eBay and Skype: The Classifieds Factor

Some analysts haven’t figured out Skype’s value to eBay. But I see it fairly plainly: classifieds. The classifieds industry appears to be on the verge of a freefall, due to services such as Craig’s List that don’t charge But with Skype in the picture, I see lots of “value add” that buyers and sellers would happily pay for.

Using Skype, which integrates Voice over IP phone and instant messaging, the unadorned text ads may still run free. But Skype potentially adds a lot of value by directly connecting sellers to buyers via Pay-Per-Call, while sending them more in-depth information at the same time.

The integration of Skype also helps close the loop in the transaction cycle. Currently, eBay transmits five million emails a day between its buyers and sellers, mostly for expensive goods like real estate or autos that are “involved” and “complex.” Skype’s instant messaging, voice mail and voice call services are likely to increase the volume of such communications, and also make them more universal.

A friend of mine who regularly seeks out music CDs on eBay for $10-12, for instance, will surely welcome the opportunity to “Skype” sellers to find out whether they are record company originals, or merely homemade copies. But he might not bother to wait for a response to an email for such a casual purchase.

New Kind of Cash

Looking ahead, Skype might be used to complete transactions themselves. Currently, eBay users need to key in their PayPal account, or some other form of payment. In the future, buyers might be able to push a transaction button on their phones to automatically debit such payments.

This would be a real boost for mobile transactions, in particular – a strongpoint in Europe and Asia, where the majority of Skype’s 54 million reported customers are located.

The idea to use a phone account for commerce, of course, isn’t exactly new. The audiotex industry has been using phone accounts to debit callers for services from campground reservations to sex calls since the late 1980s. But a comprehensive buyer-seller service, from a trusted source that takes a smaller bite on the transaction end, would be a more attractive solution.

Rejuvenating Impact on Classifieds

Up to now, eBay has vaguely threatened the classified advertising industry, which is dominated by newspapers. Sure, eBay purchased a 25 percent share in Craig’s List. But so far, it has left the touchy mavericks at Craig’s List alone. It has also quietly introduced Kijiji, a Craig’s List-like service in 50 cities in Japan, Germany, Canada, Italy, China and France. eBay has also made a hodge-podge of opportunistic acquisitions, including Rent.com, an apartment rental site in the U.S.; Marketplaats a classifieds portal in the Netherlands; and Mobile.de, a used auto site in Germany.

The addition of Skype, however, potentially transforms eBay from a well-endowed “me too” act in classifieds to a genuine innovator. It may also do the same in Yellow Pages, although eBay might be gunning to become a valued partner for Yellow Pages, rather than a competitor. In fact, eBay itself drew attention to this possibility during its analyst presentation, inserting Skype Pay-Per-Call capabilities in a mockup of an Internet Yellow Pages service for Bakersfield, Calif.

History Repeats Itself?

In thinking about eBay and Skype, people may be reminded of AOL’s purchase of the ICQ instant messaging service in 1997, which kept the company out of competitor’s hands, but was never really successfully monetized.

My sense is that Skype will be better absorbed by eBay, and will have immediate, if limited, value in the advanced mobile markets overseas. Down the road a couple of years, Skype might be the magic ingredient that really differentiates eBay classifieds, which are being counted on to be eBay’s next big growth area. Indeed, it might emerge as the linchpin of a Pay-Per-Call revenue model that makes sense to everybody in a suddenly free, Craig-driven environment that has otherwise gone haywire.

I don’t know about Skype’s $2.6 billion+ valuation, or whether Skype’s set of services are easily duplicable. To be sure, Google, Yahoo and MSN each have their own VoIP services lined up, although none of those have the audience, brand recognition or ease-of-use of Skype. I also don’t know whether Skype’s largely international user base can be successfully leveraged by eBay. I also don’t know whether Skype is a moneymaker on its own. Its primary business today, after all, is charging 2 cents a minute to users when they call non-Skype users, and renting out voice mail boxes.

But casting aside the unknowns above, it is easy to see that Skype could lead a major rejuvenation in classifieds. If eBay is successful in integrating Skype into its core offerings, eBay could find itself in the driver’s seat. At the very least, eBay’s acquisition will force the incumbents in classifieds to take their own VoIP solutions very seriously.

2 thoughts on “eBay and Skype: The Classifieds Factor

  1. Good point about the analogy of Skype and ICQ before. I’ve been a Skype subscriber for a long time and it has been helpful in making calls anywhere. It would also help lessen bogus sellers and buyers at the same time.

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