For Skype, “Freemium” is a Four Letter Word

Specifically, the first four letters: “Free.”

Sure, Skype provides an extremely useful service–its free PC to PC calling and video chatting drew 663 million users last year. But despite the new platform sound of their ‘freemium model’ moniker, few people really want to pay a premium for any of Skype’s added services.  Less than nine of those 663 million people in fact, which equates to barely over 1% of users.

Dennis Ryan, Advertising, OLSONAll of which doesn’t bode well for the IPO expected in the second half of this year. So what can they do to drive value and revenues?

Enter advertising.

Yesterday, they released this announcement, heralding the introduction of home display ads online and banners in their mobile apps. While they’re clearly not abandoning their hopes of building a subscription base, Skype recognizes they have a platform with good traffic and a captive audience. Adding advertising to the mix shouldn’t prove too difficult a concept for their consumers to accept.

After all, that idea’s been working for television for a few years now…

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By Dennis Ryan, CCO, OLSON

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