A subscription, like Spotify Premium or Amazon Prime, is a relatively new business model. Here, the supplier of the service (i.e. the company) and the customer enter into a contract wherein the customer agrees to make recurring payments (weekly, monthly, quarterly, annually, etc.) to the supplier in exchange for recurring benefits and services.

This business model is a rising trend, especially in the e-commerce space. This is so because it allows businesses to incur a stable, recurring, and predictable income by retaining their existing customers instead of spending marketing costs to appeal to new ones after every sale.

For example, when you subscribe to a Spotify Premium subscription plan, you are buying the benefit of listening to ad-free music. In this case, the ads are a kind of customer pain point that Spotify creates on purpose to persuade its FREE users into opting for the paid version instead.