Subscription Model Great Way to Create a Billion Dollar Company

Subscription Model a Great Way to Create a Billion Dollar Company

Read an interesting (though quite old post by Net standards, July 2004) @ Paul Allen (the lesser) blog.

A recurring revenue model, such as the one with a subscription business, is an excellent model to grow big in reveenues in a reasonable amount of time. Why?

As Paul says in the post, "Once you get a customer signed up, and the product is good enough to keep them happy, you generate revenue for months or years. So your marketing pays off long-term."

And he quotes some companies with a subscription model that have billion plus market caps (all 2004 figures):

1. Netflix: 2 million subscribers and is worth $1.86 billion.
2. XM Satellite Radio: 1 million plus subscribers . Market cap: $5.2 billion.
3. RealNetworks reached 1 million subscribers to its content service by April 2003. Market cap: $1.1 billion.

Interesting indeed for anyone wanting to create a billion $ company. Well of course all of us have the same question, and so does Paul: "The question is, is it possible to create new ones that have the potential to generate a million subscribers, or have all the good ideas already been taken?"

Hmmm...