UPDATE 2-MySpace, Skype to offer calls on social network

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By Michele Gershberg

SAN FRANCISCO, Oct 16 (Reuters) - 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 Inc (EBAY.O: Quote, Profile, Research, Stock Buzz), 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 (NWSa.N: Quote, Profile, Research, Stock Buzz) 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.