Subscription software has been on a steady trajectory to overtake the entire software market. I don't have data handy, but it's easy to run through landmark software products, from Microsoft Office to Apple iTunes/Music to Adobe Photoshop, and map out the transition. Once upon a time, we purchased these products once, up front, and we'd get a CD-ROM or MP3 file in return; today they are all subscriptions. Video games have resisted to some extent (Apple Arcade and Google Stadia, R.I.P., are not world beaters). But when is the last time you purchased a disk for anything else? The subscription model is so common that one might say it has reached its middle age — and we can start to think about what comes next.

AI is the latest craze, so perhaps we can learn something about future business models from AI startups. However, if we look around, AI startups are consistently following the established model: charge $10-100 per seat per month for a suite of AI tools, accessed by web & mobile apps — like a SaaS in all ways but the underlying AI technology layer. I imagine that smart minds at these companies see subscriptions as a comfortable transition strategy to something new. And, if AI reaches even a fraction of its enormous promise, that something new could be much much, more expensive.

Subscription software has been on a steady trajectory to overtake the entire software market. I don't have data handy, but it's easy to run through landmark software products, from Microsoft Office to Apple iTunes/Music to Adobe Photoshop, and map out the transition. Once upon a time, we purchased these products once, up front, and we'd get a CD-ROM or MP3 file in return; today they are all subscriptions. Video games have resisted to some extent (Apple Arcade and Google Stadia, R.I.P., are not world beaters). But when is the last time you purchased a disk for anything else? The subscription model is so common that one might say it has reached its middle age — and we can start to think about what comes next.

AI is the latest craze, so perhaps we can learn something about future business models from AI startups. However, if we look around, AI startups are consistently following the established model: charge $10-100 per seat per month for a suite of AI tools, accessed by web & mobile apps — like a SaaS in all ways but the underlying AI technology layer. I imagine that smart minds at these companies see subscriptions as a comfortable transition strategy to something new. And, if AI reaches even a fraction of its enormous promise, that something new could be much much, more expensive.