The surprising early history of the subscription model
In this three-part series, I look at how subscriptions have evolved over time – beginning from the 16th century. Here is the first one for you…
In the beginning, was a failed fire insurance scheme
In 1638, King Charles I of England gave his approval for a patent fire insurance scheme. The idea was that people could choose to subscribe to the service and get compensated in case of a loss of property in a fire breakout, an all-too-common occurrence in those days. Alas, the scheme never took off because it was poorly understood. But the idea of subscribing for access to products, services and experiences had taken root.
About thirty years later, multiple fire and life insurance companies began to crop up under the subscription model, followed by trading companies, charities, theatres, and by the 18th century, publishers. The way these companies functioned share interesting similarities to the way subscription businesses operate today.
But first, an etymology lesson…
Did you know that the word ‘subscribe’ has a legal origin? It literally means ‘to sign under’, thereby acknowledging or giving consent to a scheme or document.
This means that a subscriber ‘buys into’ an idea or a product by putting their money on the table. This is interesting because one of the main attractions of a subscription business model today is its congeniality to building customer loyalty over time because unlike traditional models, the purchase experience is not one-time.
Book clubs and shades of crowdfunding
Following close on the heels of insurers and trading companies (that opened their stocks for public subscriptions) came niche book clubs. Booksellers and sometimes, authors themselves, would advertise for ‘subscribers’ for their proposed publication. They would then enter into an agreement with these subscribers to produce a book of the specified content, size, binding, copies, etc. Long-standing relationships were created by subscribing customers.
This model is akin to the modern-day crowdsourcing model, where creators use platforms like Kickstarter to advertise their product and garner early adopters. Just as ‘premium’ supporters get additional freebies or early access, the 17th-century subscribers of books would get specific copies based on how much they had paid.
While many early subscribers felt invested in the product, others chose to benefit from it. Consider a 17th-century grocer who wanted to be seen as better than his neighbors; by subscribing to the publication of a dictionary in eleven languages, he got his name on the front of the book, next to the title page, giving him bragging rights!
17th-century education subscriptions
While companies such as Udemy and Coursera work on a pay-as-you-go model, some early education offerings were subscription-based. Universities or individual scholars would advertise their lecture series in the papers, and anyone interested could subscribe to attend.
These allowed subscribers to improve their knowledge on specific subjects or listen to experts they admired without committing to a full-time course or degree. It’s also likely that many takers of these lectures would have been folks from the middle and lower classes who wanted to ‘improve their minds’.
Charitable subscriptions: goodwill & business
The gentry and nobility were known to support various charities with causes close to their heart; by the early 18th century, many of these charities started to operate on a subscription donation model, much like today’s GiveIndia. Having regular subscribers gave these charities financial stability, income predictability, and in turn, better operational planning. While many charities ran on goodwill, some sweetened the experience by offering donors something in return. Others combined business with charity; S. L. C. Clapp, in her paper cited above, mentions how the Norwich New Stage-Coaches company raised money from over two hundred subscribers and donated the excess to ‘the relief of the poor’.
Enter stage left: Theatre Subscriptions
In 1671, the New Theatre was built in Dorset by actor and theatre manager Thomas Betterton. The funds (over five thousand pounds) for the playhouse was raised through subscriptions, although the subscribers were more like shareholders, having ‘bought into’ the idea. Betterton went on to build at least two more playhouses via subscriptions. The one he built in 1705 in Hay-Market was with a subscriber base of ‘thirty people of quality’, each of whom paid one hundred pounds and in return, got lifetime free admission for the shows!
It is interesting to note how the idea of convenience has changed with time. Today, subscribers find it convenient to make small recurring payments, often monthly, as opposed to the yearly payments patrons seemed to make two hundred years ago. This is also a reflection of how much easier it is today to collect and manage frequent recurring payments.
Subscribe to listen to the opera – Live!
The 19th century is when things got really interesting: Live streaming came to Europe and America in 1881. The very first International Exposition of Electricity was organized in Paris’ Champs-Elysees and one of the key attractions was the theatrophone, a miraculous device that seemed to take the attractions of Alexander Graham Bell’s telephone to another level.
Using the two headphones, people could sit in their hotel rooms and listen to performances being conducted live in theatres that were kilometres away. For fifty centimes, you could listen for five minutes. These theatrophones quickly became popular among the Parisian high society and at one time, 100+ of these had been installed in hotels and public spaces around the city.
According to the July 2nd, 1892 issue of the Scientific American Supplement, “But, aside from the theatrophone service, the company has also a certain number of subscribers, that is to say, private individuals, who, through the payment of a fixed amount, have the right to a certain number of listenings at home. These persons are necessarily subscribers also of the telephone.”
From incredible experiences to everyday essentials
Subscriptions as a model took off quickly and in some western European cities, began to be used even for the delivery of clean drinking water (a precious commodity in an era of dicey sanitation), grains, and exotic fruits and vegetables. The industry that used it the most — and continues to do so today — is, of course, the media and publications industry. By the early 20th century, subscribing to newspapers and magazines became a common practice.
How did this model get adapted by others? Did the early adapters see success or failure? We will look at the 20th-century history of this business model in Part 2 of this series.
Did you enjoy reading this piece? Please leave a comment below; I’d love to hear your take. For more subscription-related information do visit Magnaquest.