A startup has burst onto the scene with an incredible innovation! Regiats Electronics has created the GE killer. In a press release this week, the electronics and manufacturing startup announced the creation of the perfect light bulb. Coined “Reluminate,” the new bulbs will never burn out. The problem with a bulb that never burns out is that once you buy bulbs for every bulb socket in your house, you no longer will buy anything from Regiats Electronics. So what’s their plan? Regiats has decided to use a subscription-based business model. Each bulb has a wireless chip within it that broadcasts a signal to local cellular networks. This signal is distinct to each bulb, which has a monthly subscription price based on the wattage and size of the bulb. As long as the subscription is active, then the bulb’s status is enabled through the wireless signal. So, if you live outside of wireless phone coverage, the bulb will be disabled and you’re out of luck. If you stop paying your subscription, you’re stuck with an unusable bulb.
Of course this isn’t true. The majority of people will not change to subscription-based light bulbs in the near future. If a “perfect light bulb” were invented, we’d probably be more open to usage-based bulbs than subscriptions. I believe that most people have an inherent aversion to subscriptions. We don’t mind subscribing to services (phone services, Internet access, cable TV) or publications. These have become traditional subscription items. So, an even greater obstacle than the aversion to subscriptions is the established traditions. And as Seth Godin states, traditions rarely change quickly just because the alternatives are better. This is the hurdle that Napster-like services have to overcome. Their effort would not be as daunting as the fictitous Regiats’ (which is my name, Staiger, spelled backwards), but nonetheless they have to overcome not only the traditional CD purchasing routine, but the standard alternative which is Apple’s iTunes Music Store.
Management and marketing gurus will tell you to focus on what differentiates your company from the competition. The key is to recognize that difference may be a hurdle for your customers to overcome as well. Making a light bulb that never burns out sounds great, but changing the product also changes the business model (which may or may not be so great).