The subscription business model is a business model where a customer must pay a subscription price to have access to the product/service. The model was pioneered by magazines and newspapers, but is now used by many businesses and websites. Rather than selling products individually, a subscription sells periodic (monthly or yearly or seasonal) use or access to a product or service, or, in the case of such non-profit organizations as opera companies or symphony orchestras, it sells tickets to the entire run of five to fifteen scheduled performances for an entire season. Thus, a one-time sale of a product can become a recurring sale and can build brand loyalty. It is used for anything where a user is tracked in both a subscribed, and an unsubscribed status. Membership fees to some types of organizations, such as trade unions, are also known as subscriptions.

Industries which use this model include book clubs, record clubs, telephone companies, cable television providers, cell phone companies, internet providers, pay-TV channels, software providers, business solutions providers, financial services firms, fitness clubs, and pharmaceuticals, as well as the traditional newspapers and magazines. Renewal of a subscription may be periodic and activated automatically, so that the cost of a new period is automatically paid for by a pre-authorized charge to a credit card or a checking account.

A common model on web sites is to provide content for free, but restrict access to premium features (for example, archives) to paying subscribers. In this case, the subscriber-only content is said to be behind a paywall.

The razor and blades business model (also called the bait and hook model) is an attempt to approximate the subscription model, but without a formal agreement by both parties.

Types of subscriptions

There are different categories of subscriptions:

• A subscription for a fixed set of goods or services, such as one copy of each issue of a newspaper or magazine for a definite period of time.
• A subscription for unlimited use of a service or collection of services. Usage may be personal and non-transferable, for a family, or under certain circumstances, for a group utilizing a service at one time.

For example, a subscription to a railpass by a company may not be individualized, but might permit all employees of that firm to use the service. For goods with an unlimited supply and for many luxury services, subscriptions of this type are rare.

• A subscription for basic access or minimal service plus some additional charge depending on usage. A basic telephone service pays a pre-determined fee for monthly use but may have extra charges for additional services such as long-distance calls, directory services and pay-per-call services.

Effect on the vendor

Businesses benefit because they are assured a constant revenue stream from subscribed individuals for the duration of the subscriber's agreement. Not only does this greatly reduces uncertainty and the riskiness of the enterprise, but it often provides payment in advance (as with magazines, concert tickets), while allowing customers to become greatly attached to using the service and, therefore, more likely to extend by signing an agreement for the next period close to when the current agreement expires.