TIME: eBay recently paid at least $2.6 billion for the Internet phone company Skype, and the two words most frequently used to describe the purchase were "head scratching." Was the price excessive?
WHITMAN: We obviously think it was fair. We looked at value in Skype in a number of different ways: the amount we paid on a per-user basis, discounted cash flows, etc. We also looked at what we thought Skype could do on its own and with eBay.
TIME: eBay has about 157 million users worldwide and Skype will soon have 57 million, but the overlap is only about 1%. How will you combine the two communities?
WHITMAN: The other figure I'd lay on there is the 79 million people who have PayPal. Maybe we'll introduce every Skype user to a PayPal account, and vice versa, in a thoughtful way. We want to make sure we don't take away from the destiny of each business, but we'd like one plus one plus one to equal five.
TIME: Are there any other communities that you'd like to collect?
WHITMAN: We're always interested in communities forming on the net. Shopping.com, our shopping comparison site, has a different but equally dynamic community of buyers and sellers. There's also a very strong Craigslist community in every city.
TIME: eBay owns 25% of Craigslist.com. Are there options to acquire more?
WHITMAN: No. We own 25%. When this chunk of stock became available from one of their original partners, we were offered the chance to invest and I said, absolutely. There was no right of first refusal [on future opportunities]. We have a seat on the board, but we don't have any more say in the business than any normal board member would have.
TIME: The New York Times recently started charging about $50 a year for access to certain features on its website, including its op-ed pages. Some people thought that a better idea would have been to charge a few pennies a page and make money on micropayments. Since eBay owns PayPal, are you looking at getting into that business?
WHITMAN: Yes. Our relationship with iTunes demonstrates our ability to process a 99-cent payment without charging 7%. [PayPal does not charge consumers, but on micropayments under three dollars, the merchant, in this case iTunes, pays 5 percent of the total sale plus five cents per transaction.]Micropayments are part of the future of PayPal, and we're incredibly well-positioned to do that because we're used to handling individual, small buyer transactions of ten cents, 20 cents, 30 cents.
TIME: As video on the Web becomes more widespread, do you think eBay's marketplace will allow videos of items for sale instead of just photos?
WHITMAN: We've talked about that. As broadband catches up, I think there will come a day where people have videos of the objects, with perhaps a voice-over description. Actually, that may not be too far off.
TIME: What role will advanced cell phones play in eBay's future?
WHITMAN: I'm optimistic. Particularly in developing markets like China and India and Brazil, those populations may well leapfrog over the PC and laptop with their phones.
TIME: Is there room for more growth in the U.S.?
WHITMAN: Oh yeah. The U.S. is still growing in excess of 20% a year, which most companies would kill for.
TIME: What will take to make growth even more dynamic?
WHITMAN: That's one of the reasons we're excited about Skype. It can create a new way for buyers and sellers to communicate. It actually will help us get into new categories. For example, if you're a web designer, it's hard for you to sell your product on eBay - what you want to do is connect and find out what the buyer wants.
TIME: Is there a market for a used downloaded movie, or other kinds of digital content?
WHITMAN: We've been cautious about that. There is a downloadable music content marketplace on eBay today, but we vet the sellers quite carefully. Over time the intellectual property rights questions will be overcome, and digital content will very much be a part of the eBay marketplace.
TIME: How do you see that happening?WHITMAN: I'm not exactly sure how, but I've been impressed by the ability of technology to solve problems over time.