<![CDATA[Om Malik’s Broadband Blog » SkypeBay done for $4.1 Billion.:
So the deed is done – $4.1 billion. EBay will pay $1.3 billion in cash and $1.3 billion in stock for the online communications company. It will make a further payout of up to $1.5 billion if certain financial targets are met, Reuters reports. Charlie Sierra calculates: “So at 50m downloads, that’s $52/download, or $26 In CASH per download.” Downloads, are the new “Pageviews” it seems!
Big, big deal, though it doesn’t change EBay’s core business the way some are arguing. Like PayPal, which focuses on a financial transaction, Skype will focus on a voice interaction that a.) supports EBay’s core business (you’ll be able to call a vendor from within a product listing), and b.) the Skype service will be sold to EBay’s vast audience as a standalone voice service, as well. Collectively, it is a big win for both sides.
Now, is EBay paying on a cost-per-download basis? Maybe for purposes of the pay-out portion of the deal (which confirms the notion that the test the companies agreed to is “We’ll see if we can get the EBay user base to install this”). The real basis of the deal, however, is some multiple of SkypeOut revenue that, if I had to guess, rivals the cost-per-subscriber fees paid by cable companies during the acquisition binge of the late 1990s, in the range of 150 to 200 times the monthly revenue of the business. When you’re betting on growth, that’s reasonable. And there’s definitely a lot of growth to be won in this market—EBay’s customer/seller base is probably the best platform for achieving that growth.
UPDATE: Based on James Enck’s comments, EBay is paying about 68 times current revenue for Skype at $4.1 billion. I don’t think that’s an absurd price, given that next year’s $200 billion in revenue represents growth of 333 percent over the next year. Congrats to Lenn Pryor on a well-time migration to Skype.
And more UPDATES: The Financial Times reports how EBay will offer a cost-per-call marketing service:
The most radical addition however would be “pay-per-call” services. This is a similar concept to pay-per-click, the advertising business that provides most of Google’s revenues. Google and other large search providers allow advertisers to place a link alongside search results for particular terms – for example, online coffee merchants can pay for an advertisement alongside the results that appear every time a web user searches for “coffee beans”.
Advertisers pay a fee for each time a web user clicks on their advertisement, and the “price-per-click” is determined on an ad-hoc basis, depending on the popularity of the keyword that the advertisement is connected to.
Ebay is proposing to a similar model, but with Skype phone calls instead of clicks.
Ms Whitman said advertisers in some industries would pay between $2 and $12 per telephone call. There are 1.9bn searches carried out on Ebay’s auction network every day, she said.
Technorati Tags: media economics, Skype