The subscription economy

Whether it is a monthly payment for a newspaper, access to streaming video through a service like Netflix, or free shipping through a retailer like Amazon, it's a common practice in the business world. Companies increasingly seek to maintain relationships with customers rather than selling them a product once and watching them walk out the door."This is part of the market process," David Boaz, an economist at the Cato Institute, told the Washington Examiner.

Automakers are dabbling more and more in providing temporary solutions for car availability. For example, some carmakers tested subscription services for automobiles in the late 2010s. BMW charged $2,000 a month for a mid-tier vehicle. Users could drive them up to a certain amount of miles per month, swap out cars whenever they liked, and receive access to repair options without extra costs.

Users can pay for a monthly subscription to receive access to Zipcar vehicles, although the products are primarily available in urban areas like San Francisco and New York City. Holmes said that personal car ownership in cities is"highly inefficient" and that most cars go unused even as they claim a large portion of household budgets.

The growing interest in subscriptions exists for two reasons, according to Neale Mahoney, professor of economics at Stanford. The first is that e-commerce creates new opportunities for subscriptions. The second is the notion that subscriptions replace the need to make certain purchases, such as coffee, cars, or razors. Users can now just pay a monthly fee for the product that previously cost them four to five figures to buy.

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