Business revolution: What is the membership economy? | Robbie Kellman Baxter | Big Think

Business revolution: What is the membership economy? | Robbie Kellman Baxter | Big Think


The membership economy is a term that I coined
to describe what I was seeing starting about 15 years ago when I was working with Netflix
and continuing into this massive transformational trend where companies of all types were moving
from a model that focuses on ownership to access, from the transactional to the relational,
from anonymous to known, from one payment to many smaller payments and from the organization
talking at the customer and hoping they’re listening to multidirectional communication
among customers and back and forth between the customers and the organization under the
brand umbrella of the organization. So when you put all of those things together
you have this kind of painter’s palette to reinvent your business model and that’s
what’s driving this membership economy. So membership isn’t a new concept. We have been joining things for as long as
there have been humans. We joined clans or tribes. We’ve had professional societies and trade
guilds for centuries. Charles Dickens sold his novels in subscription
format so people subscribed to have access and as he had the chapters done he would deliver
them to his subscribers. So this is not a new concept, but what has
changed is the ability to build a business model around it that transcends time and space. So Charles Dickens actually had to know the
people he was delivering to, had to print it out, had to bring it to them. Today we can deliver it to strangers digitally
and we can do it with time lapse. So that has created so many possibilities
for organizations to build this ongoing relationship which is what people want. One example of the difference between a membership
economy company and a non-membership economy company is the comparison between Blockbuster
and Netflix. So when people, you know, way back when people
used to have to go to the corner store to the Blockbuster on a Friday night to see what
movies were available to rent, bring them home and it was never the movie that you really
wanted. It was whatever happened to be available. And then if you forgot that you had it and
you kept it for a few extra days the cost would end up being like triple what you thought
it was going to be. And compare that to Netflix where they sent
you three DVDs at a time, so three movies that you had on your long list, your queue. You didn’t have to leave your home. You always had three movies at home. And, best of all no late fees. So it’s a very different way of thinking
about the model that starts with a forever promise. A promise of what it is that you really want
to achieve. So in the case of Netflix versus Blockbuster,
which was what really inspired me, what I wanted was to always have movies, professionally
created content delivered in the most efficient way possible because I had little babies,
with cost certainty – no late fees. And that’s what Netflix delivered on 15
years ago that pretty much put Blockbuster out of business. And today even though they have streaming,
even though they create their own content, even though a lot has changed at Netflix they
still deliver everyday on that promise of professional created content delivered with
cost certainty in the most efficient way possible. I think that the membership economy is having
as big an impact on business as the industrial revolution. What I see is a new way of engaging with the
customer, a new set of skills that are required for the professional and a new way for entrepreneurs
and business leaders to design the entire model from the ground up. It’s creating new businesses everywhere. There are literally hundreds, if not thousands,
of new companies that are built in this model. Subscription box businesses, digital content. The reason is that you can start as a solopreneur,
as a one person shop and you can expand very, very rapidly in many cases because of the
ability to share your digital assets widely and the ability to send content or physical
products directly to the customer taking out the middleman. So it’s really a rethinking of how businesses
are structured and how they deliver value.

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About the Author: Oren Garnes

10 Comments

  1. Lol. Her example isn't a "different way to think about the model". It's the direct product of changing technology.
    Bleh. This all seems very internally directed to me. It seems to be a way for these corporations to tell themselves they are actually good and getting better.

  2. Big Think really is pushing the conservative agenda since being funded by the Koch Brothers, isn't it?
    The membership economy is just another way to bleed more money from consumers for less product. Expect to never own a product again, only rent it.

  3. Yet we're seeing more of this type of arrangement for software that was previously sold as a product for a once-off moderate amount and is now only available as a monthly subscription service where you pay the equivalent of product purchase within 3 to 6 months yet your subscription obviously doesn't stop there. From my perspective, the primary culprits are Microsoft and Adobe but the list of offenders is obviously much longer. The end result of this strategy is not to improve the customer relationship, both of the brands cited as examples did already engage in significant customer support, it's simply to gouge the customer for as much of their disposable income as possible. What will be the next step? Monthly rental for all the fixtures of your house? Are we going to gradually eliminate private ownership entirely in favour of a slew of large corporate entities simply owning and leasing everything to the general public?

  4. It's called subscription economy and it's been around for the past 10 years or so. Also, f**k the subscription model. We want ownership – that is the essence of capitalism.

  5. i find that to enjoy good content i must have subscriptions to 3 seperate online providers, as most of the content is old Blockbuster movies.

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