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Comment by BrandonWatson | Hacker News Reader

Oh dear...where to start: * 37Signals * Salesforce * <insert name of food product> of the month club (you said profitable - not Fortune 500) * <insert name of major gym> membership * Does Amazon Prime count? * Costco - you need to pay to be a member, whic his, by definition, a subscription business * Successful hosting providers - I myself use the great Bluehost.com

Though you could argue that paying for and building a gym gives you exclusive right to a physical asset.

Out of hand rejection of subscription businesses is your prerogative, but there are businesses which charge monthly rates that have surperior proritary products or services, or which use the membership as a means to incent more purchases, that can be very successful.

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I have no way of knowing whether 37signals is actually profitable or not, but perhaps Salesforce is a real example. You found ONE.

Your gym membership does not count: Physical asset.

Amazon Prime is not a business. And I guarantee you it is NOT profitable anyway. It's a marketing program.

Hosting does not count: It's a physical asset.

Costco is not a subscription biz. It's a retailer that uses membership as a marketing ploy to drive loyalty.

You said, subscription based businesses. I am not sure what physical assets have to do with anything. Even ignoring Netflix's physical DVD library, if you consider hosting a physical asset, then I think you'll also have to qualify Netflix as a "subscription service which provides automated hosting & licensing of select content for subscriber's convenience".

>Hosting does not count: It's a physical asset.

If, instead of 'subscription business' you mean "businesses that rent access to software without much by way of per-user physical infrastructure" then yeah, I think some people would agree with you. I would. businesses think that because they have a low marginal cost per user, they think they can rest on those high margins. This might be what you are talking about, and if so, I agree. I mean, if you have a business with margins that are very high, investors notice, and they start trying to horn in on your market; either investors are willing to throw gobs of cash at re-writing all your software then saturating the market with marketing, or maybe someone open-sources something that can do a lot of what you can do, and suddenly you have a bunch of small competitors using the open-source software willing to compete with you at a more reasonable margin.

I was thrown off by your use of apple's hardware business as an example; I mean, selling intellectual property divorced from infrastructure is a hard problem, really, it's a different problem from the subscription vs. one time payment business models.

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