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In the course of upending the traditional business models of the music and telephone industries, Niklas Zennstöm and Janus Friis have become paper billionaires. The duo that co-founded Kazaa, a file-sharing service that became the source of free music to as many as 370 million people who downloaded its software, now run Skype Technologies SA, which is taking on traditional phone companies by enabling free Internet phone calls.
At the heart of both Kazaa and Skype is an underlying peer-to-peer technology called FastTrack. More important than any technology for driving this new business, however, is Zennström's sheer chutzpah and a vision that sees no geographical borders to confine once-traditional businesses. Zennstöm once told an interviewer that "charging for phone calls is something you did last century." As he and Friis see it, phone companies offer the network but not the service. "Telephony turns out to be a software application," Zennstöm told EE Times.
Skype has 54 million members in more than 200 countries and is adding approximately 150,000 users a
day. The success has not gone unnoticed. Online-auction site eBay agreed to buy Skype in a $2.6 billion deal in September, positioning itself as a powerhouse for next-generation e-commerce.
Many hail the founding duo for disrupting the powers that be in both the music and the telephone industries. Others suggest the two are simply using distributed-computing technology and offshore business practices to undercut legitimate businesses and avoid the legal consequences. Opinions may vary, but a few key facts are beyond dispute: Users have flocked to the free music and phone services, shaking up existing empires and making Zennstöm and Friis wealthy men.
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