MySpace and Skype to Announce Partnership

New York Times ( October 17, 2007)

SAN FRANCISCO, Oct. 16 — In a deal that will connect two of the largest Internet services, MySpace, the social network owned by the News Corporation, will announce on Wednesday that it is teaming up with Skype, the Internet telephone service owned by eBay. In November, MySpace will add the Skype features and brand to its instant-messenger software, which allows MySpace users to conduct text chats with each other. MySpace users who download the newest version of that software will also be able to make free calls from their computers to each other, and to anyone else on the Skype network. “We are interconnecting the world’s largest voice network and the world’s largest video and social network,” said Michael van Swaaij, interim chief executive of Skype. “It feels like an obvious fit.” The companies hope that the combination will accelerate the growth of two already robust online networks. MySpace has 110 million active users around the world, but its members are mostly concentrated in the United States. Skype has 220 million users, most of them outside of this country. There is little overlap, particularly in the United States, where, according to Nielsen NetRatings, only 6.7 percent of Skype users are also users of MySpace’s instant-messenger software. The two companies say they will split the revenue when MySpace members use Skype’s pay features, like voice mail boxes and calling to and from Skype accounts and regular landlines and mobile phones. They have not disclosed the exact ratio of that split. The deal could be beneficial to both companies. MySpace’s instant- messenger software, used by about 25 million people, trails rival services from AOL, Yahoo and Microsoft in popularity and features. Those services already let people make voice calls in addition to conducting text chats. MySpace says the Skype deal helps it catch up. The partnership gives Skype increased exposure at a difficult time. EBay recently acknowledged that it overpaid by more than a billion dollars in its $3.1 billion acquisition of Skype in 2005.