A New Business Model For Skype: Turning Phone Numbers On The Web Into Paid Ads

While eBay prepares to unload Skype via a sale or IPO next year, it is busy looking for new ways to make money off its 405 million global users. They already account for an estimated 8 percent of international calls, and many of them are increasingly paying for SkypeOut calls to regular phones. Its revenues last year were $551 million, but it wants to get to $1 billion by 2011. To get there, it might have to start thinking local.

In fact, it has already started trials in Europe and New Zealand with Yellow Pages businesses that turn business phone numbers on the Web into free calls. Mike Boland at the Kelsey Group explains the concept:

The idea is that Skype is used by 405 million global subscribers to make free and cheap calls. Why not position it as a complementary tool to help find and drive calls to local businesses too? This was the same idea behind the launch of SkypeFind (which we covered here), but takes it a step further.

Essentially it broadens this to the larger Web, where most local search activity is already happening. What the idea requires is that phone numbers that show up throughout local search results be hyperlinked to launch a Skype call.

The SkypeFind feature he mentions is basically a local business directory within the Skype client which nobody uses But currently there is a browser plug-in that works with Skype 4.0, the latest version, that turns any phone number on the Web or search result into a clickable Skype call. In order to use the feature, you need to pay the normal SkypeOut rates.

The idea Skype is playing with is to make those calls, or at least some of them, free to consumers. Instead, a Yellow Pages company would buy up the calling minutes in bulk and either offer it as part of the fees it charges businesses to list their numbers in its directory or charge the businesses on a click-to-call basis. How they decide to price it will probably vary depending on the type of businesses being called. Lawyers and plumbers, for instance, would be more likely to pay for phone leads on a click-to-call basis. For other businesses, the Skype feature would act more as a retention strategy.

Click-to-call ads have been tried before, but this turns the actual phone number into an ad. Click it, and you call the business you were looking for, and the call is paid for by either the business or the Yellow Pages partner. The $32 billion Yellow Pages industry is quickly moving to the Web and Skype has the ability to light up any business phone number found on the Web.

Presumably, the Yellow Pages partners would only pay for numbers in their directories, so Skype would have to come up with a way to indicate which calls are free and which ones are not. And there is no reason to limit this to local calls. As people continue to use Skype increasingly for free long distance calls, making money from local calls might be the key to getting to that $1 billion in revenues.