Making Skype More Profitable and Ultimately Better

There 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?

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McAfee Offers “Plus” Version of SiteAdvisor

I was checking the details of a site that came up as a yellow site in SiteAdvisor today. I was surprised to see a screen open that was inviting me to pay for the “Plus” Version. It would seem that the acquisition of SiteAdvisor has finally resulted in McAfee trying to make some money out of it, which was always going to happen it was just a case of when and how.

SiteAdvisor is a great piece of security software that is a Firefox extension, there is also support for Internet Explorer. It classifies sites as green, yellow or red. It may be that a particular site is yellow because you will get a lot of spam from them by registering. Or that there are excessive pop-ups. Red because a browser exploit has been found on the page, or the downloads are infected with spyware or a virus. Green sites are okay at all levels. More about how it works can be found on the SiteAdvisor website.

The really cool part of this extension once installed; is that it flags these sites in the search results. Never end up on a site that could be a local disaster again. Next is the fact that if you are surfing a green site then green sites can only link to green sites. So a site cannot be green and link to a yellow one or red. Nice to know that where you are is safe and where you are going is safe. Not fool proof, it is only as good as the most recent test. But in my experience, coupled with a bit of common sense; it works.

So I wanted to check the status of a link that was not rated (it was from my Feed Reader) so I went to SiteAdvisor to input the URL and get the results and I get a screen come up with an offer to buy “SiteAdvisor Plus”. It might be worth noting that in small print it says “For Internet Explorer”. There was also the assurance that this screen would only come up once every 30 days, provided I keep my cookies (I don’t so I guess I will be seeing it again). I can not find the screen on the SiteAdvisor website, so it was lucky that I was thinking and took a screenshot and put it Flickr. The deal is that for $19:99 you get:

• Checks of the safety of links in email and Instant Messages
• Checks for phishing and identity theft scams in real time
• “Protect Mode” which prevents interaction with dangerous sites

The software works with:

• Outlook and Outlook Express
• Yahoo Mail
• MSN Mail/ Windows Live Mail (Hotmail)
• Gmail
• Yahoo! Messenger
• MSN Messenger
• GTalk

With the note that says “Also includes SiteAdvisor Firefox Extension”, thanks.

The $19:99 gives you a discount and is for single users. A “family pack” of three users will set you back $39:99. The features are great but does anyone else notice what is missing?

Where is the support for other IM clients? Or Thunderbird, or something other than corporate software? Notice the “NOTE” about Firefox at the bottom? The chance that there will be support? I would reckon about zero. The code is not open source for obvious reasons. So no chance for some open source team to develop it. A bit disappointing in my opinion. Then again anyone that uses IE all the time probably needs it more than me. But the email link checking would be a nice addition.

Still might be a good investment for you if you use the applications mentioned and especially if you have kids that use the computer. I have put friends onto SiteAdvisor and they have said that the kids use it very effectively and alert them if they accidentally end up somewhere they should not be. In addition to the fact that in recient times IM services have been targeted with links to either malicious sites or downloads so they are a good inclusion in such a package. Money well spent for peace of mind. Too bad there is no support for open source software.

Capitalism in the Face of Content

I have often thought about this issue and I think it has even come up on Global Geek Podcast. How are all these lovely looking “Web2.0” websites going to make money? At this present time most of these sites look great, they have minimal advertising; if any. They look a million dollars due to the sleek web design and neat Ajax applications that they are employing. Or to use what has become a social term: these sites look very “Web2.0”. But today I see that this is changing.

Shoutwire is what people would term a “Web2.0” site. It is an on-line community that works a little like Digg in that news stories are submitted by the community and are “shouted” or “liked” by the users. In this way articles get X number of “shouts” which promotes that story up the ladder. I guess that you could say it a form of voting. Users can submit comments and have discussions about the stories as well. Great idea, news that the community decides is important gets promoted and read by more visitors to the site. There is also an RSS feed that you can subscribe to for the front, page much like Digg. The site when I joined was slick, pleasing to the eye and easy to use and it was fun. Although being a new site at the time the community was small. I don’t know how big it is now but if they continue wrecking their “look” they are going to scare people off in droves.

I had not visited Shoutwire for a while and I had some time free so I decided to swing on over to their site. To say that I was appauled is an understament. Sure there were some sort of syndicated adverts along the top, making up part of the header. Fine, a lot of sites have that or something similar. But the wart on the face of beauty was an overly large, flashing, obnoxious, irritating, badly placed advert right in the middle of the submitted article pane, right at the top. Absolutely disgusting.

[Click thumbnail for bigger image] Not only does this make the once slick site look cheap; it was also probably one of the most badly placed ads I have ever seen, but yes, I noticed it. I hated it, I am not even sure that I want to go back and I most probably will not. In addition to that is the fact that the type of advert that the editors (or whoever decides this stuff) have used; just does not look like it belongs on the site. It looks like they were desperate for money so they stuck up whatever they were offered. I don’t care if this type of advertising works, if it was me making these decisions it just would not have happened. It would be like a flashy magazine like Vanity Fair placing ads that you might see in Picture Magazine (Australian soft porn magazine) in the featured story. I am not sure if they realise that is how the selection and placement of advertising comes across or not but I would be interested to find out what other people think. There is another “choice” advert along the right side of the main page but at least it is not in your face. But it is one that I would not have expected to see, it just does not fit with the “flavour” of the site.

That said I have always maintained that these flash sites that we are being spoilt with are going to change and some like Shoutwire for the worse. The services and the nice looking sites, to say nothing of the bandwidth do not come for free. Something has to give here for them to be able to continue to operate and maintain the services that they offer.

We are going to see some things happen. These sites that promote traffic are going to have to decide how they tackle the revenue problem. Decide to fall on their sword and die a dignified death. Or they advertise. The only other alternatives is to charge a subscription to be able to contribute to the site or perhaps to even enter it. They would have to be pretty confident of their product for that to occur. But I can see the advertising thing happening. But please do it with class and good taste, Shoutwire is a great example of what not to do.

One nasty trick that some companies might be considering is that of building a user base that is highly involved and somewhat reliant on what they offer, like Odeo for example, then start to charge people to use it. I am not saying that I have heard that Odeo is considering doing this but I must say that if I would suspect a site for maybe doing it, it would be Odeo. You ask why I hear. Well; what Odeo are doing is transferring heaps of data in the form of podcasts and sent odeo messages to their user base and anyone else that wants to just listen to podcasts. That aspect alone would be costing them a lot of cold hard cash. Up until this point in time I have seen no advertising, except for themselves. But then again they might get their funding from somewhere else I don’t know.

Another site that comes to mind is YouTube, again huge bandwidth, big dollars, huge active user base and to top it off they are as popular as you might be able to get. Are they loosing money? I know they were for a while but they might not be now.

I would pay for both access and use of a site if a few conditions were meet. One is that I would have to rely on the service that they were offering and it would have to be good and reliable. Or alternatively I would have to very much enjoy being a part of that community. Secondly, I would expect that a subscription was payed in lieu of having to put up with obnoxious advertising. For example, if Odeo said to me that I would have to pay to be able to recieve Odeo messages into my inbox for the podcast, I would agree to it. The reason being is that the service is a great one, it works, it is reliable, it is of high quality. But I would expect this fee to be reasonable as well, I won’t pay through the nose either!

So it remains to be seen if companies and websites will maintain the look and feel of their websites while meeting the need to raise revenue in order for the site to exist. I can see the need for both. But what I do not see the need for is the example of Shoutwire. It will be interesting to see what route these companies take over time as the pressure increases with more competition. Given Shoutwire, I am sure some will opt for cash and capitalism over content. In the meantime I am going to Newsvine, they look like they are doing something right.