[asterisk-biz] How is Skype pulling this off ?

[Trixter aka Bret McDanel]

On Fri, 2008-05-30 at 23:37 -0700, Nitzan Kon wrote:
> Good luck to you. But I hope for your sake your pockets are
> VERY deep. You can't get something from nothing, and you will
> have to pay for the calls your users make. If you can subsidize
> it with advertisements and such, all the power to you - but in
> my opinion ad-supported free calling won't work unless you're
> pretty strict on how much calling credit you hand out. If you
> give out too much, you won't make enough ad revenue to cover
> calling costs. If you give out too little, users will see it
> as too annoying and quit using it.
> 

no to mention what drove some people away from ad based revenue 10 years
ago, and that is ROI, or conversion rates.  Just having enough ads isnt
always enough, your users also have to click on those ads and then from
the clicks a certain amount have to turn into sales.

You may be able to get along for a while with no conversions, but there
will come a time when the advertisers demand conversions or no money -
unless of course they start out that way, which some do, commission
only.


> In the end, it's all economics - you can't take a product which
> costs money (i.e. calling minutes) and turn it into "free". Skype
> will end up getting a whole bunch of abusers on their network and
> lose a lot of money until they shut it down. MagicJack will take
> the money and disappear. Other such companies will have the same
> fate.
> 

skype hasnt yet and its been years.  First they did totally completely
free.  Then they did $15/year.  Then $30/year.  Now $6/month.  While its
a gradual increase in price over that 2 or so year window, it isnt bad.

Skype also makes money in other ways than just minutes.  They sell DIDs
(if you dont have one your ani/clid is often 0000012345 or something)
and who knows they may even get compensated on the inbound - if you goto
a telephone company saying "we have 200 million users" you can negotiate
slightly differently than if you go "we have a single asterisk box and
hope to get some users someday".  

Skype also charges higher rates on the destinations that are not
included in your monthly plan.  So for example if you get flat rate US,
and you call the UK you are paying a higher than most rate for that UK
call.  

Skype also peers with some of the larger providers via SIP using G.729
(shhh its a secret) and has for some time.  

Skype utilizes customer computers as part of their network turning some
of the users into supernodes carrying some of the traffic, basically
offloading cpu/network reducing their costs.

Needless to say there are a lot of ways for a company such as skype to
lower costs and increase revenue streams.  There are probably some I
didnt yet mention.

-- 
Trixter http://www.0xdecafbad.com     Bret McDanel
Belfast +44 28 9099 6461        US +1 516 687 5200
http://www.trxtel.com the phone company that pays you!