Passive Income: Subscription model business or bust.

This article glosses a very important piece of subscription revenue - churn. Just because a customer paid last month doesn't mean they'll pay this month. This is why it's important to understand "Lifetime Value", i.e. customer lifetime X subscription price.<p>It turns out that high LTV is correlated closely with high customer acquisition cost. That means getting people to convert to your service is -hard-. I'm surprised this isn't mentioned in the "disadvantages" part.<p>I also think it's silly to write an article on subscriptions as a business model and then mention examples that don't use subscriptions at all.

My advice: Find a niche open source project that can be hosted, and become a contributor and an expert on it. Then offer premium hosting and support. It doesn't have to be a recent project either. The one I'm doing is still using CVS for version control.

Seems like a very superficial article, not much meat, especially considering it's such a potentially interesting topic. Shame, I think there were better articles on this blog before.

I agree with most of the content of the article but the term passive income always bothers me, running both styles of businesses right now (subscription and ad firm) I can tell you that neither of them feels very passive.

Headline only. This isn't going to help you start a submod business.

He grossly overstates the stability of subscriptions and their predictability. They _can_ be more stable than advertising revenue when faced with some kinds of disruptive factors... anyway, written from the grass-is-greener-on-the-other-side-of-the-fence perspective of someone who hasn't been there.

"You don't want to rest on your laurels, but it's likely that you're never going to take in less revenue next month than you did the previous one."<p>Bull. If that were true then companies that charge subscriptions would never go out of business. Also as Teej said, his examples are horrible. Zynga is not a subscription business by any means. Apparently he is not aware that charging for products does not equal being a subscription model business.