Can sleeping giant Skype reinvent itself?
– Eric Auchard is a Reuters columnist. The opinions expressed are his own –
Do once-hot Internet start-ups who miss a date with destiny ever truly get a second chance? History says no, even for once-great names like Netscape, AOL and MySpace.
Skype hopes to be the exception. On Tuesday, a group led by top Internet financiers in Silicon Valley and Europe agreed to pay eBay $1.9 billion in cash for a 65 percent stake in the one-time web calling sensation.
The deal values Skype at a face-saving $2.75 billion, well above the $1.7 billion at which it has been valued on the ecommerce giant’s books. Ebay also stands to keep a 35 per cent stake in the company.
But that overlooks the humiliating $1.4 billion eBay has written off on the original deal. Four years ago, eBay promised to pay up to $4.3 billion for Skype, but it later scaled back the total payout. All told, it makes Skype one of the biggest value destroyers of any Internet merger since the last days of the dot.com era.
EBay’s justification for the Skype deal in 2005 was how its chat and calling services could serve as an online customer service platform connecting consumers directly into eBay merchants. That never happened.
Instead, product innovation slowed and business setbacks, such as a corporate ban on Skype’s network-hogging software inside companies, were allowed to fester, rather than becoming new business opportunities.
Ad strategy at root of Facebook privacy row
– Eric Auchard is a Reuters columnist. The opinions expressed are his own –
Social networking phenomenon Facebook has beaten out arch-rival and former market leader MySpace by most measures of popularity, except the one that pays the bills.
While Facebook has outpaced MySpace in bringing in members — it has 175 million active users at the latest count, compared with around 130 million for MySpace — it has struggled make money from them. While MySpace is closing in on $1 billion in revenues, Facebook generated less than $300 million in sales last year, reports say.
Indeed, Facebook’s efforts to drum up revenue have led to it repeatedly becoming the target of some of the biggest online privacy protests on the Web. Its most recent fight earlier this month followed Facebook’s attempt to redefine its own rules and assert ownership over anything its members posted on the site. The company has since backed off and is rethinking its policies.
Why hasn’t Facebook benefited from the vaunted “network effect” that makes such services more valuable the more its adds members and connections between them? After all, Facebook is spreading quickly in nearly 100 languages, while MySpace has focused on the United States and five other markets where Web advertising flourishes.
The answer may lie in the origins of the five-year-old site started by then Harvard University student Mark Zuckerberg.
Its appeal at the outset was that it was a place where users could share tidbits of their personal lives with selected friends and acquaintances. This blurred the distinction between a private space and a public one. MySpace is more explicitly a public place where friends hang out in the equivalent of a cafe or a club and the aim is often to meet new people. Most of all, MySpace is a place to share music with other fans.
I don’t do either and don’t know if I’m missing something.
WHAT “AXE” DOES THIS GUY HAVE TO GRIND WITH SKYPE…DON’T KNOCK PHENOMENAL SUCCESS..SKYPE’s A BEAUTIFUL THING!!!!
WHATS MORE IS THE PHONE COMPANIES HAVE HAD YEARS OF
“RIP OFF” RATES…SKYPE SIMPLY VERIFIED THEIR EXCESSES!!