Calling on MySpace: Is Anyone Listening?

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In November, eBay-owned Skype initiated a strategic partnership with the social networking site MySpace, wherein MySpace would feature and brand Skype services across its instant messenger client. This deployment came one month after eBay conceded it would take a $900 million impairment write-down, acknowledging that it overpaid when it bought the Voice over Internet Protocol (VoIP) carrier for $2.6 billion in October 2005. But while eBay’s decision to purchase Skype baffled both analysts and bloggers, the MySpace-Skype federation has been met with cautious optimism.

eBay’s initial idea for Skype was to integrate voice calls into its auctioning rounds. Because Skype is largely free, eBay wasn’t able to profit from user interest. Additionally, users were happy with eBay’s traditional system of email communication, so there was little uptake of Skype’s service.

But analysts see greater opportunity in the integration of voice calling with social networking sites. Certainly the potential to tap a huge user base exists. According to Internet usage tracking firm Hitwise, MySpace garners 4.92 percent of all Internet visits. The rapidly growing Facebook accounts for 1 percent. And Nielsen Online reports that MySpace’s unique users increased 24 percent between September 2006 and September 2007.

"From Skype’s strategic point of view, the more they’re able to woo people into making calls online, the better the opportunities for revenue in the future. It’s a question of encouraging a cultural shift," says Datamonitor analyst Ri Pierce-Grove.

And the Skype-MySpace service, branded "MySpace IM with Skype," takes a proactive approach in overseeing that watershed by harnessing the enormous number of people who use social networking sites as the primary means of staying in touch with friends.

"There’s roughly 110 million active users on the MySpace side and over 246 million registered users on the Skype side," says Jin Kim, Skype’s senior manager of business development. "So this partnership in essence creates the world’s largest online voice-connected community."

For Skype, the immediate benefit lies in revenue sharing from add-on features, such as PC-to-phone calling, phone-to-PC calling, or call forwarding, for which the service charges.

While voice calling provides a form of correspondence alien to social networking sites, which thrive on asynchronous communication, Pierce-Grove doesn’t believe this will be problematic.  After all, MySpace isn’t implementing Skype at the expense of its other communications functions. The Skype service does allow users to make a spur-of-the-moment call, a feature Pierce-Grove thinks is analogous to Amazon’s one-click buying option.

Though it’s still too early to know what effect this partnership will have on either company’s user base, a potential problem could arise in that, according to Nielsen Online data, only 6.7 percent of Skype users also use MySpace IM, which lags in popularity behind other instant messenger clients like AOL and MSN. Additionally, only 2.6 percent of MySpace users access Skype. But Kim doesn’t see this as a detriment. "We know there isn’t a lot of overlap," he says, "which is great because we can now take advantage of the community for growth."

But will MySpace IM with Skype entice new users to either MySpace or Skype? Pierce-Grove sees it as "a good move in terms of increasing loyalty," but concedes that "it’s very unlikely that if you were engaged in another social networking site, this would woo you over."

A report issued by Parks Associates found that 40 percent of MySpace users also have a Friendster or Facebook account. In recent months, MySpace has added offerings like video or music sharing to keep its base from migrating to Facebook (which itself features widgets, such as online Scrabble, to retain and attract users). It’s likely that, for MySpace, voice calling will be a weapon in an arsenal rather than a killer app.

The Weigh In
Would you use Skype on MySpace?

>> "If I wanted to chat with people, I’d use AIM, MSN, and Google, where all my contacts already are. Who needs yet another program?" — David Harrington, 28, arts researcher

>> "Skype is a good service, but it is not ubiquitous enough for me to use it exclusively with MySpace IM." — Eric Douglas, 23, teacher

>> "I don’t think people want to talk on those chat services. The point when you are on there is to multitask, so you can talk to people at the same time you are checking your email." — Bridget Chen, 26, health center employee

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