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Confused? Take Zuora Inc. The recently launched startup sees a big future in subscriptions for a host of products and services beyond magazines. Think Netflix Inc. [NFLX], which lets movie lovers subscribe to a service that delivers unlimited DVDs so they don't have to buy or rent them. Think compannies like Zipcar that provide consumers with a car when they need one so they don't need to make a steep investment in something that loses much of its value the moment its off the lot. Or think Salesforce.com Inc. [CRM], a pioneer in the burgeoning software-as-a-service sector, which spares businesses the upfront investment in time and money associated with traditional enterprise software. If these seem like three completely distinct businesses, Zuora says they're actually some of the earliest adopters in a natural progression toward the subscription model. Zuora, which was launched in May by a group of high-tech veterans including former Salesforce.com executive Tien Tzou, offers software that companies from a range of industries can use to support a subscription service. Zuora--whose name is a scrambling of all the founders' last names--has raised $6.5 million in funding from Benchmark Capital and Salesforce.com CEO Marc Benioff. "Our epiphany was in seeing there is nothing special about software that lends itself to the subscription model," says Zuora CEO Tzuo. "If you want to adopt a subscription-based model, we want to make it really easy for you to do so." Tzuo said that while most companies were built with product-centric views in mind, its software eases the shift to a subscription model, where companies may let customers select a package that suits their usage level and then manage the account online. In other words, the company offers what it calls a "highly customizable" software subscription service to support other companies' subscription services. For anyone who subscribes to Netflix, that service offers a good analogy of what Zuora hopes to enable for all sorts of businesses. The startup has already signed up a handful of customers including Coremetrics, which will use the software to let customers subscribe to its digital marketing optimization services. Since it's early days in this shift to subscription-based tech services, Zuora says it's premature to predict what kind of companies is most likely to use its software. But it expects broad demand. "When Salesforce.com was launched, most of its customers were other dot-com companies," Tzuo says. "Fast forward nine years and we're selling to the Merrill Lynches and the Ciscos of the world." Tzuo argues that subscriptions are the fourth major business revolution to be enabled by the Internet, following online retailing, online payments and, most recently, low-cost targeted online advertising. "What Amazon.com did for online retailing, we want to do for online subscriptions," he says. -- Andrea Orr
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