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Wednesday, October 17, 2007
MySpace + Skype

News Corp.'s MySpace will offer members of its popular social network free Internet phone calls with a new feature based on eBay Inc.'s Skype service, the companies announced Tuesday.

Users with a Skype account will be able to click a single button in their MySpace profile to call the computer or telephone of another member, so they could reach people in their network even when they're not online. The service will be available in 20 countries starting in November.

MySpace, the largest social-networking site with 110 million members, will share revenue from the deal with Skype, which allows customers to place long-distance calls using their computers. Skype, the Luxembourg-based division of eBay, has 220 million registered users.

Standard PC-to-PC phone calls will be free, but users must pay for "premium" options such as their own personal phone number, voice mail, call forwarding, and the ability to make calls from a computer to land lines or cell phones.

Executives would not disclose other financial terms of the deal, which comes as both companies strive to expand membership amid growing competition.

One of MySpace's biggest rivals is fast-growing, which has more than 47 million active users ? including at least 200,000 new registrations per day since January.

On Wedn
esday, San Jose-based eBay is expected to report taking a $900 million impairment charge for Skype ? an acknowledgment that the e-commerce leader drastically overvalued the $2.6 billion acquisition, completed in October 2005.

Skype co-founder and CEO Niklas Zennstrom stepped down earlier this month to spend more time working on independent projects. EBay chief strategy officer Michael van Swaaij, formerly vice president for European operations, is acting CEO as the company seeks a replacement.

Skype and MySpace executives began discussing a partnership in June, and within weeks, programmers at both companies began working on the new offering, which will be featured as part of MySpace's instant messenger service. More than 25 million MySpace users have installed the IM program.

Kyle Brinkman, MySpace vice president of product development, said the service won't be another vehicle for unwanted solicitations in MySpace, a unit of Fox Interactive Media Inc.

Users who set their MySpace profile to "private" won't receive a Skype call from someone who is not on their friend list. Users may also selectively add individuals to their Skype personal contact list, and any call can be blocked at any time.

"We went to Skype and said we could incorporate your voice engine into our network we're not just slapping on an instant messenger client that doesn't connect to MySpace," Brinkman said in a phone interview. "It's not just a stand-alone product offering ? it's tightly integrated into the MySpace experience."

In a separate announcement Tuesday, MySpace said it has signed a licensing deal with Sony BMG Music Entertainment to allow the site's users post videos and music from Sony artists on their personal profiles.

The companies said they will split revenue from advertising that will be placed inside videos as well as other ads placed on Sony artist profile pages and sponsorships. "MySpace has always been a promotional vehicle for labels and artists," said Amit Kapur, vice president of business development for MySpace. "We see an opportunity to evolve the platform to involve richer content experience." The deal comes as record labels are searching for ways to increase revenue from Web sites that stream their videos for free. MySpace and similar sites are also looking to avoid lawsuits from labels that aggressively guard their assets. Universal Music Group sued MySpace last year, claiming the Web site illegally encouraged its users to share music and videos online without permission.

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