Skype's New Revenue Model

Skype just announced a new kind of advertising-based service. The service is aimed at giving Skype a portion of the $31billion yellow page market.

With Skype's business funded click-to-call,  Skype users will find it easier and free to call local businesses . A call that is funded by a business will be highlighted with a blue "Free Call" button that appears anywhere online where a phone number is displayed, including search engines, Internet yellow pages or local search sites. Calls that are not funded by a business can still be connected via Skype, but at a low cost charged to the Skype user.

The partnership between Skype and European Directories will offer consumers free calls to up to 700,000 businesses across Europe.  I think a similar arrangement within US is questianble given Skype's smaller footprint within the US.

"Working with European Directories to drive calls to its local advertisers is a natural extension, and a revenue diversification move that taps into the $31 billion global Yellow Pages market." said Michael Boland, Analyst and Program Director for BIA/Kelsey in a statement.

The impact of the service has some industry watchers keeping an eye on Skype. "Though I don't see individuals downloading skype just for this app, still with its massive install base it should be able to generate some buzz and have an advantage on other players, but I still wonder how much it will contribute to Skype's bottom line." writes Ari Rabban, CEO of phone.com in an e-mail.

Another question will be how Skype handles calls form users located in other countries permanently or as they travel. "Of course the rates are very low but advertisers will still need to agree to pay for the minutes," he adds.