Skype - the Perfect Freemium Model

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The perfect FREEMIUM model

Petra Sanyova
BCi08: 5th semester: e-Marketing

The Freemium Model
The term freemium is a coined term, derived from words ‘free’ and ‘premium’. This term stands for an expanding business model where companies are making profits from selling premium products to a small percentage of their total users. Although the majority of the users is not paying anything for the product, companies still has possibility to be highly profitable, and they usually are. The business where only 5-10% of customers generate revenue could not run profitably under traditional conditions. The change was caused by numerous innovations in the field of digital production, as well as internet distribution. Due to these technological progresses, companies are able to copy and distribute free products to many customers at very low costs. Skype

“Skype is software that enables the world’s conversations.” Millions of people make video or voice calls, send instant messages and share files through this program. The majority of them do so with no charge at all. The only prerequisite, to be able to use this software, is that both parties who would like to communicate need to have the program installed and running. Skype was established in 2003, with its headquarters being in Luxemburg. Its founders Niklas Zennstrom and Janus Friis are still partial owners together with investor group led by Silver Lake (that also owns eBay), the Canada Pension Plan Investment Board and Andreessen Horowitz. Since the establishment – the first version of the program, Skype never stopped to grow and is still introducing new updates, features etc. When it comes to its community, the Skype changed from a small unknown program into a program used daily by millions of people with many features. Lately everybody is impressed with the number of Facebook users; nevertheless in the end of year 2009, Skype had 160 million more registered users than Facebook, which in...
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