Making Skype More Profitable and Ultimately Better

SkypeThere have been a few articles floating around talking about the fact that eBay is considering selling Skype. Although the talk is mostly related to new Skype CEO John Donahoe referring to “synergy” and weather or not the two business are complimentary. I think this might be cover for “profit”. The acquisition of Skype by eBay was a curve ball in most commentators eyes and there is no doubt that it has likely had a negative impact on Skype’s revenue and image.

That discussion made me think about what is it about Skype that is stopping it from being a giant (a bigger one). Number one in my book is the fact that most users don’t pay for any calls they make. They use it as a communication tool while online. They take advantage of Skype’s free calling, which is great. But there is no profit to be made from free. This is despite the fact that paid calls are cheap and deals like “Skype Pro” were top value for money. Indeed the new “flat rate unlimited calling” is also feature rich and again cheap. So if the majority of users are not taking them up on these great offers what can they do?

Charge for the use of Skype. That’s right charge for it, make Skype a subscription service on a per year basis. Before you go screaming your butt off hear me out. If you are screaming you must use and value Skype, I hear you. Skype is one application that I could not live without.

One of the strengths of Skype is the user base, it is massive. Used by an estimated 30% of all internet users and accounting for 95% of all VoIP traffic. Watching the total users online I see a constant + 10 million. There are questions about “active” users on Skype, given that total registered users is reportedly over 100 million but that is what I see on a regular basis so lets use that in our math.

With this huge user base Skype is in a great position to use that market share and economy of scale to charge a minimal subscription fee and make a very large profit. Consider this:

Skype have 10 million active users. Charge $10 per year for the use of Skype free calling PC to PC, therefore outside of SkypeOut. Given the fact that some people won’t pay this and ditch Skype lets be conservative and say that they lose 50% of current users. Now we have 5 million users paying 10 dollars a year. That is 50 million dollars a year! That is profit that they just don’t have coming in right now that could make Skype a whole lot better. Skype’s revenue is currently running around 500 million, subscriptions then would account for 10% of total revenue, that is a lot for any business.

I don’t think that they would lose 50% and I think that it will benefit users and Skype. I would pay 10 bucks a year. I might consider paying more. Why? I think that it is that good and I don’t have a problem paying for a quality service. I have used a number of VoIP services and none compare to the quality that I get from Skype, especially for recording. Generally speaking Skype is constantly reliable and stable, making it easy to use and dependable. Ten dollars a year is a very nominal fee for a great service.

In addition if I knew that the addition of a fee might make for a better Skype and encourage more development, great. They could even concentrate on working on some of my gripes:

  • No record feature native to the software
  • Bloatware like Skype Extras
  • Creating a stripped down version for optimizing call quality

I know that many people will disagree with me and strongly. I may even get flammed for putting ideas in their head. But quite frankly I don’t want to loose Skype. I sure as hell don’t want to lose it to the likes of Microsoft or some other web company that will pollute it with rubbish… “Yahoo! toolbar will be installed with Skype” (in fine print at the bottom of the EULA). Skype should concentrate on being a VoIP service, not a games platform, not aan application client, not anything else.

I will say though that subscriptions without value adding to the application and development of more bloatware would be a disaster. But the opposite would make for Skype to develop and maintain a platform for which there is no equal. As long as they add that record button.

Would you pay 10 bucks for a killer app?

Skype 3.0 Out of Beta

SkypeSo Skype 3.0 is out of beta, I am yet to be impressed.

While the interface now looks a bit better and functionally easier for users to get Skype functional I was disappointed to start seeing bloat. The RAM that Skype now uses is up around 30 MB. The Skype client itself is taking 12 MB on it’s ow, the other 20 MB is an application called skypePM.exe. It is the Extras Manager. Damn if that ain’t bloat I don’t know what is. This is optional on the install. It may well explain why my computer now takes an aeon to load as well. I will be uninstalling and reinstalling with this feature out.

Then there is the recording issue. As regular readers would know I have been harping on about the ability to record Skype for ages. But since Skype is yet to build this ability in I have and used Hot Recorder, it worked beaut. Until Skype 3.0 showed up, it now successfully records silence. Sure the new Skype as the old Skype could be used with a plug-in, now “Extras” that are able to record. One hot tip; none of these applications are able to record Skype with anywhere near the quality required for podcasting. So what now Skype? It looks to me that Skype are going to rely on 3rd party applications to take up the slack in the recording department. A shame because Skype would produce the best one. These other applications are lacking the quality required.

The positives while there, are hard to find for me. The audio quality seems to have improved, so that is a good thing. The other thing that has improved that may or may not have to do with Skype is that file transfers seem faster. Nothing huge but they are no longer dismal. The integration of Skypecasts is a good one.

Speaking of Skypecasts, having them in the interface of Skype is great. I have never heard one before today. The fact that they are in the interface meant that they were easy to access and that the ones there were on then or starting soon. So I thought that I would pay one a visit. It was great fun and I was able to network with a few people and added them to my Skype contacts. I even meet up with another Australian podcaster! Small world.

The cast was a computer help one that offered people that had joined the opportunity to have their questions answered or a problem sorted. Which is a great idea and people seemed to take advantage of getting some real-time assistance with what they were trying to do. Far less formal than a podcast it offers a great forum.

I was surprised at the sound quality which was good. Although the quality of other participants was the limitation. Some “callers” I am sure were on dial-up, given how it sounded! But most people had reasonable connections. It was fun and I’ll be doing it again. The other thing is that you could easily listen to a Skypecast and do something else at the same time. Does that make me a lurker?

This is the extent of my experience with the new Skype. I hope that it improves and I feel a bit better about it in time.

So my mixed feelings on Skype continue. I sincerely hope that they keep their focus on call quality and just consider including a RECORD button for future releases (I would even pay for it). Some nice improvements. Regular users will find it a worthy upgrade, not much here for the person that has special requirements and the bloat is not necessary in my opinion. I certainly feel that this is the most corporate version to evolve so far. A sign of the times? Only that very thing will tell. But with over 7 million Skypers on-line as I write this who am I to argue?

NOTE: The Hot Recorder Homepage is broken and this product is no longer developed from my experience.

Skype 3.0 Release Screenshot