Automattic is on a roll. It recently received $300 million from Salesforce Ventures and made a few key acquisitions including Tumblr and ZBS. The acquisitions represent expanding functionality, congruent with an ongoing theme of website builders becoming one-stop-shops for presence and promotion.
Some definitions are in order to avoid confusion. Automattic sits at the center of the WordPress universe. As an open platform, WordPress.org has no owner, but Automattic runs WordPress.com, which is the biggest onboarding source and provider for WordPress website creation and hosting.
Now Automattic is adding more monetization tools. It announced native functionality for recurring payments and customer management for subscription-based content. It will be available to WordPress-hosted sites (WordPress.com) and self-hosted sites using the WordPress platform (WordPress.org).
This is particularly relevant given the rise of subscription-based products. There are certain behavioral economics tied to the rise of subscription services in terms of spreading out payments. This has led to the rise of paid content online, as well as services ranging from Dollar Shave Club to Spotify and Netflix.
Looking to appeal to a wider range of businesses, Automattic now makes it easier for sites built on WordPress to activate and manage paid subscription products. This of course only applies to the segment of SMBs that produce or sell digital content, such as premium research or training products.
One question is why didn’t this already exist for such a prevalent website builder? The short answer is that it did… but more indirectly. One of WordPress’ benefits is how expandable and customizable it is with tens of thousands of plugins. These include subscription management such as MemberPress.
Member/subscription management that’s baked right into the WordPress core platform conversely makes it a bit more user-friendly. For reference, other things that make it into the WordPress “core” are basic functions such as how pages, posts, comments, and other key website functions operate.
Based on that deeper integration, it raises another question: what’s to become of those third-party subscription plugins? The short answer is that they’ll likely be fine. MemberPress, for example, is very powerful (I happen to use it), but its level of customization makes it a bit advanced.
If WordPress core functionality in other areas is any indication, this new subscription functionality will likely involve simpler (SMB-friendly) setup and management. But it will correspondingly lack advanced capability and nuanced customization. We believe there’s room in the marketplace for both.
Back to the macro view for Automattic and WordPress, this falls in line with our prediction that more functionality will continue to roll out quickly in the wake of its recent cash infusion. And again, this aligns with the clear trend we’re seeing among website builders to broaden appeal and functionality.
As we’ve said before in these situations, a broader product suite can boost revenue per SMB (ARPU), retention and lifetime value. It’s all about having more tentacles that reach into business operations, thus anchoring a given vendor in SMB marketing support. That, in turn, creates a sort of lock-in effect.
This is particularly true with anything tied to payments or customer management. These things are hard to move to new systems. Anchoring things even deeper, we’re talking about recurring payments here. It’s a particularly daunting task (I’ve tried it), to move this to a new site or platform.
The move towards broader functionality is also supported by LSA’s Modern Commerce Monitor™️(MCM). The survey indicates that SMBs increasingly prefer one-stop-shop providers for various operational needs. That’s everything from presence to marketing to back-office functions.
Expect more bundling and feature expansion from Automattic and others that target SMBs. We’ll report back as we see that unfold across the SMB SaaS landscape.
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