Monday, September 12, 2005

When Free Equals $2.6 billion

What is the value of something that is primarily free? Some say that people do not value things that are free, either taking them for granted or treating them with skepticism about what "offer" lurks around the corner. Seth Godin has noted that free ebooks such as his twin web tomes "Knock Knock" and "Who's There" spread 40 times faster than ebooks that cost money.

Today, Skype, the (primarily) free computer-to-computer telephone service that has been downloaded more than 164 million times for free, announced that it will be purchased by ebay for $2.6 billion.

Skype provides free software. Skype has done little but word-of-mouth marketing, that is its users have done it for free. Skype has only small revenue streams from additional services layered on top of its core free service. Skype has been purchased for $2.6 billion, or $15.85 for every person in the world that has already downloaded it.

Do you think the founders of Skype feel like they made the right decision to give it away?


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