How Skype and Kazaa changed the net
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BBCNews: Skype makes money because a small fraction of users is buying additional services, such as the capability to call from Skype to the telephone network or vice versa.
Not having to make money from every user is not a new idea, Zennström emphasises.
“It is very similar to companies like Google and other internet companies. When you go and search on Google you don’t pay for that. But sometimes you click on an advert and Google makes money on that.
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This passage outlines an important point about Internet businesses that provide free services; you don’t have to monetise your entire audience to make a profit. If you have an innovative technology that will garner massive mainstream penetration then all you need is a small percentage of your audience to make a purchase to reap significant returns.
I don’t think it’s the death of the free Internet quite yet.
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Indeed this is true. I use a free shopping cart/checkout facility for a couple of my internet enterprises – there is a “premium” service available for $US6 pm that provides added functionality. With 80,000+ users, it does not take too many upgrades to make the system a nice little earner….