No surprises in the Skype write-off

I’m not surprised about the Skype writing off Ebay did. (here also) There is an old well known fact in the media business: it is extremely hard to turn free subscriptions to paid subscriptions.

Skype is for free. And if you have more than 300 million users, which Ebay got with Skype, that can call each other free of charge with a program that is for free, there really is no reason for them to pay for something. Everybody you know already are on Skype, free of charge.

And now MSN Live Messenger, Yahoo Messenger and AIM offer the same service as Skype; Skype has become one by many.

What is free will stay for free; otherwise the users turn somewhere else. Just look at Napster (of blessed memory). Napster had at its peak 80 million members sharing music over the Internet. When it was under fire for copyright infringement by the RIAA, the German multimedia giant Bertelsmann bought the company. They saw a huge potential market and wanted to convert the members to pay for the music. It didn’t work. Instead the members turned to free alternatives.

I strongly believe the same will happen with Skype if Ebay tries to convert the members to pay for the calls. Members join Napster, Skype or whatever because it is for free. And the majority of consumers don’t choose the product or service with the highest quality; they choose the most easily accessible.

Ignore basic economic principles at your own risk. Technology changes. Economic laws do not.