When will Skype’s Users Stop Being Skype’s Customers?

“If you are not paying for it,
    you’re not the customer;
      you’re the product
         being sold.”

posted on Metafilter’s
User-driven discontent” thread
by blue_beetle
at 1:41 PM on August 26, 2010

Facebook’s customers are its advertisers, making Facebook’s users the product sold to advertisers. This creates a tension between the needs of advertisers and the needs of users. Facebook’s success has been walking that line closely and carefully, minimizing the perception of intrusion while aggressively pimping their users to merchants.

Skype’s users paid for SkypeOut and SkypeIn from the start, accounting for 90% of revenue, so Skype’s bottom-line interests were aligned with its users.

Dave Davies record cover

Skype’s management slowly eroded that alignment.

Employers. Skype Manager and the Skype for Business desktop client for Windows give your company control over Skype credits, privacy (your manager can see all the SkypeOut calls you make), specific features (your manager can turn off IM or file transfers, for example) and many user preferences (see the Admin guide to Skype).

Advertisers. Skype produces ad revenue through business directory listings, toolbar and web site Click-and-Call ad services, some in-app display ads in the “home” tab, and toolbars. The newest version of Skype for Windows, the 5.3 Beta, now shifts focus away from where you left Skype, pulling you out of context, showing you the latest big advert. You cannot return to your conversations without dismissing the ad, an annoying usability hit. 

Distribution Partners. Skype works closely with phone companies and ISPs to promote Skype to their customers. These deals come with strings.

stuck in bar code

  • The Skype mobile app for Verizon came with an exclusivity, hurting US Skype users who weren’t  on Verizon’s network.
  • Those same versions came CALEA wiretap-ready, making all Skype calls less secure (you can’t know if other Skype users are using a surveillance friendly version).
  • Skype’s TOM-Skype partnership in China similarly walked back Skype’s original spyware-free premise in exchange for opening up their largest market; TOM-Skype is free to package Skype software with spyware and malware as ordered/suggested by Chinese government agencies and common business practice.
  • Skype lowered call quality for its first Verizon Android apps at Verizon’s insistence.
  • Skype’s 3 Skypephone partnership in the UK restricted SkypeOut to international calls, even when domestic SkypeOut rates were cheaper than 3’s.

Developers. Half of eBay’s revenue comes from transactions driven through APIs. Many of Skype’s managers from that era learned that lesson. eBay listens closely to their developer channel, sometimes wrestling over fees, access to customer data, and terms. As Skype’s platform products (embedded, cloud, mobile) reach programmers, Skype will be tempted to meter access, charging for use of its APIs. We haven’t seen Skype choose between developer and user interests. Yet. 

Microsoft. This is prospective: Ballmer and Bates committed to building Skype into a range of Microsoft products. Will the Xbox division be Skype’s customer? Or the Xbox players?  Live Messenger’s advertisers or Messenger’s users? Bing’s advertisers or Bing’s users?

Skype may never again report its revenue by source, a strong alignment signal. So watch Skype’s behavior. Does Skype serve you over all other others? Or does Skype deserve the high customer scrutiny and alternatives Facebook inspires?

photos cc-by: evan moss, elizabeth stark.

About Phil Wolff

Phil Wolff is strategy director of PDEC, the Personal Data Ecosystem Consortium, a Small Data NGO. Wolff is a director of the DataPortability Project and co-author of the project's model Portability Policy. He's had management, technology, and marketing roles at Adecco SA, LSI Logic, Bechtel National, Wang Laboratories, Compaq Computer, the City of Long Beach, the State of California, and the U.S. Navy Supply Systems Command. On LinkedIn, ORCID 0000-0002-7815-4750, Quora top 250 of 2012. He holds the PDQ Bach Inauthentic Identity Fellowship at the University of Southern North Dakota at Hoople. Phil lives in Adams Point, Oakland, California.