Skype, with its P2P architecture, is even more cost effective than Hotmail. It will take only a tiny percentage of its users paying up for some premium services for it to become highly profitable.

Unless it is.

You answered your own question. If no profitable, independent business model becomes apparent for Skype, Draper will sell it off to someone who can make money with it — just like Draper did with Hotmail. Do you think that Microsoft regrets buying Hotmail? Absolutely not. It is the only way that they have been able to do any sort of decent customer acquisition for MSN.

http://www.techdirt.com/articles/20040315/0937214_F.shtml

However, I’m going to point out that whether or not Skype has a business model is really only an issue for the folks at DFJ and others who put their money towards it. From the consumer side, we should end up with better VoIP offerings, as money flows into this space… That seems like a good thing.

Kevin

You can charge $20-$50 for software. Since skype doesn’t need to operate an infrastructure, they should be able to make good money.

I just can’t figure out why they would need $18M though, unless they plan to start a massive advertising blitz.

I could see a Skype CD version 1.0 included with everyone phone sold in every store – royalty revenue, 3 months enhanced voicemail service included with the phone purchase , free calls to your loved ones anywhere in the world etc…. the demand would be impossible to fill – talk about viral marketing..

Skype is again in the news with $18.8 million in second round financing with Draper Fisher Jurvetson and European Index Ventures. Om Malik weighs in and asks where’s the business model. To which we should look more closely at both…

I had published a tiny piece yesterday on the potential lack of business model at Skype, which recently raised about $18.8 million from various venture capitalists. Stuart Henshall has an interesting response where he explains the business model and ex…

For past few weeks there has been a lot of noise around Skype. What with company raising millions in venture …

Just spent over an hour on a Skype call with Matt this morning. Wow. The first time around, I had several significant complaints about Skype — I was in the minority at the time, but the sound quality for me…