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?