Skype's Free Calling Promo Ends, And Now The Hard Work Begins
from the mr-telephone-man-there's-something-wrong-with-my-business-model dept
Earlier this year, Skype announced that all outgoing calls to the US and Canada would be free through the end of 2006 in a big promotional push to try and attract users, but also an inevitable result as the cost of voice service trends towards zero. Skype has now released its pricing for after the promotion ends, and it will charge $30 per year for unlimited US and Canadian calls (with early subscribers paying just $15). Skype's free calling offer didn't seem bound to last indefinitely, and $30 per year for unlimited outgoing calls to North America certainly isn't a bad deal -- but when you're in a price war, it's awfully hard to successfully raise your prices. Will users start paying for the previously free services? While Skype is still cheaper than many other voice services, it also carries a lot of strings, in particular being tied to a computer, unless users shell out for a standalone VoIP handset, which are still pricey and by some accounts don't work very well. While a Skype exec says the company's revenue are back up to the same levels as before the free calling promo, there's still a lot of skepticism about Skype's success as a business. Getting blocked around the world doesn't help, but Skype's basic problem is much more fundamental: will enough people pay for its services?