Evan Williams poses an interesting question on Twitter:
"Does Skype make less money the more users they get? (Because previous users no longer have to be Skype-Out minutes to talk to them.)"
It seems obvious that there is an issue here. Assuming the current business model (selling in and out minutes for calling non Skype users with an otherwise free service) and ultimate success (no non-Skype telephone users), Skype's revenue would be $0. That hardly seems like a good business plan or goal.
As Evan's question indicates every new Skype user implies a potential loss in revenue from existing users (they will no longer have to buy in our out minutes to converse with the new user). It also has a potential gain in revenue as the new user buys in and out minutes to converse with non Skype users in his/her circle of contacts. At some point the loss in revenue will in fact exceed the gain. I am not sure where that would be. Somebody with vastly superior mathematics skills and business/economics knowledge can probably comment.
Mitigating factors would seem to be:
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Skype could continue to increase minute in/out costs to equalize the revenue (but not to infinity)
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Skype could find another balancing revenue plan (it could supply the world's telephone needs and make money some other way)
It would seem that the current revenue model is a kind of reverse pyramid scheme. There may well be some sort standard explanation for this apparent paradox I am not aware of but Evan's seemingly off-hand twitter raises a whole line of interesting questions.
One of the most interesting questions for me is why is Evan (currently the man behind Twitter) raising/pondering this issue at this time. Is this somehow a clue regarding the conundrum of the still not determined Twitter business model?
