Why I want to move from membership to subscription

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I’m extremely jealous of Jason Levin.

A couple weeks ago, I tweeted this into the abyss:

“Got a newsletter business idea for you: this week’s memes”

In less than an hour, a dude I don’t know replied:

“I think this is what @iamjasonlevin is doing, essentially”

👀👀👀 

What is Jason doing and why am I so jealous?

He runs a subscription called Meme Alerts. It’s $6.90/month and it has three features:

1) Daily email with new trending memes
2) Google slides so you can make your own memes
3) Archive of all past memes

Talk about an easy model to deliver on!

I wish I’d thought of it (oh wait I did, but a little late and I don’t think I could be nearly as ruthless as Jason is about it 😜). I love the simplicity of the concept and his execution.

The low expectations of a low cost subscription call to me as a repeat overdeliverer.

I wound down my high touch membership a couple months ago. Of course, I miss the incredible members and the financial stability but I don’t miss how complex it was to run.

Memberships are hard. Subscriptions are easier. Why? We’re gonna get into it in today’s issue.

Memberships vs Subscriptions

Why is running a membership so much harder than running a subscription?

For our purpose, I’m defining a membership as something where you interact with people (either the creator or a community) that’s more medium or high cost.

I’m defining subscription as a thing you buy continuous access to that is generally low cost (think Netflix).

Not everyone means these two words the way I just described them and that’s not important. The distinction I’m making is HIGH TOUCH MRR* vs LOW TOUCH MRR.

(Jason has a membership too actually but I predict that he will shut it down in favor of just running Meme Mail. Can’t wait to find out!)

The problem with memberships

After running a membership mostly full time for 2 years, here’s the main problem: memberships require you to contend with the messiness of human behavior.

Some members can’t manage their calendar or workload. They stop using their membership. They quit.

Some members can’t decide what they want or need. They become harder to solve for, no longer fitting into what’s serving others well. You have to either adapt to serve them or steer them toward another solution.

Some members don’t have good foundational skills. They can’t execute what the membership is designed to address or they need way more help than a membership would ever deliver on. They don’t get the result promised. They quit (or worse, stay in the same place all year.)

All of the above scenarios mean that that member is a growth dead end.

In order for your membership to grow, each member has to get a result you can publicize OR they have to be so pleased they tell a friend about you.

Given that most members will fit into one or more of the above scenarios, you need A LOT of members to avoid the growth dead end.

Can you push it up the hill anyway? Sure, you can and I did for two years.

My members stuck around a long time (average 6 months with many staying over 1 year), but due to the small size of the program, the sales load never got lighter and the operations only got more complex. I loved running Growthtrackers until I didn’t.

The beauty of subscriptions

✨ Enter the magic happy land of subscriptions

Subscriptions are more take it or leave it.

When you subscribe to Netflix, you are a customer of theirs and they do consider your behavior when designing their platform, but they don’t come to your house and help you set up your surround sound. They expect you can figure out how to watch TV.

See what I’m getting at here? There’s a major difference in high touch MRR and low touch MRR.

It’s true that even in a subscription context, you want customers to get value from what you’re delivering. But you’re operating more one size fits all unless a pattern emerges that affects multiple subscribers (which usually shows up as churned subscriptions).

Let’s put in math terms…

Low cost subscription: If I’m adding $1k in new MRR* each month and losing $50 to churn, I’m coming out on top by a longshot even if churn could be lower (see blue line below).

Medium cost membership: Compare that to adding $2k MRR but having higher churn due to higher cost per customer. What seems like higher revenue gets eaten up quickly by churn (see red line below).

You can see how the subscription is growing at a faster pace even with lower recurring revenue being added.

How to move to subscription happy land

I’m oversimplifying and overglorifying subscription happy land. It comes with its own complexity. But if you’re jealous of Jason too, here’s what I’m packing in my bag to bring to subscription happy land 🧳 

Pitfalls to watch for 🕳️ 

• Requires growing a medium to large audience

• Pricing can be more sensitive, more commodified

• Slower to reach your revenue target

• Less customer loyalty and harder to get to know them

Opportunities to spot 🤩 

• One trick pony offers that already sell

• Something you’re churning out a ton of regularly

• Something people need multiples of

• Hyperniche audience you can uniquely reach (and already are)

• B2B over B2C (consumers much harder to sell than businesses)

Other subscription businesses I’m jealous of ❤️‍🔥 

• Liz Wilcox’s $9 email club

• Angus Cheng’s bank statement converter

• Counsel for Creators Legal Membership (yes, technically a membership)

• Alissa Walker’s Torched newsletter

• Pathfinder SEO

Having MRR of any kind is not without its stress and I am glad to be taking a break from that pressure for a bit. Making money from various one time ventures is cool too and it means I could finally take a vacation again.

Stay tuned here and at Journalists Pay Themselves for how I solve my jealous fever about subscription businesses.

Do you have a subscription business? Do you want one? Let me know!

*MRR is monthly recurring revenue. Fun fact I heard this term for the first time when I interviewed with the CEO of Zapier to work on their growth team but then I didn’t believe Zapier had an interesting growth path so I bailed 😬