Skype may be broken in more ways than one, but after taking day or two to reflect, some analysts are back on the eBay bandwagon. JupiterResearch's Patti Freeman Evans told me that "without the Skype writedown, things look pretty good." She said eBay's users are active in the U.S. and abroad. It's all because they've refocused on their core auctions business. How is the rest of the field reacting?
The New England Patriots have no tolerance for cheaters. To prove it, the team sued eBay-owned ticket reseller StubHub, demanding the names of 13,000 season-ticket holders who sold their seats above face value on the site. The Patriots argued that StubHub encourages fans to violate state law and team policies. A judge ruled in the team's favor yesterday. On the bright side, if eBay decides to write off its StubHub purchase, as it did with Skype, there's only $310 million to lose. (Photo by AP)
eBay is experimenting with cutting fees to list items for sale, a marked change from its history of price hikes. "We've not ever really decreased price, and it is possible that by decreasing price, we actually increase the revenues and vibrancy of this market in such a way that this price decrease is self-liquidating," said CEO Meg Whitman. Translation: The competitive threat from Amazon.com and Google is increasing. [AuctionBytes]
WEB 2.0 SUMMIT — Special correspondent Paul Boutin is reporting by text message, which is fitting, since apparently this morning's keynotes from Microsoft's Steve Ballmer and eBay's Meg Whitman can easily be condensed into a Twitter. Or less. Conference organizer Tim O'Reilly, in fact, has all the good lines. O'Reilly to Whitman: "You become what you disrupt." He means, Boutin texts, that eBay is now the old guard waiting to be Napstered. That's also evident in a following exchange, where O'Reilly points out that you can't Skype people by clicking from a Facebook page or using an email address. Whitman's only response is that it's easy to look up people in Skype's directory. Meg, it's time you had a chat with Mark.
Skype is the gift that keeps on taking. Yesterday, the Internet phone service weighed down record revenues from eBay with a massive writeoff. Today's its just annoying customers. The site is reporting technical difficulties with Skype gift certificates that have been issued since Tuesday. [Heartbeat]
Judge David Folsom, in the Eastern District of Texas today, banned the term "patent troll" from his courtroom. In his ruling, the judge wrote that the term "has no probative value and would unduly prejudice the Plaintiff." Does this mean MercExchange will quit abducting princesses? [Patent Troll Tracker]
Last week, eBay announced a few me-too social-network features allowing users to blog and share photos. Too bad it's not 2004. Meanwhile, Facebook is getting more serious about invading eBay's turf. Today, Facebook announced that developers can now write apps to search Facebook's Marketplace classifieds and create listings for users. Expect to see apps that, for a small commission, help users sell their stuff; eBay already has a ton of such apps, and they account for a large share of eBay's listings. Will this make Facebook's marketplace actually useful, though? The site's classifieds are already filled with offers for free iPhones and guides to telling if your man is cheating. If Facebook CEO Mark Zuckerberg can solve the spam problem, perhaps he'll add eBay CEO Meg Whitman to the list of prominent visitors calling on him with offers to buy a stake in his company.
Online auction house eBay wants you to bring the hammer down, as it were, on the people nearest you. A much-needed redesign begins with the introduction of Neighborhoods, its version of a social network. Neighborhoods are really just a mashup of existing features: eBay listings, blogs, eBay Guides, reviews, and updated message boards. These old features are now on one page and contain the social connections people have come to expect from today's websites. They're also more visually appealing to the simple-minded — look, more pictures! While it's a necessary step, retreading the jargon and features of Web 2.0 and social networks already feels stale. And will it really spur more auctions? The "Neighborhoods" moniker reminds me of nothing more than Mr. Rogers — quaint, cuddly, but antiquated. eBay had better hope that other more functional features like an enhanced checkout, bid assistance, visual "window shopping," and a desktop application actually spur new sales. Instead of being my neighbor, try saving me some labor.
Felix Salmon of Portfolio thinks online auction-house eBay should sell Internet telephony service Skype to News Corp. for use in its social network, MySpace. Salmon thinks that a free calling service fits more naturally with MySpace, which is, after all, about communication. While that may be true, eBay will likely have to accept a much lower price than what they originally paid. Even Skype cofounder Niklas Zennstrom is conceding that Skype was overvalued from the beginning. If even a founder is doubtful of Skype's value, though, why should eBay strike a private deal to sell the unit? We say let the marketplace rule. eBay should list Skype on, well, eBay, and auction it off. Just imagine how much profit it will make from the listing fees.
We'd hardly blame Meg Whitman if, after this week, she decided to hang up on the phone business altogether. On Monday eBay said they were taking a $1.4 billion charge related to their acquisition of VOIP startup Skype. On Tuesday, we noted that one of Whitman's major goals in buying Skype, bolstering its auction business in China, where rivals were using click-to-call features on their auctions to close sales, has turned into a complete failure. And then, yesterday, things somehow managed to get worse.
The Freakonomics blog is inviting readers to pose questions for Craigslist founder Craig Newmark and CEO Jim Buckmaster to be asked in an upcoming Q&A. The blog's readers have already started to make pointed suggestions, but none has stepped forward to ask this question: Exactly how much money did Newmark and Buckmaster make when eBay took a stake in their company?
In Kara Swisher's otherwise excellent analysis on AllThingsD of the Skype writeoff's effect on Facebook, there's a string of nonsense that desperately bears correction. Swisher ramblingly suggests that eBay bought Skype for some kind of ability to target ads and premium offerings to the VOIP service's users. Nonsense. It's well-documented that eBay CEO Meg Whitman got the idea on a trip to China, where she saw that users of rival auction sites were using VOIP calls and instant messaging to close sales — a useful feature in a country still getting used to conducting business electronically, rather than face to face. Adding Skype to eBay's auctions in China, she hoped, would boost its market share. No such luck.
When it rains, it pours. And eBay's recent billion-dollar writeoff of Skype, the VOIP startup it bought two years ago, could have an impact on Facebook's negotiations to sell a stake in the social network, at a high valuation, to Microsoft or another large backer. (Both Bernhard Warner and Kara Swisher make this observation, which I'll attribute to great minds thinking alike.) Skype's financial failure is a sobering reminder of the risks of overpaying for a startup. And all of a sudden, Microsoft CEO Steve Ballmer is playing diffident, saying Facebook "might be a fad." But what may be forgotten in this latest skeptical turn to the hype cycle is that underpaying has risks, too.
Niklas Zennstrom, CEO of Skype, and eBay are paying the price for the disastrous acquisition of the Internet telephony service two years ago. The Skype cofounder has stepped down from his CEO role, and eBay will take a $1.4 billion asset-impairment charge — more than half of the $2.5 billion they paid for the company. The silver lining? eBay only has to pay $530 million of a potential $1.7 billion earn-out to Skype investors, since Skype is performing so poorly. With the shareholder payment out of the way, eBay can more easily put Skype on the auction block. And Zennstrom can focus on Joost, his new online-video venture.
Perhaps emboldened by Prince's move to sue YouTube, eBay, and Pirate Bay for encouraging others to violate his copyrights or — more likely — seduced by Web Sheriff who is assisting both artists to create a minor media brouhaha, disco band The Village People has announced its own plans to sue YouTube for a video featuring Hitler and a coterie of prominent Nazis singing "YMCA." Unlike Prince who seems to have given little regard for the Digital Millennium Copyright Act's provision which allows potentially infringing parties an exception until a take down notice has been issued, Web Sheriff and The Village People have sent more than 500 take down notices for the same offending clip.Every time YouTube complies, another user uploads the same video — which may provide The Village People an actual legal argument . On the other hand, while The Village People have every right to be offended by their music being associated with Nazis, doesn't Hitler dancing and singing gay men's disco have as much artistic value as... Well, gay men's disco. It could constitute a fair-use artistic expression in its own right, for all I know.
Purple Rain vs. Chocolate Rain: Prince is suing YouTube for not actively removing illegal copies of his work. His argument is simple and solid: "YouTube ... are clearly able (to) filter porn and pedophile material but appear to choose not to filter out the unauthorized music and film content which is core to their business success." YouTube responded with the usual lines.
Auren Hoffman, networker extraordinaire, hardly flies under the Silicon Valley radar. But his latest venture, Rapleaf, backed by Facebook investor Peter Thiel and launched more than a year ago, has managed to do so. Until recently. So what is Rapleaf, exactly, and why are people buzzing about it now? Hard to say — no, really. Launched as a "trust meter," a way to quantify people's business ethics — like eBay's buyer and seller ratings, but independent of any one site — Rapleaf's value proposition and stated goals have taken several perplexing twists and turns. And as with Hoffman's party patter, Rapleaf's premise is initially alluring, but leaves you feeling slightly nauseated.
