Skype's Newest Duets

Who's that girl crooning from your PC? Why, Madonna, of course. She is just one of the musical heavyweights you will find on Internet phone-service provider Skype these days. Earlier this month, Skype, owned by eBay since October, partnered with Warner Music in a deal that lets Skype dip into the label's expansive catalog to offer ringtones to its 74 million users, adding to its premium services--which generate most of Skype's revenues. The Material Girl, Green Day and Mike Jones are headlining Skype and Warner's landmark debut into the $1.2 billion ringtone industry. In fact, at $1.50 a pop, ringtones are like "found money" for both parties, says music-industry analyst Charles Golvin of Forrester Research. "Neither has to do a whole lot of work--just license, sit back and count the money rolling in."

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Some of that instant cash may find its way to FON, an ambitious new global wi-fi network. Skype, along with Google and others, will invest $22 million in the Spanish start-up, which plans to have more than 1 million hot spots by 2010. Subscribers will pay less than $2 a day to have guaranteed wireless access wherever they roam. More than 3,000 people have signed up since the beta version launched in November. "It's a dream come true," FON founder Martin Varsavsky says of his new partners, although he demurs on the specific roles Google and Skype will play. Sounds as if he has found his lucky star.