• Home
  • Latest
  • Fortune 500
  • Finance
  • Tech
  • Leadership
  • Lifestyle
  • Rankings
  • Multimedia

Trendingnow

1

The U.S. campaigned to host the World Cup. Now soccer fans will trade their countries' train system for the U.S.'s 'D' rated infrastructure

2

The pig in the python: Baby Boomers are strangling the economy they built by refusing to move or retire

3

Jeff Bezos wants the bottom half of earners to pay zero income tax—he says nurses making just $75K should save $12K a year

1

The U.S. campaigned to host the World Cup. Now soccer fans will trade their countries' train system for the U.S.'s 'D' rated infrastructure

2

The pig in the python: Baby Boomers are strangling the economy they built by refusing to move or retire

3

Jeff Bezos wants the bottom half of earners to pay zero income tax—he says nurses making just $75K should save $12K a year
Software as a service

It’s a subscription economy, and you’re just living in it

Michal Lev-Ram
By
Michal Lev-Ram
Michal Lev-Ram
Special Correspondent
Down Arrow Button Icon
Michal Lev-Ram
By
Michal Lev-Ram
Michal Lev-Ram
Special Correspondent
Down Arrow Button Icon
June 6, 2014, 6:42 AM ET
Adobe Systems CEO Shantanu Narayen during the launch of Adobe Creative Cloud and CS6 in San Francisco, California in April 2012.
Adobe Systems CEO Shantanu Narayen during the launch of Adobe Creative Cloud and CS6 in San Francisco, California in April 2012.David Paul Morris / Bloomberg / Getty Images

You’ve heard of the sharing economy? How about the subscription economy?

It’s actually not that new: Businesses have been selling monthly subscriptions for all sorts of goods and services for years—magazines like Fortune come to mind. But more recently, all sorts of unexpected industries have started dabbling in subscription-based business models, offering anything from online software to toothbrushes to genome sequencing for a flat monthly fee.

One of the companies leading this charge is Zuora, a Foster City, Calif.-based startup founded by former WebEx and Salesforce.com (CRM) executives. The company sells software that helps other firms move towards a subscription-based revenue business model, including tools for billing, accounting and analytics. This week, Zuora unveiled the latest version of what it calls “relationship business management” software—a suite that lets companies transition and maintain a shift from a traditional to a subscription-based revenue model. (And yes, Zuora sells its product on a subscription basis.)

“[Relationship business management solutions] are an emerging class of software focused on building, managing and optimizing the ongoing customer relationships that are the lifeblood of a subscription businesses,” the company says in a recent press release.

But the real news is that more and more industries are dipping their toes—a rare few even jumping in head-first—to a subscription-based, recurring revenue model. At an event hosted by Zuora this week, several of these companies came together to discuss the shifting landscape and its opportunities and challenges. At the obvious top of the subscription-based model list are cloud software companies like Salesforce.com and Box, which have always charged a monthly per-user fee for their online enterprise products. But this week’s event was also attended by a telecom firm, an online toothbrush seller and a biotechnology company, among others. Their reasoning? People today would rather subscribe to services than pony up the cash to own products.

Innovators like Netflix (NFLX), Zipcar (CAR) and Spotify have certainly proven that subscriptions can work for more than just software. Should all industries make the switch?

The answer is complicated. Subscriptions should certainly be an option for consumers, regardless of the product type. Consumer behavior, especially among younger people, is changing, and the need to own and house goods—from music to cars to physical documents—is waning. While Wall Street grapples with how to evaluate some of the subscription-only companies (à la Box), it has clearly worked up an appetite for a recurring revenue model that gives companies all sorts of new ways to engage with old and new customers. But transitioning isn’t easy, and each company needs to evaluate the needs of its customer base—and how subscriptions could potentially open the door to new users.

Case in point: Last year, Adobe Systems (ADBE) decided to transition its software suite for creatives to the cloud. The move was far from flawless—a recent hours-long outage irked users—but the results have mostly been positive. The company says 20% of customers that are purchasing the updated online tools weren’t Adobe customers before the switch. And now that the software is cloud-based, Adobe can better track how customers are using it and constantly push updates to individual users.

“We were really trapped inside the box that we shipped—both literally and figuratively,” David Wadhwani, SVP and GM of Adobe’s digital media division, said at this week’s event. (Adobe is not a Zuora customer.)

Other companies who have made the switch have found they’re able to attract a broader customer base by offering a subscription-based model, which has a much lower upfront cost to consumers. But the transition is sometimes easier on the customer than on the company, where the transformation to a new business model can be incredibly disruptive to the way sales and marketing is run. (Incentivizing and commissioning salespeople with this model is particularly challenging).

“It is an organizational issue,” says Mark Field, CTO and VP of software services at LifeTech, a biotech company owned by Thermo Fisher Scientific (TMO). “Our processes were set up to support selling instruments.”

Zuora and its investors are, of course, extremely bullish on the growth of the subscription economy, and believe there are lots of untapped industries that will also jump on the bandwagon, from manufacturing to legal services to education. And even if you’re not buying your toothbrush via a monthly subscription service, chances are you’re already part of the subscription economy yourself. The way we consume movies, listen to music, or even drive around in cars, is changing. Zuora hopes the trend will continue.

About the Author
Michal Lev-Ram
By Michal Lev-RamSpecial Correspondent
Twitter icon

Michal Lev-Ram is a special correspondent covering the technology and entertainment sectors for Fortune, writing analysis and longform reporting.

See full bioRight Arrow Button Icon

Latest in

Finance
Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam
By Fortune Editors
October 20, 2025
Finance
Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam
By Fortune Editors
October 20, 2025
Finance
Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam
By Fortune Editors
October 20, 2025
Finance
Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam
By Fortune Editors
October 20, 2025
Finance
Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam
By Fortune Editors
October 20, 2025
Finance
Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam
By Fortune Editors
October 20, 2025

Most Popular

Finance
Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam
By Fortune Editors
October 20, 2025
Finance
Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam
By Fortune Editors
October 20, 2025
Finance
Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam
By Fortune Editors
October 20, 2025
Finance
Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam
By Fortune Editors
October 20, 2025
Finance
Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam
By Fortune Editors
October 20, 2025
Finance
Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam
By Fortune Editors
October 20, 2025
Fortune Secondary Logo
Rankings
  • 100 Best Companies
  • Fortune 500
  • Global 500
  • Fortune 500 Europe
  • Most Powerful Women
  • World's Most Admired Companies
  • See All Rankings
  • Lists Calendar
Sections
  • Finance
  • Fortune Crypto
  • Features
  • Leadership
  • Health
  • Commentary
  • Success
  • Retail
  • Mpw
  • Tech
  • Lifestyle
  • CEO Initiative
  • Asia
  • Politics
  • Conferences
  • Europe
  • Newsletters
  • Personal Finance
  • Environment
  • Magazine
  • Education
Customer Support
  • Frequently Asked Questions
  • Customer Service Portal
  • Privacy Policy
  • Terms Of Use
  • Single Issues For Purchase
  • International Print
Commercial Services
  • Advertising
  • Fortune Brand Studio
  • Fortune Analytics
  • Fortune Conferences
  • Business Development
  • Group Subscriptions
About Us
  • About Us
  • Press Center
  • Work At Fortune
  • Terms And Conditions
  • Site Map
  • About Us
  • Press Center
  • Work At Fortune
  • Terms And Conditions
  • Site Map
  • Facebook icon
  • Twitter icon
  • LinkedIn icon
  • Instagram icon
  • Pinterest icon

Latest in

n
InvestingMarkets
Goldman Sachs just ran some ugly numbers on the SaaSPocalypse—and found hedge funds are dumping software and piling into semis
By Nick LichtenbergMay 26, 2026
16 minutes ago
Rear view of a depressed non binary person looking out of their bedroom window on a sunny day - negative emotion
EconomySmall Business
America is becoming less neighborly, and it’s hurting Gen Z and millennials’ chances at economic mobility
By Tristan BoveMay 26, 2026
33 minutes ago
Trump has lost four members of his Cabinet. All of them are women
NewslettersMPW Daily
Trump has lost four members of his Cabinet. All of them are women
By Emma HinchliffeMay 26, 2026
56 minutes ago
Coinbase pushes further into AI payments with new MCP for Base network
CryptoCoinbase
Coinbase pushes further into AI payments with new MCP for Base network
By Jeff John RobertsMay 26, 2026
1 hour ago
Bill Winters, chief executive officer of Standard Chartered
SuccessJobs
Standard Chartered CEO apologizes for calling some workers ‘lower value human capital’ in AI push
By Emma BurleighMay 26, 2026
1 hour ago
Kevin O’Leary slams people who want work-life balance: ‘I hope they work for my competitors’
Successwork-life balance
Kevin O’Leary slams people who want work-life balance: ‘I hope they work for my competitors’
By Sydney LakeMay 26, 2026
1 hour ago

Most Popular

The U.S. campaigned to host the World Cup. Now soccer fans will trade their countries' train system for the U.S.'s 'D' rated infrastructure
Travel & Leisure
The U.S. campaigned to host the World Cup. Now soccer fans will trade their countries' train system for the U.S.'s 'D' rated infrastructure
By Catherina GioinoMay 25, 2026
1 day ago
The pig in the python: Baby Boomers are strangling the economy they built by refusing to move or retire
Economy
The pig in the python: Baby Boomers are strangling the economy they built by refusing to move or retire
By Nick LichtenbergMay 25, 2026
1 day ago
Jeff Bezos wants the bottom half of earners to pay zero income tax—he says nurses making just $75K should save $12K a year
Success
Jeff Bezos wants the bottom half of earners to pay zero income tax—he says nurses making just $75K should save $12K a year
By Preston ForeMay 21, 2026
5 days ago
A billionaire and an A-list actor found refuge in a 37-home Florida neighborhood with armed guards—proof that privacy is now the ultimate luxury
Real Estate
A billionaire and an A-list actor found refuge in a 37-home Florida neighborhood with armed guards—proof that privacy is now the ultimate luxury
By Marco Quiroz-GutierrezMay 25, 2026
1 day ago
Elon Musk's best friend could make more than $100 billion from SpaceX's IPO. His firm is also owed billions by SpaceX
Investing
Elon Musk's best friend could make more than $100 billion from SpaceX's IPO. His firm is also owed billions by SpaceX
By Eva RoytburgMay 25, 2026
1 day ago
The Supreme Court handed Trump a Golden Chariot on tariffs — now he just has to take it
Commentary
The Supreme Court handed Trump a Golden Chariot on tariffs — now he just has to take it
By Jeffrey Sonnenfeld and Steven TianMay 26, 2026
7 hours ago

© 2026 Fortune Media IP Limited. All Rights Reserved. Use of this site constitutes acceptance of our Terms of Use and Privacy Policy | CA Notice at Collection and Privacy Notice | Do Not Sell/Share My Personal Information
FORTUNE is a trademark of Fortune Media IP Limited, registered in the U.S. and other countries. FORTUNE may receive compensation for some links to products and services on this website. Offers may be subject to change without notice.