News Corp’s (NWS) social network MySpace will add Ebay’s (EBAY) Skype voice over IP product to the MySpace instant messaging feature. The two companies say that the deal will promote the use of both products. But, of course, both products are free.
Ebay recently wrote down Skype’s assets because the VoIP service brings in very little money. MySpace has a $900 million deal with Google (GOOG) to place advertising on the site, which as 110 million users. But, social network users say that they tend to ignore ads and it is difficult to break them into distinct demographic groups for online advertisers. A look at the News Corp quarterly numbers indicates that MySpace revenue is modest compared to, say, Yahoo! (YHOO)
The new partnership looks like the deals that were made in 1999 and 2000 when new internet companies set up cashless partnerships for PR or traded revenue to build investor interest in their companies.
When the business development people at large internet companies are spending time on arrangements with little revenue upside, something is wrong.
Douglas A. McIntyre