Alejandro Cantarero is the Field CTO of AI at DataStax. Previously, Alejandro was founding CTO of Nami ML. He has built and run data teams at startups and large enterprises. Most recently he was the VP of Data at two large media companies, the Los Angeles Times and Tribune Publishing Company.
Nami is excited to announce the 1.0.0 release of our Flutter SDK for In-App Purchases (IAPs) and subscriptions.
Flutter is a great framework to build apps for iOS and Android with a shared code-base. The Nami® platform brings the same simplicity to selling in-app purchases and subscription cross-platform that Flutter brings to app development.
In our Flutter v1.0.0 release, we bring all our latest features from our iOS and Android SDKs including:
Create paywalls in multiple languages.
Improved support for accessibility features like Apple’s VoiceOver and Google’s TalkBack on Nami® no-code paywalls.
Paywall Smart Text feature that enables custom text on purchase buttons or including Product SKU information like price, subscription, and free trial duration in all text fields on your paywalls.
Support for one-time purchases on iOS and Android
In addition to these great new features, we have included a number of internal improvements in this release.
Enhancements to ensure purchases on Android get acknowledged if the initial attempt fails
Updated to the Google Play Billing 4.0.0 library
Improvements to our Java interface to make it easier to use
Added support for development on M1 Apple computers
We are very excited to make flutter in-app purchases and subscriptions as easy as cross-platform app development. Get started today in just a few minutes with our flutter quick start guide.
The promise of Apple’s App Store ecosystem is that you can capture a bigger audience and make more money than if you tried to build it on your own. For the benefit of everything Apple provides, you pay 30% of all your revenue. For subscription products, if you keep your customers past the 1-year mark, that rate drops to 15%.
Are you really making more money while giving Apple so much? In the rest of this article, we’ll break down a typical subscription business for a small app. There’s been a lot written recently about how the Indie Developer is not treated fairly in Apple’s ecosystem but is that really the case?
We’ve put the analysis below into a spreadsheet. Feel free to copy it and plug in the values for your own app to understand what type of benefit you are receiving if you leverage everything Apple is offering.
A Quick Look at the Benefits Offered by the App Store
Apple positions the value of its marketplace around a few key benefits:
Multiple platforms including Apple Watch, Apple TV, iOS, iPad, and Mac
Access to a worldwide audience
App and revenue analytics
No hosting fees
Payment processing
According to Apple’s latest numbers, this combination of platforms and audiences spent around half a trillion dollars in 2019. There’s plenty of money to be made, and yet in 2018 fewer than 3,000 apps were making more than $1 million a year in revenue according to App Annie.
What are the basic components needed to build a subscription revenue model? For our model we assume there is only one entitlement in the app and all the different product SKUs offered in the app correspond to different billing terms for the same product. As a simple example, our app offers a single product and sells it for $4.99 a month or $49 a year.
For a basic model we’ll need:
The current number of subscribers
The average monthly revenue per subscriber
The monthly rate at which the app acquires new subscribers
The monthly rate at which the app loses subscribers
In our example app, we assume that starting this month we have 1,000 subscribers. Further, 20% of our subscribers are on our annual subscription and the remaining users are on our monthly subscription, so our average monthly revenue is about $4.81.
That puts our total annual revenue over the next 12 months with our current 1,000 users at $57,720. Not bad, but if we want to grow our business, we’ll need to drive those numbers up.
We’ve measured our growth rate over the last few months and we are acquiring 100 new subscribers on average each month.
The last piece we need to build a basic model is how many subscribers we lose each month, or our churn rate.
Recent research from the subscription management platform Recurly places the average churn rate for B2C products at 7.05%. We can further break down churn rates into voluntary churn, these are your customers that have decided to cancel their subscription, and involuntary churn. We’ll dive into these more in the next section.
Estimating Revenue Gains from Key Features Provided by Apple
Let’s take a more careful look at some of the benefits for subscription businesses selling digital products on Apple’s App Store and make some simple estimates to see how much money Apple may help us make on their platform.
First, how can you leverage Apple’s large international audience? Selling products in multiple foreign jurisdictions comes with a slew of challenges from currency conversion, taxes, and other legal requirements. Every developer will need some platform to tackle these challenges so they do not have to take them on themselves.
Of course, selling your app in multiple countries is not as simple as flipping a switch and going live, but for the sake of simplicity, we’ll assume that our app is already good to go.
For an app currently selling in the United States, there’s a 40% growth in the potential audience just in moving into other countries with English as their official language, such as the United Kingdom, Canada, and Australia.
Second, let’s look at involuntary churn. There are many reasons involuntary churn can occur including expired cards, fraud, card limits, and more. So how do we estimate a baseline rate? If the average credit card expires every 3 years, then if your customers are never updating their billing information, you could expect to see about 2.7% having their credit card declined for this reason alone. Let’s assume that with all the other reasons declines may happen that you hit 3%.
One of Apple’s key benefits is that they put a lot of effort into reducing involuntary churn. Also, your app is pooled in with every other way a user spends money with their iCloud account, so even if their card expires another payment may come up before yours is due that forces the customer to update their credit card information. What does a more healthy involuntary churn look like? Subscription management platform Recurly’s research places average involuntary churn in consumer subscriptions at about 1.11% and voluntary around 5.94%.
In our model, we’ll start by looking at what your revenue might look like with nothing in place to mitigate involuntary churn, and then use the 1.11% average as a number that has solved many of these issues that you would get with a platform like the App Store.
Let’s take a look at our app’s annual revenue from three different viewpoints:
No involuntary churn mitigation
Using Apple’s involuntary churn tools
Using Apple’s involuntary churn tools and expanding into other English speaking countries
With no involuntary churn mitigation, our app makes about $60,000 over 12 months.
Adding involuntary churn mitigation, we grow our annual revenue to around $65,000.
Releasing our app in other English speaking countries can grow our revenue to a little over $75,000.
So where did we end up? That’s just about a 25% increase in annual revenue.
Did we beat Apple’s 30% take? Not quite, but we are healthily over the 15% revenue cut Apple takes starting after you’ve had a subscriber for 12 months.
Since the launch of the App Store in 2008 and Apple’s StoreKit framework in 2009 for selling in-app purchases, a lot has changed in the world of payments and subscription management. The growth of platforms like Stripe and Shopify have certainly changed the landscape from when Apple landed on its 30% number.
Is Apple’s App Store cut worth it? They definitely offer a lot of benefits, but with a rapidly changing SaaS landscape, it may come down to a question of how many resources you have available to tackle these challenges yourself to grow your revenue.
Take a look at the spreadsheet and plug in the numbers for your app. How do Apple’s involuntary churn and access to international audiences help grow your app revenue?
Explore Paywall Strategies: Check out our interactive paywall gallery for examples of best mobile paywall designs as well as common mistakes.
For many content creators, paywalls can be seen as a risky move. For over 10 years now, content publishers have gradually shifted to using them as a way to grow revenue that is more consistent than advertising. For companies that get the formula correct, the results have been phenomenal! Like many publishers before them, Wired Magazine took a leap of faith and introduced a premium content paywall last year. Since then, they have seen a 300 percent increase in their subscriber base year-over-year and have been open to sharing their results.
The paywall is simple and direct when presented to the customer. It sits at the bottom of the screen waiting to be clicked at any time the reader is ready to subscribe. It is clear and to the point. For me, the design of Wired’s paywall is an excellent example of communicating to readers that there is value in the subscription. As a mature company in a mature market, Wired has had the benefit of learning from others’ mistakes.
Let’s look at a few ways a great paywall design can help impact your subscription strategies. Here are 4 key paywall best practices:
Keep Design Consistent, Personalize When Relevant
If you publish a content-based app, most of your users will reach a point as they navigate your app that will prompt a paywall barrier as they attempt to access a premium specific page or content. When this occurs, it is important to ensure that you maintain content consistency, that can also be personalized at points of conversion. For example, if your user wants to access premium content such as an exclusive article to read, avoid taking the user away to a generic page that offers in-app subscription options. Instead, look at personalizing the paywall with one basic offer and a caption of the article the user wanted to read in the window. Keep the color scheme, fonts, and other design elements close to the original content and consistent with your brand so the change isn’t a drastic shift from what they've been looking at so far.
Keep Your Subscription Options Simple and Test
Choosing the right number of purchase options on your paywall can be tricky. Too many choices are often the most common unforeseen contributor to users clicking away from your digital paywall. Keep it basic. If your product is simple, start with one price for one option and use only one button as your CTA. If you have multiple purchase options, you may find that adding a third button performs better than just having two. Try it both ways and see what happens.
Figure out a starting price your app can be tough. Price too low and customers may think you do not have a premium product. Too high and they may not purchase. Research similar apps to get an idea for a starting point. Be sure to test. See what happens for a few weeks if you move the price up or down. You may be surprised by the results of running even a simple test on different price points.
Your Call-To-Action – Make it Clear and Purposeful
What is a call-to-action (CTA)? In digital marketing, this is simply the action you ask your users to do. It could be to access certain content on the website, create an account, or purchase a subscription. They are important because they are what is used in the paywall to drive people to where you need them to go – the subscription page. It’s critical to ensure that it is designed to keep that goal in mind.
Don’t leave any doubt with your users about the purpose of your CTA. To that point:
Keep the Focus on the CTA: Eliminate all links or design elements that may distract from the CTA.
Choose the Right Colors: Bright and bold colors are great but make sure you’ve got enough whitespace around it to stand out.
Page Placement is Key: Your CTA should be prominently displayed on the page. Don’t make your recipients scroll around to find it.
Use a Clear CTA: Your button label must be clear and direct. “Subscribe Now” rather than “click here to subscribe”.
Features, Benefits and Offers
This is a perfect time to list one or two of the best benefits users get when they make a purchase. Mentioning a couple of key points on your paywall gives that extra reason why joining would be that way to go. If your offer includes a free trial period, be sure to mention this on the paywall screen. Also, do the same if offering a discount to new users.
There is no point in promising excellent content behind your paywall if you users don’t understand the value of that content. Free trials and metered paywalls where users get some amount of free content each month are great ways to allow potential customers to learn the value of your product. The aim is to give all users a fantastic customer experience with the app. Now that you’ve created an opportunity for your users to “shop” around and experience your content, moving to a subscription model will be that much easier a decision to make.
As a publisher, the main takeaway here is that the customer experience is as seamless as possible when presented with a paywall option. Your content should be one that is both excellent and willing to be paid for. By taking the time to optimize the subscription process with Nami, we see customer signup rates increase by up to 45%. With an easy to integrate platform, designed to help you succeed, Nami is ready to help!
For an early-stage startup, the thought of tackling data privacy, security, and compliance can seem rather daunting. It may also feel low priority compared to other work on your plate.
You likely have a limited timeframe to show increased traction in your business. Prioritizing work that is directly tied to growing your customer base or revenue is very rightly at the top of your mind. Adding a lot of development time or a large spend on a vendor for data privacy and security is an easy task to kick down the road.
Three main factors can influence any business to invest in improving their product.
Customers. Who buys your products?
Regulations. GDPR, CCPA, and other government regulations around the world.
Investors. Depending on your company this may be individuals, funds, or the stock market.
Unless data privacy is putting a large stress on one of these 3 factors, the work will never climb to the top of your queue.
How these factors affect large enterprises.
Equifax suffered one of the largest and most damaging breaches of American consumers’ data in the last few years, effectively releasing everything needed to steal the identity of every adult in the United States. Yikes.
Customers. Who are Equifax’s customers? They are not the people whose data were stolen. Equifax sells consumer data to other large companies. These large companies did not have any data leaked, so they aren’t concerned.
Regulators. They are concerned, but the settlement with the FTC amounted to around $4.75 per consumer whose data were stolen. The CEO in charge at the time took home $20 million in bonuses. This hardly feels like a punishment that will have Equifax or its future leadership worried about the consequences of improperly handling consumer data.
Investors. When news of the breach became known, Equifax stock dropped by about 40%. Two years later, their stock has effectively recovered all of its value without any meaningful changes being made.
Equifax is not seeing any large pressure from its customers, regulators, or investors to correct the behavior that led to their data breach.
Facebook similarly does not appear to be under any real pressure from these three groups to be better stewards of our data.
Coverage of each of these issues can be found at the end of the article.
Customers. Interestingly, no matter how poorly Facebook treats its customers and their data, we have not seen any large movement of customers away from their platform. In fact, daily usage of their platform continues to grow.
Regulators. While concerned, the size of the most recent fine from the FTC was not large enough to materially impact Facebook’s bottom line, only amounting to one month of revenue.
Investors. After Facebook settled its latest data privacy breach with the FTC, their stock price went up. Investors clearly are not concerned.
How do these same factors affect early-stage companies?
Some of the largest companies in the world are not being forced by their customers, regulators, or investors to take data privacy seriously. What do these same factors look like to an early-stage company today?
As an early-stage company, you likely do not have a dominant enough position in the market, like Facebook or Experian, where customers have to use your products.
Data privacy can also be a key feature of what you are selling as well as a differentiator amongst your competitors.
The rise of products like DuckDuckGo, Brave, and 1.1.1.1 has shown that companies are gaining traction by positioning themselves against well-established competitors as the privacy-focused alternative.
Still, it is easy to remain unconvinced. Are customers really looking for companies to take action on data privacy? GitLab’s recent reversal on a plan to roll out product analytics based on community feedback is one example that suggests we are starting to see the influence of the customer in privacy decisions.
Regulators. As a small and young company, you may think that the regulators are focused on large organizations and you are safe avoiding compliance until your company has grown. However, in Europe there have been fines against small businesses.
CCPA opens a new risk vector to companies by allowing individuals to bring legal actions, which may create a slew of new law firms overnight in 2020 seeking to bring lawsuits on the behalf of consumers to companies around the US.
CCPA does have exclusions for small businesses. CCPA applies to your business if you have:
$25 million in annual revenue or
50% or more of your revenue is derived from selling California consumer’s personal data or
50,000 California customer, household, or device records
Some of these numbers may seem big, but let’s focus in on the 50,000 customer or device records for a moment. For a Software as a Service business, this is actually quite small.
Whether you sell to other businesses or you are a direct-to-consumer product, you are likely to have 50,000 customer records while still being well below the $25 million annual revenue threshold. For B2B companies, landing one small or mid-sized customer could create 50,000 records in your systems. In a direct-to-consumer SaaS product, 50,000 customers is likely small enough that you still do not yet have real traction in your market.
Are you actively growing email lists as part of your marketing strategy? Do you have a CRM where you track every potential lead you’ve come in contact with? How quickly do these systems get to 50,000 distinct records? It will depend on your business, but it is easy to envision reaching this number fairly quickly.
For early-stage SaaS companies, you are likely to reach the threshold of 50,000 customer records, and therefore have to be concerned with CCPA, while still being in a very early growth stage of your company’s lifecycle. This is a particularly challenging time for many companies to have to worry about data privacy and security.
Investors. As an early-stage company, your investors are individuals and funds that you are either pursuing or have already invested. This is very different from the set of investors involved with a publicly held company like Facebook or Experian.
The results of regulatory action against an early-stage company are potentially much more damaging than they are for a large and profitable enterprise. On the customer front, issues with data privacy are affecting potential future customers rather than customers you already have.
Any issues coming from these groups may make potential and current investors nervous about the viability of your company and products, and will likely have data privacy issues higher on the list of investor concerns than they are for large enterprises.
Customers that you are trying to draw to your products are more interested in data privacy than ever before.
Regulations like CCPA are likely to apply to your company very quickly after you start acquiring customers.
Investors are paying attention to changes in both of these areas as they directly impact their return on investment in your company.
While this all might sound a bit intimidating, the shifting data privacy landscape shows lots of opportunities for companies that can differentiate themselves from their competitors by making privacy a core value of their products.
So, now that we are all either terrified into behaving well or excited about adding privacy as a differentiator to our business, look out for part 2, where we’ll discuss easy ways early-stage companies can lay the groundwork for a healthy approach to data privacy.
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This is the first in a series of articles about why data privacy, security, and regulation are important for small and early-stage companies, and how they can start to put good practices into place.
The subscription economy has skyrocketed to the point that it seems like everything is a subscription. On one side, the growth of subscriptions is driving benefits, new services, and more options for consumers and businesses. On the other side, subscription fatigue, often driven by customer frustration from there not being enough perceived value in the product, is driving customer unhappiness and churn for businesses.
One thing that is clear is the subscription economy is big business. Below, we’ll take a look at a few key numbers you should know about the booming subscription economy.
Subscription Economy to Reach $1.5T USD
A recent report from UBS Wealth Management estimates that the subscription economy with reach 1.5 trillion USD by 2025. That’s more than double the addressable market size in 2020.
Source: UBS
The US Consumes 53% of all Digital Subscriptions
The United States consumes a majority of all digital subscriptions worldwide. The next closest market is Europe at 21% followed by China at 14%. For more details, see the full UBS report.
Mobile App Spending to Reach $270B
Mobile app spending is one of the first places we often think of when it comes to subscription businesses. Mobile devices have become integral to our lives and that is reflected in our spending habits. Data from Sensor Tower shows continued large growth in mobile spending. In the last year, the top 100 subscription apps’ revenue was up 34% alone.
Software as a Service (SaaS) is another top-of-mind subscription sector after mobile. 2020 was a big year for IPOs in the tech sector and SaaS in particular.
Recent reports see revenues in SaaS doubling over the next 5 years to reach US $307B by 2026.
Largest Category: e-Commerce Subscriptions at $478B
Companies in the e-commerce subscription market are set to eclipse every other category of subscription revenue over the next few years. From clothes to snacks from Japan, this space covers everything you could ever want to buy. Amazon alone had $25.21 billion in subscription revenue in 2020.
Recent research available on UnivDatos shows the e-Commerce subscription market growing to $478B USD with a 63% CAGR from 2019.
Streaming Services to Grow to $155B
While streaming services aren’t the largest category of subscription services, they are the first ones that most of us think about.
Subscription Video on Demand (SVOD) services are the most popular category of streaming services. Netflix spent $17 billion on content in 2020, Disney+ crossed 100M subscribers 16 months after its launch, and with all the new entrants from HBO Max to Discovery+, Netflix’s market share dropped by 31%.
With so many huge companies fighting for our attention, it is no surprise that this sector of the subscription economy continues to see growth. Research estimates that by 2025 SVOD revenue grow to $100 billion with the number of subscriptions topping 1.1 billion.
Streaming audio including podcasts and music is also a growing category not to be ignored, with Spotify and giants like Apple, Google (through YouTube), and Amazon all in the mix. Grand View Research has streaming audio growing to $55 billion USD by 2025 and up to $76.9 billion USD by 2027.
Subscription and Billing Management - $10.5B
Last but not least, the business of running a subscription business is booming. This includes subscription management companies like publicly traded Zuora, payments infrastructure giant Stripe, and recent entrants like Nami ML that provide a platform to create better subscription experiences.
How big is this space and how many companies are fighting for a slice of the subscription industry pie? Business software and review site G2 is tracking over 100 companies in 4 different categories in the subscription ecosystem, including Subscription Management, Subscription Billing, Subscription Revenue Management, and Subscription Analytics. Take a look at the breakdown below.
Reader revenue is the most reliable way to build a successful and sustainable content business. Digital subscriptions and membership models have proved highly successful for news brands including the New York Times and Washington Post, as well as local news like the Boston Globe and Minneapolis Star Tribune.
How can mobile apps help drive that success for your reader revenue company? See 3 key areas where apps can really shine below.
1. Mobile audiences are app users
According to eMarketer, mobile users spend 90% of their time in mobile apps versus only 10% on the mobile web.
Reader revenue companies can more deeply engage with their audiences through mobile apps. Increasing returning visitors and driving up time spent are great reasons to adopt a mobile app strategy.
“Another learning is that more than 50 percent of subscribers are coming from the apps, so the apps are crucial to our subscription success. And only 30 percent of the subscriptions are coming directly from the paywall,” – Sophie Gourmelen, Le Parisien
2. News consumers engage with push
Many apps use push for marketing and sales use cases. Content apps are strongly positioned to use push to engage their app consumers with more content that they love. Using content rather than marketing for push notifications is a great opportunity to build loyalty and engagement.
A recent study by App Annie and LeanPlum showed a 7x increase in customer retention when using personalized push.
Push is even more effective in reader revenue apps when editorial is involved in crafting the message. Clifford Levy, a digital editor for the New York Times discussed their evolving push strategy with Recode back in 2016.
“A year or so ago the push notifications from the New York Times were simply headlines. They were written with a particular voice that was almost like the voice of the print front page. Sam and I and some of our other very, very talented colleagues in the newsroom said, "You know what? That's not how the lock screen on a phone works. The lock screen is where you get texts, the lock screen is where you have very personal communications. We need to evolve a new voice for push notifications.”
Mobile app spending in 2021 was up 20% over 2020 to $133B USD according to Sensor Tower. And that’s not all. Sensor Tower is predicting that by 2025 mobile app spending will reach $270B USD.
Reader revenue products can tap into this growing digital spend by adding mobile apps to their product suite.
Build and Grow Reader Revenue with Nami
Once you’ve built a great app experience to engage your readers and build loyalty, Nami has all the tools you need to build and grow reader revenue.
Integrate recurring revenue with our No-Code paywalls and 5-minute integration to sell and grant access to your premium content. Manage your customers with our CRM. Understand opportunities to grow revenue with our analytics and insights, and build campaigns to execute on those insights. We’ve got you covered.
