Business Models for Skype Developers
"How the hell can you make money with a system that is for free?" , asks Skype Forum member, tropicaljantie, the real-life Belgian Jan Geirnaert, residing in Kuala Lumpur, Malaysia.
That's a good question Jan. The big travesty in the growing Skype Ecosystem, Skype Developers Program, and the API is the lack of thought by Skype staff about how developers will make money.
We have had some feedback in the Skype Journal...
Here is a comment to Stuart's post Skype Developer Ecosystem Gets a "D-". Jason Terando, the developer of the Skype API COM Wrapper, had this to say:
"One unfortunate trend seems to be Skype adding functionality without regard to what has already been developed. One example is voice mail. A few parties went to great trouble to build voicemail apps, only to have Skype include it as an included feature (albeit not for free). Likewise, Skype has committed to an API/web-based mechanism for retrieving on-line status, which a couple of parties have already worked hard on developing, only to see the rug pulled out from under them."
In an interview about Spontania's Video4IM, CEO Enrique Dominguez talked briefly about his business model.
"As you say, Skype is free, but out of the free version comes premium services. We follow the same strategy. We are a private owned profitable company, and obviously we need to generate revenue to keep these black figures ongoing.""Regarding Spontania Video4IM, in some weeks we will announce some cool premium features; among others, videoconferencing between PC users and 2.5 and 3G mobile devices. This would drive Skype-Out minutes and open the door for new subscription models."
Niklas Zennström created a market of 45M users who want just about everything for free. Niklas makes millions and soon billions by nickel, diming and Euroing his captive Skype Users with valuable services, while members of the Skype Ecosystem get economically pummeled.
Jan, let's hear how our readers might answer your question, "How the hell can you make money with a system that is for free?"


Comments
It appears a developer needs to use Skype as a piece of a bigger product, rather than develop a piece to be used for Skype. Put another way, use Skype for your product, not vice versa.
For instance, create a game or dating service that employs Skype. I read today where someone is going to put Skype into their Wimax voip for games.
Posted by: Rick | July 28, 2005 02:12 PM
Actually, I believe there is some thought emerging on how to make money. There are three clear developer areas that emerge. Each presents different challenges.
1) Hardware Integration: This is the simplest in terms of how does one make a buck and I believe the thrust of the initial API. Two opportunities emerge. One developing the API to integrate with hardware means that if I buy a dual-phone and later want to use it with another system similar to Skype then new companies will want to look very carefully at integrating or emulating Skype API functionality. The cost of hardware locks people in. Hardware vendors get a premium or first to market advantage.
2) Augmented Services: Many sites from social networking to forums to online marketplaces would be made better by integrating Skype. The development effort here has a different payoff. It may not be direct dollars, it is value added for their customer base. Improving communications etc adds value. The cost of these implementations can be quite low.
3)Add-On applications. These are the most difficult. They are most likely to be absorbed into Skype in some way over time. Sites from Groove to Netscape have had plug-ins and enhancements and like MS Word.. in the end only one Spell-checker was absorbed. Where is there immediate opportunity? Presence, profiles, and money. Skype could make this better by creating a Firefox like plug-in strategy and making it clearer to developers what their path is.
There is nothing wrong with creating a market for free. In fact we know the calls aren't free. Most of us paid a fixed fee to access the bandwidth. To really make it free, services need to be created that lower the cost even more for Skypers. That means that Skypers must earn money, get paid for using it. Skype can't afford to do that. However other commercial interests are certainly interested in connecting with Skypers. As the community grows the value of that attention becomes ever more valuable.
In summary, I think there are many opportunities even for the applications. The "presence" element in my view remains an opportunity for "independent" developers.
I'd also suggest that some independent developers are selling their developments short. Many of these are prototypes. Many companies should be paying to get some of these rapid prototypes done. Either to get the jump on the competition, get the learning or negotiate with Skype so it is brought in the product in the future. The benefit from organizations prototyping and funding early development of these tools is they learn both how to use and apply them and more importantly they get an indepth understanding of the changed "behavior". Thus much is running from hypothesis to benchmarked improvements.
I believe every company should be in the business of considering how to improve their conversations.
Posted by: Stuart | July 28, 2005 04:47 PM
As one of the developers, I think we still have a good chance. 3rd party can provides a excellent and profitable Skype-service idea to Skype. With some unique technology that Skype can't do by itself, Skype needs to cooperate with 3rd party. Afterward both Skype and 3rd party will benefit from this new service.
Posted by: tommy_sheu | July 28, 2005 11:46 PM
Exactly the same way as with any open source development. By adding value via a service not by selling code. So this means that there are plenty of opportunities around areas like distributed call centres or micro-consulting that charges for time.
But trying to make money from your particular extension is a dead end for all the reasons given. That doesn't mean that it's not worth doing, just that the rewards are soft in terms of reputation not hard in terms of direct cash reward.
Posted by: Julian Bond | July 29, 2005 12:34 AM
Making money with Skype is not easy but in my opinion possible.
From my experience with other non-technical users and companies that don't have a IT specialist Skype is not that clear at all. So there is a way to make money with consultancy and solutions.
People normally don't look for just a software package they look for a solution for a problem.
Posted by: Hans Blaauw | July 29, 2005 12:44 AM
Obviously Niklas Zennström is a great mutherf****r.
Posted by: minitester | August 22, 2005 01:45 AM