Business Model & How Does it Work?

Are you a content creator looking for new ways to monetize your content beyond traditional methods? As the creator economy continues to grow, it’s becoming clearer that sticking to monetization on one platform isn’t always enough. One model that has gained significant popularity in recent years is the subscription business model. This model not only provides a predictable and steady revenue stream but also allows creators to increase customer retention and build closer relationships with their supporters. 

In this article, we’re exploring what a subscription business model is and how it works, different types of subscription models, benefits and challenges of using this model, and how to build a subscription business as a creator. 

What Is a Subscription Business Model and How Does it Work?

A subscription business model is a revenue model where customers pay a recurring fee to access a product or service. The subscription business model is simple: a customer pays a recurring fee to access a product or service, and the provider delivers the product or service to the customer until the customer decides to cancel the subscription. 

In the creator world, we use the term ‘memberships’ to describe this. As a creator, you can offer exclusive content or other perks to your supporters that become members on your site. Two popular membership platforms are Patreon and Fourthwall.

5 Benefits of Subscription Business Models

1. Predictable income: The subscription model provides a steady income stream that creators can rely on. Creators can predict the level of revenue they will receive each month, which helps with budgeting and investing in future content.
2. Increased fan loyalty: Offering memberships or a subscription business model provides an opportunity for creators to connect with their audience on a deeper level. As customers continually engage with the creator's content, they are more likely to feel a stronger connection and loyalty to the creator, making it easier for the creator to sell additional products and services.
3. Better Customer Retention: The subscription model is an effective way of retaining customers because they are committed to the content. If you have a community of loyal subscribers who are happy with your content, they are less likely to churn. 
4. Ability to upsell and cross-sell: Subscribers are more likely to buy additional products or services from the same creator. As such, creators can use the subscription model to upsell and cross-sell their products and services to their audience. 
5. Scalability: Subscription-based businesses are easily scalable. As creators acquire new subscribers, they can create new tiers and products, and revenue will increase over time.

How to Build a Subscription Model

Building a subscription model is relatively straightforward. Here are some steps creators can follow to build their subscription business:

1. Look for Inspiration: There are many creators doing a great job of offering memberships. Check out Armchair Historian’s revolutionary subscription model site for educational history content, and why he chose to offer memberships. 
2. Confirm that there’s demand: Check that the concept you have in mind is viable and that there is demand for your subscription content or service. While there’s no perfect number, creators tend to have the most success starting to offer exclusive subscriptions after they’ve reached at least 5K subscribers/followers or 10K monthly viewers on other platforms.
3. Select a subscription platform: You should select a platform that aligns with your objectives and can help you achieve your business goals. Fourthwall is a great option for creators looking to create membership sites and subscription-based businesses while also offering physical goods.
4. Create compelling content: Build a plan and strategy to regularly produce high-quality content that adds value to your audience's lives.
5. Market your subscription business: Use social media and other marketing techniques to promote your subscription service and gain more subscribers.
6. Provide excellent customer service: To keep your subscribers happy, make sure that you address their needs on time, provide them with excellent customer service, and regularly engage with them. At Fourthwall, we do this for you! 

4 Examples of Subscription-Model Platforms 

There are many examples of subscription-based platforms often used by creators. Some of the most popular examples include:

1. Fourthwall: A free creator e-commerce platform that enables content creators to launch a website, source and sell products, and offer memberships to their supporters.
2. Ko-fi: A social and funding platform where creators can receive donations and offer exclusive content to their supporters. 
3. Fanfix: A subscription-based platform that allows creators to offer exclusive posts, media, and direct messaging to their supporters.
4. Patreon: A subscription-based platform that allows creators to offer exclusive content and experiences to their supporters through various membership tiers. 

For a more detailed explanation of these options, check out our guide. 

Challenges of the Subscription Business Model 

There are a few challenges with the subscription business model that creators should be aware of. They include:

• Potential for high customer churn rate: Subscribers may decide to cancel their subscriptions if they aren’t happy with the content being posted. Supporters typically pay for “community” or exclusive access, so it’s important to keep fostering those.
• Continuous creation of engaging content: Creators must continuously produce high-quality content to keep their supporters interested in their brand. If you promised to stick to a posting schedule, you should stay on top of that to avoid an increase in unsubscribes.
• Difficulty acquiring new subscribers: For new creators, it might be difficult to attract and acquire new subscribers. We suggest looking into ecommerce marketing strategies.

What Are Common Subscription Model Types?

There are different types of subscription models that creators can use. Some of the most popular models are:

• Subscribers-Only Model: This model requires customers to pay a fee for exclusive access to a creator’s content. Customers must be subscribed to access the creator’s content fully.
• Subscription Box Business Model: It consists of delivering a package of products or services at a set interval. The subscribers pay a recurring fee, and in return, they receive a product package from the creator that they subscribed to.
• Membership business model: This model offers access to exclusive content and perks for a recurring fee, usually monthly or yearly. This model is perfect for creators who want to build a more dedicated following while getting a stable monthly income.

Create a Membership Site With Fourthwall!

Fourthwall is a solution for creators looking to build membership sites and subscription-based businesses. Creators of all kinds can create their own professional websites to sell merchandise and offer memberships. We handle product creation, checkout, customer service, and more, so you can focus on connecting with your supporters and creating valuable content. Join Fourthwall today to jumpstart your monetization journey.