The Integrative Stream

Skype Model

I just purchased Skype calling credits for the first time. I’m doing some work with a company in New Zealand, and international calls at two cents a minute just make sense. I’m a little behind the curve on this technology, since I have a perfectly good speakerphone and a nice calling plan. As you might imagine, it’s pretty popular at MIT, particularly with the international student body.

But how do they make money (or, rather, how did they plan to before eBay bought them)? The margin on international calls, at 2 cents a minute, can’t be that high. Actually, it looks like a lot of the revenue might come from people losing interest: calling credits expire if your account has been inactive for 180 days. I wonder what the attrition rate is.

Update: I used it for an hour long conference to New Zealand yesterday. Voice quality was excellent, and the person on the other side (talking on his landline) didn’t even notice I wasn’t on a regular telephone. Total cost for the call: $1.07.