If you’ve ever subscribed to a favorite glossy magazine, signed up to receive one of those rotating goodie boxes that show up on your doorstep each month, or yes, registered for a Netflix account, then you already have experience with a subscription monetization model.
How do subscription services make money? Simply put, a subscription monetization model earns revenue by charging customers a recurring monthly or yearly fee for continuous, on-demand access to a product or a service. In the realm of video creators, the goods would be your videos, of course.
If you’re a content creator who’s ready to monetize your videos via subscriptions, you’re in the right place. This handy guide will walk you through all the different subscription models so that you can find the one best suited to your business needs.
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What is a subscription business and how does it work?
The subscription business model is a business model in which a customer pays a recurring fee – usually weekly or annually – to gain access to a product or service; allowing the business to earn rolling revenue.
Although, traditionally, we've seen subscription business models for magazines, newspapers, and video rentals, recently, we've seen this business model primarily used for video and music streaming services.
To put this into perspective, Netflix and Hulu are prominent streaming services that use the subscription business model as their primary source of monetization. They allow their customers to access a large video library for a recurring monthly fee.
As long as the customer continues to pay those fees, they will always have access to all content listed on their streaming platform.
Know your video monetization options
The subscription monetization model is a popular choice for video creators, but it’s not the only one. When you monetize your video content, you’re typically looking at three main Video On Demand (VOD) business models:
- Subscription video on demand (SVOD)
- Ad-supported video on demand (AVOD)
- Transactional video on demand (TVOD)
We’re going to focus on SVOD in this article, but as a quick overview of AVOD and TVOD:
- AVOD stands for ad-supported video on demand, and refers to a monetization model where advertisers pay to place their ads in front of your viewers. This model works best for big media companies or creators who are able to pull in millions of views a month. YouTube is the biggest example of this model.
- TVOD stands for transactional video on demand, and refers to a video monetization model where consumers purchase video content on a pay-per-video or pay-per-series basis — essentially, “renting” a video, digitally. Amazon Prime, Apple iTunes, and Google Play are familiar examples.
Take a deep dive into monetization models →
What are the benefits of a subscription monetization model?
What’s the SVOD model, anyway?
With SVOD, or a subscription monetization model, subscribers pay a recurring fee, usually monthly or annually, to enjoy unfettered access to premium content. It’s one of the most profitable video monetization business models for creators since you receive a steady, consistent, and reliable stream of income from your subscribers.
For niche creators offering high-value content — and who know that people will pay for it — SVOD is probably the best option for monetizing your content. One merely needs to peep the phenomenal success of subscription streaming services like Netflix, Hulu, and Disney+ to know this model can work:
Revenue growth in the global SVOD market is expected to surge past $87 billion beyond 2025.
Is a subscription monetization model right for me?
Before we go any further, let’s back up a bit. How do you know if a video subscription monetization model is the right fit for your business? First, ask yourself these two key questions:
- Do you have a passion for creating engaging content that entertains, informs or educates your audience?
- Is your content is unique or sought-after enough that people would be willing to pay for access?
If you answered "yes" to both, then a subscription monetization model is worth a shot. Music education brand Prodigies, which offers video music lessons and specialized curriculum for kids, is a perfect example of how a small business can thrive with a subscription-type model.
Many content creators make a beeline for YouTube when launching their brands and trying to grow their audience through AVOD, but Prodigies founder Rob Young knew he could build a more reliable source of income. "Prodigies' content is more niche than, say, a general children’s video on YouTube," he says. "We knew we could do more by developing a curriculum that offered clear steps and included supplementary materials."
He decided to monetize from the get-go through annual and monthly subscriptions. Today, with help from Vimeo OTT, Rob has scaled his business, distributing content across the web, TV, and mobile apps.
6 ways a subscription monetization model can support your business
You, too, can build your own mini Netflix, and utilize a subscription monetization model to do so.
There are several different subscription models from which to choose, with a Netflix-type model being one of them. The subscription type you run with depends on the kind of content you’re offering. Let’s dive in!
1. Create members-only content
If you’ve got specialized skills and want to share your passion with like-minded individuals who are ready to soak up your knowledge, then this is the subscription monetization model for you. With a membership-based model, content creators are typically looking to do two things:
- Build a fellowship of people who actively share a specific interest and genuinely want to learn more
- Put your expertise and original videos behind a paywall to protect them from would-be content thieves or copycats
These were exactly the things Jessica Putnam-Phillips wanted to accomplish when she started her online pottery school, ClayShare. A career ceramicist, Putnam-Phillips gained a loyal following on Facebook and Periscope with free lessons. As their audience grew, so did viewers’ appetite for mobile and TV viewing experiences.
So, ClayShare partnered with Vimeo OTT to diversify its offerings and expand its subscription network.
Ever since the small online studio has grown “stunningly fast,” says Kevin Phillips, head of operations at Clayshare (and husband of Jessica). Now, they can distribute their content further, build a large yet tight-knit community of members, and grow their paid subscriber base — which has seen a rate increase of 24% month-over-month.
With a membership-based subscription monetization model, viewers have the freedom to interact with instructional content as much or as little as they want. They can choose what lessons to watch when, and during live stream demonstrations, can even get their questions answered in real-time.
Read Clayshare's story →
2. Offer niche entertainment found nowhere else
We’ve mentioned Netflix a few times already, so it’s important to remember: you don’t have to be a giant media company like Netflix to find success. As long as you’re delivering high-quality, high-value content that can’t be found elsewhere, your business can be profitable.
Having a Netflix-type of subscription monetization model allows you to:
- Focus more on doing what you do best: creating engaging content
- Let your subscribers stream your videos on demand, whenever and wherever they want
- Earn a steady stream of revenue with monthly or annual subscriptions
One example of an entertainment monetization subscription is MHz Choice. Specializing in foreign and international content, MHz Choice offers a wide library of TV series from France, Spain, Switzerland, Finland, Germany, and many more countries. The platform offers a monthly or annual subscription, and users can access content from the web, mobile apps like iOS and Android, or TV streaming apps like Roku.
3. Engage fans all year long
When your main business is rooted in seasonal or time-sensitive events or products, keeping your audience engaged all year long (and continuing to earn revenue) can be a challenge. In these scenarios, a subscription monetization model built around engaging fans whenever and wherever is a great choice.
Just look at Martha Stewart TV. The Emmy Award-winning TV host, purveyor of housewares, and Snoop Dogg’s BFF has a loyal fan following. When there are lulls in production, book tours, or product line releases, her fans still want more. With Martha Stewart TV, fans can stream full episodes from her content library any time, from any device.
Another example is the very one Barry Manilow. Barry’s team launched MANILOWTV to satiate the hordes of Fanilows (yep, that’s the collective noun) who want to enjoy the epic entertainer’s performances when they can’t see him in person.
You don’t have to be Martha or Barry (if only we could be so lucky, right?) to utilize this subscription monetization model. Any creator who is looking to keep their audiences engaged and open up another line of revenue can partake in this subscription type.
4. Offer exclusive content for invested subscribers
As a content creator, you’re passionate about your product and enjoy sharing it with people. And so, sometimes you don’t mind giving away that content for free. But if you can earn a living doing what you love while giving access to valuable, exclusive content to people who are willing to pay, then consider this subscription monetization model.
With this invested subscribers model, you begin offering your content or service at no cost, and gradually shift additional content behind a subscriber paywall.
Millionaire Hoy, the owner of HoyPro.com, first launched his fitness career running free boot camps on Chicago’s South Side, and then on YouTube — where he amassed hundreds of thousands of subscribers. While he loved sharing and supporting his growing YouTube community, it wasn’t a sustainable business option.
After turning to Vimeo OTT for help to launch his own subscription network, including an entire suite of branded apps, Hoy says he’s discovered "new-found freedom" in creating fitness content and feels a deeper connection to his audience. He continues to share free content on his YouTube channel, with consistent promotion and discounts for HoyPro found throughout his content.
Read Millionaire Hoy’s story →
At a larger scale, media company CollegeHumor follows a similar strategy with their DROPOUT subscription network. Original series only available on Dropout, like Dimension 20, are teased on YouTube. Viewers on YouTube can tune in to, say, the first episode — and if they want to watch more, CollegeHumor nudges them to their Dropout channel, and even offers a free trial for first-time viewers.
How do I know which subscription monetization model is right for me?
5. Connect with your community
As organizations remain at limited capacities (or closed entirely) due to the global pandemic, more are turning to subscription monetization models as a way to diversify their revenue, while maintaining a sense of community with their customers.
Faith-based organizations have particularly felt the challenge this year, with in-person services screeching to a halt. Hillsong Church, the global organization with congregants including Chris Pratt and Kevin Durant, offers its members access to sermons, teachings, and even documentaries with its Hillsong Channel service. A low-cost monthly subscription fee furthers helps offset the loss in monetary donations at weekly services.
Through this bumpy year, Hillsong Channel COO Will Peddie sees silver linings. For one, Hillsong continues to engage its community with live events, bringing its members from around the world together online.
6. Provide access to exclusive live events and experiences
You can also think about using subscriptions to provide premium content or special live experiences. This could involve live Q&A sessions, behind the scenes content, virtual workshops, or exclusive online events that are invite-only for certain subscribers. This strategy can add revenue to your business model and also create a stronger sense of community and belonging for your audience.
Picture a musician hosting a monthly livestream concert just for subscribers, or a fitness coach leading a live workout for subscribers followed by an interactive chat about health tips. These experiences can help build a personal bond and make subscribers feel like they are part of an exclusive group, which justifies the subscription cost and also boosts retention.
Let’s review: Subscription business models
You should now have a better understanding of all the subscription monetization models that are out there and which subscription type might best align with your business needs.
As a recap, here’s how you can develop a subscription monetization model, based on examples from actual Vimeo clients.
- Create members-only content when you have a specialized skill to share. It’s a great fit for people looking to build a community of individuals with shared interests while protecting their expertise behind a paywall.
- Offer niche entertainment to deliver high-quality, high-value content on demand. It’s ideal for those wanting to focus on creating engaging content while earning a steady stream of revenue.
- Engage fans all year long when your main business is rooted in seasonal or time-sensitive events or products. A good choice for people who want to keep their audience engaged year-round while continuing to earn revenue.
- Offer exclusive content for invested subscribers when you have a two-part strategy with both free and paid content. A popular choice for creators with existing freemium content and a large following, such as on YouTube, who want to convert free viewers into paying customers.
- Connect with your community by offering a diverse library of video content around a shared message. For non-profit and faith-based organizations, a subscription monetization model can serve as a new source of giving.
- Complement online content with other business strategies, such as in-person events. This is great for businesses looking to supplement existing initiatives (like film screenings) with online content, and to scale online subscriber growth through offline experiences.
Just know that no matter which subscription monetization model you choose for your videos, Vimeo can help.
Learn more about just how much Vimeo can help by checking out our cutting edge tools like our AI script generator, video teleprompter, AI caption generator, and AI video translator.
What do I do after selecting a monetization model?
At Vimeo, we offer an OTT platform that takes care of all your technology and customer service needs so that you have more time to focus on content creation, growing your brand, and connecting with your audience.
Plus, you stay in control of all your content, giving you the autonomy you need to churn out videos quickly, whenever you want. With Vimeo, you’re empowered to create a destination where you can:
- Stream live or on-demand video content across the web, and mobile and TV apps
- Monetize your videos via subscriptions, one-time payments, or advertising
- Manage your content library with an easy-to-use CRM
- Track video performance and analytics
- Run promotions and special offers
Our creators come from a wide variety of industries — fitness, entertainment, faith, kid’s content, sports, instructional, and more — and have created 1,000+ VOD-optimized channels boasting more than 1 million end-users and 3 million live streams annually. The best part? Anyone can get started with Vimeo OTT, right now, for free.
