I agree that the large yearly price would put many people off (unless maybe there's an extra discount for up front charge, and some of us don't care if it takes longer, we just want the best deal :-) )
Still, I think the option to carry a balance might be feasible...everything would work the same except instead of charging your card, the system would first try to deduct it from your existing balance, otherwise it would charge it.
But it's true that I'd like the ability to combine shipping with other things I've ordered with that month's subscription.