What is subscription revenue?

Subscription revenue refers to the income generated from providing customers with access to a service or a product over a specified period in exchange for a recurring payment. This model allows businesses to establish a steady and predictable revenue stream, as customers typically pay on a monthly or annual basis for continued access to these services. Examples of industries that commonly use subscription revenue models include software (like SaaS), streaming services (like Netflix), and magazines.

This approach differs significantly from one-time purchases or revenue derived from the sale of individual products, which do not promise ongoing revenue. Additionally, revenue from advertisements represents another distinct category, focusing on income earned through advertising partnerships rather than direct consumer subscriptions. Thus, the correct choice captures the essence of subscription revenue, which is fundamentally about providing ongoing access to services rather than one-time transactions or advertisement-based income.