Today, a musical look at the future of streaming. Plus, customer retention predictions for the year to come. And the retailpocalypse is on fire. When will retail fight back? 

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An issue for streaming, on the horizon

Jimmy Iovine, the record executive who made his leap to Silicon Valley, looks back on the decade in the music business—and says he sees a major problem on the horizon.

We found a New York Times piece interviewing Iovine regarding the biggest story in music this past decade: namely, embracing the internet and leveraging the comeback of streaming in the business. 

Because perhaps no one has had a broader view of this than Iovine. He and his partner, Dr. Dre, sold Beats Electronics to Apple for $3 billion back in 2014 and helped launch Apple Music—a late entry to the streaming market that is now booming.

And in this interview, Iovine claims there’s a looming problem for streaming: margin. It just doesn’t scale.

“At Netflix, the more subscribers you have, the less your costs are. In streaming music, the costs follow you.”

And streaming music services are utilities; they’re essentially all the same. As we touched on in yesterday’s episode of Recur Now, content success has been all about originality. But music streaming services are all the same, and that’s an issue.

“What happens when something is commoditized is that it becomes a war of price. If you can get the exact same thing next door cheaper, somebody is going to enter this game and just lower the price.”

It's a solid conversation and view inside Iovine’s thoughts on the future of streaming and the industry as a whole, and we’re keen to hear what you think on his take. We’re steadfast in our viewpoint that subscription is the future, but what’s the next decade look like for streaming?

It could be a totally different beast. 

Is retention-first the way of 2020?

Guy Marion, Founder and CEO at Brightback, argues that retention is on tap for companies who are looking to keep customers engaged and driving growth moving forward. 

Here’s where his head's at:

• • Guy thinks more mainstream brands will embrace the subscription model amid this retailpocalypse.

  • He also believes customer retention will become the new frontier for marketers. He’s talking companies like Zoom, Datadog, and PagerDuty, who were visions of success in 2019, thanks in part to their killer retention metrics.

  • Metrics will shift to reflect a retention-first mindset. The acquisition-at-all-costs mentality isn’t a problem that originates solely within a marketing organization, but changing the focus of marketing teams to be retention-minded will be a common theme this year, he claims. A public and shared churn goal will help keep teams aligned on their retention efforts. And we know the cruciality of choosing your metric wisely, although we're also aware it can be incredibly difficult to assess this collection of numbers and figure out where to begin. Here's where to start.

  • Guy also says in 2020, personalization will mean more than "creepy ads" and <first name> emails. Because we need to look at interaction with our customers as a one-to-one event, taking more of the known factors of customers, segmenting them into groups, and personalizing their web and product experiences to the point where it’s an entirely custom journey. Here's a solid resource by Userlane to get you started there.

  • And finally, Guy sees customers as having even more control, and companies needing to pay close attention. California enacted legislation in July of 2018 that stipulates online subscriptions must also be available to cancel online (not required via phone call or long, complicated queues). In 2020 and beyond, the consumer takes back control. 

There is a lot more where this came from, so be sure to check out the full piece. 

Shop 'til retail drops

For more in retail, the team at Zuora says they’ve read all the headlines about #retailpocalypse, yet retailers are still struggling to fully embrace what Zuora has coined “the subscription economy.”  

Tien says he often gets asked about which industry will move to subscriptions next, and he always has the same answer: Follow the disruption.

But that’s what makes retail so puzzling. Headlines about zombie malls and retail apocalypse have riddled the web, and UBS expects 75,000 more stores in the US will be forced to close by 2026.  So when is retail going to fight back? 

There are some in the space that are already nailing it, like Stitch Fix or Amazon Prime—but retailers are still obsessed with shipping products, and they aren’t focused on maximizing transactions as opposed to cultivating relationships. 

Tien says he hopes it happens sooner rather than later, but for him, the shift feels like it’s going to take a while.

Let us know what you think. Connect with me at abby@recurnow.com with your thoughts. We want your intel—as the shoppers, and the creators. 

Subscription Sapien: Tien Tzuo

As Founder of Zuora, Tien Tzuo has given hundreds of other entrepreneurs the tools to manage their own SaaS business. He may be a veteran in the space—being one of the first employees at Salesforce and remaining there for nine years—but he isn’t afraid to be radical. 

As one of the earliest adopters of the subscription model, Tien has a wealth of knowledge, so it’s no surprise he literally wrote the book on subscription. In his book he evaluates subscription past, present, and future. With all sorts of companies incorporating subscription into their businesses, the pricing model may seem like a no-brainer, but this was not always the case. Tien was integral in showing the big wigs on Wall Street the subscription way.

And that’s a wrap for your January 8 subscription news.

Recruit your teammates into the subscription know at profitwell.com/recur/recurnow. With interest in collaboration, send a note to abby@recurnow.com and we'll get it in the works.