Wednesday, October 17, 2007

Skype Scrambles by Linking with MySpace

Skype is hoping that talking via PC becomes as popular as IM chatting via its deal with MySpace. At face value MySpace seems to get the better of the deal that lets MySpace IM users connect via Skype for free. Skype will share in the revenue when MySpace users who call land lines via Skype.

Skype doesn't get any direct financial benefit from the deal, but the added exposure to an audience likely to want to save money on phone calls can't hurt a company that was vastly overvalued.

John Delaney, principal analyst at consulting firm Ovum says: “It seems pretty clear what MySpace gets out of this deal: a competitive differentiator. MySpace is big and still fast-growing; but it has been feeling heat from the more rapid audience growth seen by rival Facebook in recent months.”

“It’s likely, then, that the main benefit that Skype will get from this deal is not money, but brand exposure. Most of MySpace’s users are in the US, and Skype’s brand has not been as strong in that market as it is in Europe.”

Opening up the Skype API to allow it to be integrated with other IM applications is a smart long term bet for getting more users. Remaining in the background as a technology provider could be Skype's path to growth.

By John Gartner at 10:47 AM | Comments (0)

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