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MySpace, Skype to Offer Calls on Social Network

Reuters
Tuesday, 16 Oct 2007 | 7:07 PM ET

Top social network site MySpace and Web-calling leader Skype will offer MySpace members free Internet phone services in a bid to expand their user bases while fending off rivals, company officials said on Tuesday.

MySpace and Skype will begin allowing MySpace members to make calls starting next month using Skype's Web-based voice-calling service. The calls will be placed through MySpace's existing instant messaging technology.

Members of Skype, a unit of eBay , will be able to link their own MySpace profiles to their existing calling service. The two sides have also hooked up their technology to make it easier for members of only one network join the other.

"We're connecting the two networks to create the world's largest voice-connected online network," Don Albert, Skype's North American general manager, said in an interview. The companies planned to announce the deal officially on Wednesday.

Both Skype and News Corp's MySpace work off the premise that their value to individual users increases as they attract more members and aim to keep people on their networks for as much time as possible.

MySpace faces growing competition from privately held social network Facebook, which quickly rose to a strong second place since it became an open network earlier this year.

It sees extending its communication capabilities as a key competitive strategy.

"A huge chunk of our user base is already using AOL messenger, Yahoo or MSN," said Kyle Brinkman, vice president of product development at MySpace. "We think we do it better when it's integrated (into the MySpace site)."

MySpace has nearly 110 million members worldwide, with about 8 million of them actively using its instant messaging service, while Skype boasts 220 million registered users and is available in 28 languages.

But while Skype began by building a strong base in Europe and then Asia, it seeks stronger growth in its U.S. business. MySpace bolted to prominence in the United States and has since built local-language communities in about 20 countries.

"Another thing that's really exciting for both companies is how we can help each other grow geographically," Albert said.

Skype is under pressure to bolster sales and profits, after eBay said earlier this month it would write down a large chunk of the value of its acquisition of the company and co-founders Niklas Zennstrom and Janus Friis resigned as executives.

Financial terms were not disclosed, but the two sides have agreed to a revenue sharing arrangement.

In addition to the free calling services, MySpace users can choose from paid Skype services that include voicemail and call forwarding to a regular land-line telephone or a cell phone. Skype calls between Web phone users are free, while calls to conventional phones incur small per-minute charges.

MySpace users can ward off unwanted calls by adjusting their profile settings to "private," allowing only people on their "friends list" to contact them through Skype. A window on the computer screen also notifies users of an incoming call and allows them to accept or block the call as they choose.

Ahead of its quarterly results due out on Wednesday, eBay shares rebounded to $39.80 in extended trading from its close of $38.60 on the Nasdaq on Tuesday. News Corp shares rose slightly to $22.34 from its close of $22.24.

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