January 22, 2016 | Authored by: Vindicia Team Blogs

Brands evolve in their approach to subscription billing

Subscription billing is one of the best ways to monetize a digital service, but it can be challenging to settle on a rate that is effective for both users and the business. As a result, companies often adjust their sources of revenue over the years, often making a few surprising choices along the way. Netflix and WhatsApp both recently announced significant changes to their subscription options, with Netflix upping its rates and WhatsApp eliminating them altogether.

Netflix raises rates for HD
Netflix just bumped up its subscription fee from $7.99 to $9.99 per month for HD streaming users. The starting subscription price for HD has been $9.99 for some time now, but now those who are on grandfathered plans will also have to pay up, The Next Web reported. Users who want to remain at the lower rate will have to sacrifice screen clarity and go for standard definition instead.

Many are already criticizing the choice, believing it may alienate some of Netflix's most loyal users. According to the Next Web, with rising competition in the streaming video space, it may not be smart to increase prices now. According to the publication, Netflix doesn't expect an unusual amount of churn as a result of the decision, but it remains to be seen whether the brand's expectations are correct.

Netflix Subscription RatesNetflix will raise prices for grandfathered subscribers.

WhatsApp eliminates subscription fees
Meanwhile, WhatsApp, a cross-platform messaging service, recently announced on its blog that it will eliminate subscription fees on its platform, raising the question of how the Facebook-owned company will continue to sustain its service. At 99 cents per year, the subscription fee was never substantial to begin with, and users are only required to pay it after a full year of free service. However, the company still ran into issues with its customer base. For instance, many users don't have a debit or credit card number, which made it difficult to sustain their accounts after the first year.

While you might assume WhatsApp will substitute third-party ads for its subscription revenue, the company argues this won't be the case. Instead, it will partner with other companies to allow these businesses to communicate with WhatsApp users through the platform. As Business Insider pointed out, this "app-within-an-app" approach mirrors that of Chinese messaging app WeChat.

"The app-within-an-app model could be the future of mobile."

WeChat allows users to access many different services within its service, including the ability to hail taxis, purchase movie tickets and even donate to a charity. Essentially, this enables users to make in-app payments. In other words, rather than gaining revenue from consumer subscribers, WhatsApp will likely switch things around to gain recurring payments from businesses that want to reach consumers through the app.

The change represents an interesting shift and also demonstrates a new potential direction for the app environment. According to Venture Capital firm Andreesen Horowitz, the app-within-an-app model could be the future of apps and mobile commerce. For instance, the WeChat app hosts millions of apps in its ecosystem, much like the Internet hosts Web pages.

Powered by subscription billing
In a rapidly changing digital environment, companies need the support of a versatile subscription billing platform that can evolve with them, whether they need to increase fees or change to a different form of revenue generation. Moving from traditional subscription billing to micropayments could be extremely difficult without the right software to back you up. In addition to versatility, it's crucial that companies can utilize user data to make informed decisions regarding any substantial changes to their subscription billing fees. Subscription-based models could be the future of payments, but it's important for brands to invest in high-quality partnerships to make it happen.

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