eBay and Skype: Connectivity over Content

With today’s buzz surround the rumor of eBay’s potential acquisition of Skype, I was struck by what the larger implications of this move would be. One of my readers, Zbigniew Lukasiak, recently brought to my attention an article which I read last weekend. Written by Andrew Odlyzko, “Content is Not King” maintains “that connectivity is more important than content.” Citing historical industry revenue figures, Odlyzko makes the point that “spending on connectivity [point-to-point communications] is much more important for communication services than spending on content can ever be.” Though the article is a little long and somewhat dated, it is a good academic argument supporting this thesis.

If these eBay rumors are indeed true, it represents a significant departure from the company’s current main business lines. And at a speculated multibillion dollar price-tag, the deal would certainly be valued at more than its most recent acquisition, Shopping.com, a “content” site. While the latter deal makes sense to me strategically, the Skype one for me is a stretch. Certainly there are other more strategic content companies out there for eBay to acquire. Given a blank slate to spend suspending strategic considerations, eBay’s possible move re-raises the question – is connectivity worth more than content?

David Beisel

David Beisel is a co-founder and Partner at NextView Ventures. He has been focused on early stage Internet startups his entire career, both as an entrepreneur and venture capitalist. As an investor in the digital media space, David was most recently a Vice President at Venrock and previously a Principal at Masthead Venture Partners. Prior to becoming a venture capitalist, David co-founded Sombasa Media, an e-mail marketing company best known for its flagship product BargainDog. Sombasa was successfully acquired by About.com where David served as Vice President of Marketing. David holds an MBA from the Stanford Graduate School of Business and an AB in Economics, magna cum laude and Phi Beta Kappa, from Duke University. He also founded and leads the Boston Innovators Group, an organization which holds quarterly entrepreneur events drawing a thousand attendees.

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