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October 23, 2006

Jingle Networks Has Now Raised Over $60 million

Michael Arrington

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Like Skype, the main attraction of Jingle Networks is to destroy a fat existing market. Skype gave users a way to bypass costly telephone calls by routing them over the internet for free. Jingle Networks, through its 1-800-Free-411 service, is helping to destroy the $8 billion U.S. 411 market by making those calls free as well.

So while carriers continue to charge an average of $1.25 for each 411 call, Jingle Networks is providing the same service for free and adding a fifteen second advertisement after you request a phone number but before you are given the results. Consumers don’t seem to mind the advertising - less than a year after launch they claimed to have taken 3% of the total U.S. market for 411 calls, with 450,000 calls per day (out of 6 billion total yearly 411 calls).

Today Jingle Networks announced a fourth round of financing - $30 million from Goldman Sachs and Hearst Corporation, at a valuation of around $150 million. This comes after a $26 million round in April 2006, a $5 million round in December 2005 and a small angel round of financing last year.

I spoke to CEO George Garrick and early investor Josh Kopelman today about the financing and the Free-411 business in general. Listen to the podcast at TalkCrunch.

Advertisers include 1-800-flowers, 1-800-Mattress, 1-800-Contacts, CBS, Discount Tire, ID Media, Ingenio, OMD, Roto Rooter, The South Beach Diet, Vonage and Zagat Survey. In many cases users are given the opportunity to go to an advertiser instead of their requested phone number. For example, if you request a number for a local florist, you may be asked if you’d rather try 1-800-flowers with a discount coupon instead.

Ultimately 411 is just another way for people to search for information, and Google will clearly be eyeing this space as the company matures.

  • Sphere It

This entry was posted on Monday, October 23rd, 2006 at 12:53 pm and is filed under Company & Product Profiles. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.

Trackbacks/Pings (Trackback URL)

  1. 365questions.org » Blog Archive » A new business model for telephone enquiries ?

    October 23rd, 2006 at 1:56 pm

  2. Mapping The Web » Disruptive Jingle

    October 23rd, 2006 at 2:13 pm

  3. Free 411 Gets Some VC Love

    October 23rd, 2006 at 2:36 pm

  4. TalkCrunch » Blog Archive » Interview With Jingle CEO and Venture Capitalist

    October 23rd, 2006 at 10:17 pm

  5. Dial 411 for $60 million « Yoick - Hightechwire

    October 24th, 2006 at 12:39 am

  6. FIRE Finance

    November 6th, 2006 at 11:12 am

  7. Techcrunch » Blog Archive » Jingle’s Free 411 Service Hits 100 Million calls

    November 30th, 2006 at 4:32 pm

  8. TechCrunch en français » Comment vraiment réussir sur le marché des renseignements téléphoniques

    December 1st, 2006 at 9:08 pm

  9. RazorSharp iPods & Raw Gadgets » Blog Archive » 1-800-Free-411 Has 6% Market Share of U.S. 411 Market

    March 17th, 2007 at 12:24 pm

  10. Just a random blog !

    June 15th, 2007 at 9:35 am

  11. Jingle Awarded Patent For Advertising-Supported 411 Calls : Forecast-Blog

    June 16th, 2007 at 3:09 am

Comments

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  1. PK

    October 23rd, 2006 at 1:02 pm

    Sounds like we are getting very close to the giddy days of Web 1.0. We will see many more of these mega VC investment stories in companies that have a very weak business model.

  2. Michael Arrington

    October 23rd, 2006 at 1:05 pm

    This one has a kick ass business model, though.

  3. CenterVox

    October 23rd, 2006 at 1:25 pm

    I have used this free service many times and really don’t mind the pre-roll ads.

  4. Erik Schwartz

    October 23rd, 2006 at 1:43 pm

    With $60 million VC money in, they better have a kick ass business model. You’re into the area of needing a billion dollar exit.

    Personally I think that directory assitance is a dying industry. Imagine them like the company that has just designed the killer audio cassette player. Would have been great 25 years ago but there’s not a lot of point in disrupting that market now.

  5. Isoken

    October 23rd, 2006 at 1:48 pm

    I have said it before http://www.411sms.com tops the cake in this sector
    Endgaget even blogged about the free hot spot locator by 411sms.

  6. Tim Symington

    October 23rd, 2006 at 1:54 pm

    With data services becoming more and more prevalent in the mobile market, swift and free access to yellow page information will cause demand for voice 411 services to shrink - whether its free or charged.

    Not to say there isn’t a huge market for this now, but I personally don’t like entering an industry that is destined to be destroyed.

  7. vik

    October 23rd, 2006 at 2:17 pm

    This sounds like the Netzero for 411. Remember those good old days when you were able to get free Internet access with Netzero? Netzero’s users didn’t mind those ads either because they learned to ignore them completely.

    I’m certain that this company’s users will also learn to ignore those ads and soon, the advertisers will realize that they’re wasting their ad money on this service. Then slowly, just like Netzero, this company will start charging for its services.

    LOL, I’m so negative :-)

  8. mesattack

    October 23rd, 2006 at 2:40 pm

    I agree with Mike here…this is a solid business model. The valuation could well be in line. I have been using it and convincing friends & family to take it for a spin. It’s an easy story to tell, simple to adopt, and incredibly disruptive even if that is a buzzword.

    Mark
    http://www.markseremet.com

  9. Patricia

    October 23rd, 2006 at 2:46 pm

    If the ads are short and quick, I’d probably be willing to use something like this. But I don’t mind paying for convenience, either.

    I like the perspective about Google. that’s why i like to read techcrunch

  10. BowRiverBrown

    October 23rd, 2006 at 2:49 pm

    These guys are reaching a huge mobile audience which opens up a lot of opportunity for SMS and WAP. Their voice recognition system is also very good. It’s rare that I get rolled to a live operator b/c their IVR is excellent.

  11. tark

    October 23rd, 2006 at 3:02 pm

    I don’t see this market shrinking at all. Not everyone likes carrying around PDAs, and not everyone is going to open up their laptops and connect to wi-fi when all they need is a phone number; but everyone does have a cell phone — none of these facts will change anytime soon. 1800free411 is an easy name to remember, and it speaks for itself. That kind of simplicity makes it a winner. We’ve all been saturated with ads for so long now that nobody minds hearing one if it means the service is free. And giving callers the option of choosing the advertiser instead of the requested phone number — you can’t do that with traditional advertising, which makes Jingle’s service all the better.

  12. JoshP.

    October 23rd, 2006 at 3:13 pm

    This is great news for Jingle. I am happy for them, I hope they stay in game, I use them all the time and I agree with CenterVox, no worries on listening to an ad when you get something for free.

  13. Jim

    October 23rd, 2006 at 3:15 pm

    I am surprised no one has mentioned Google Maps / Local installed on a blackberry / PDA. It not only looks up numbers but gives you directions. I have not used directory assistance once since installing it. I agree that not many know how to install it or have a compatible phone / service but you got to think that 5 years down the road nearly every phone will be able to use that type of service.

  14. Todd

    October 23rd, 2006 at 3:19 pm

    This one is a no-brainer. Cellphone users avoid DA like the plague…why? Because after dropping $100+ for a phone, $75/month for access and another $25 for enhanced services, they loath getting dollared and cents-ed for for a basic human right–free directory service. Data services or not, DA is a long long way from obsolescence. It’s too easy compared to the alternatives, most of which people use because…why? DA WAS ridiculously expensive.
    I’ve avoided using DA for almost two years. Once I learned about Free411, I started using it all the time. My bet…as the cell market goes, so goes Free411. And the cell market is going nowhere but up.

  15. nemrut

    October 23rd, 2006 at 3:35 pm

    This thing will be huge. I often dial 411 for (dir ass) and 511(rd conditions) while on the road. Although calls to the latter are free, the frequency of the former amounts to a nice chunck of change at the end of the month.

    As more and more cares come equipped with bluetooth/voice capability, this svc should be a hit.

  16. Michael Kayton

    October 23rd, 2006 at 4:04 pm

    Michael,

    I am not convinced. Their business model comes aparts under a fundamental view of searching behavior.

    The key point: Whereas a Google searcher may query at a high level (e.g., Hipster Bars Williamsburg, College Bars Marina, etc.), a 411 user knows exactly what he is looking for. Thus, the web searcher is much more amenable to accepting advertised suggestions than is a 411 caller. The latter is merely looking for the missing link to contact something they already really want - they’re not likely to be swayed by advertising.

    Also, having used the service many times, I can speak for the sad state of their advertising at the present time. Over a period of two weeks, every call I made searching for nightclubs, hookah bars, clothing stores, restaurants, etc., generated an advert. for the South Beach Diet. The present lack of relevant ads is severe. However, this will surely change as they expand their local base of advertisers. That being said, if their long-term success requires callers actually opting for the advertisment, I don’t think it’s a sure thing just yet.

    - Mike

  17. Erik Schwartz

    October 23rd, 2006 at 4:35 pm

    http://www.google.com/intl/en_us/mobile/sms/

    Is what will kill this.

    There are some things the voice channel is good for, directory assistance is not one of those things.

    SMS based services will kill 411 for users on the go. http://www.google.com has already killed 411 from home.

  18. johnnyjuan

    October 23rd, 2006 at 4:45 pm

    I definitely hope this works. the massive cell bill I pay should be enough to cover the 411 costs of the eastern sea board.

    one thing to add…carriers will probably up their other service rates to recoup.

    http://surprisebag.blogspot.com/

  19. Pusspaw

    October 23rd, 2006 at 5:04 pm

    great idea….success will come down to ad effectivity. will advertisers pay $1 per lead or more if there is less than 1% ‘click-thru’…..sure if they are mortgage leads for re-fi folk but thats pretty pricey for a restaurant lead…!

  20. DavidEzra

    October 23rd, 2006 at 5:22 pm

    First, I agree with Michael K.

    Second, I doubt many people will mind the 15 second ad (which they’ll simply ignore) if it means they’ll save a buck (which is equivalent to ~ $300 an hour).

    Finally, I wonder how solid 1-800-FREE-411’s future prospects appear? In other words … granted I cannot do a “Google Search” - or equivalent - on my cell phone today. However, do you really believe that you won’t be able to do a “Google Search” on your cell phone 5 years from now? (Will technology not evolve to the point where that is possible over the next several years?)

    I definitely would not invest significant capital in a company who’s business model was based on “Pay Phones” (as they have been suplanted by cell phones). I wonder if 1-800-FREE-411’s future trajectory will follow the same course (if it is likewise suplanted by a “Google Search” in the future)?

  21. Michael Kayton

    October 23rd, 2006 at 5:51 pm

    David,

    I echo-your-echo of my doubts regarding this model (as I perceive it.)

    Yet, I think you are being to cautious - why can’t I do a Google search from my cell phone today? … … Of course I can; and much more than a Google search. So I think the end of assisted directory services is here.

    Even if it is a matter of typed vs. spoken searching, I doubt 1800Free411 will have an advantage. I am confident that at somepoint we’ll be able to search Google (and others) by speaking our query. Moreover, a company like Google (especially if it were to ever acquire a company like Yelp!)
    is better positioned to deliver local search and advertising.

    On the topic of locality: Many of 1800Free411’s advertisers are national. At the same time, I’d guess that the majority of 411 callers are seeking within their locale. Even if those national advertisers do have local branches/franchises, the value proposition to the consumer is weak without a dense and relevant base of local advertisers.

    - Mike

  22. BowRiverBrown

    October 23rd, 2006 at 5:54 pm

    Actually, Michael Kayton is correct for the now, but very soon we’ll be seeing “category search” capability. The big carriers are already introducing this notion. So instead of having to know exactly what business you are asking for (ex, John’s Pizza), consumers will call 411 (or 1-800-FREE411) and be able to ask for “a pizza shop near the Empire State building.” Category search like this exist in Canada and account for a significant percentage of DA requests. Introducing category search should help Jingle’s ability to monetize calls b/c advertisers will line up to be the first company to be listed when someone searches for a business in their category. Bidding will likely be the mechanism, similar to a google search when somene types “digital camera” a bunch of advertisers want to be the #1 spot. Ad connection rates will soar with the introduction of category search and Jingle will benefit from that.

  23. David Mackey

    October 23rd, 2006 at 7:23 pm

    This is a great idea. Fifteen second advertising spots in exchange for free info. I’ve added this site to my bookmarks.

  24. Jorge

    October 23rd, 2006 at 9:50 pm

    Have you geeks considered that YOU’RE NOT the MARKET for this service?

    Normal people don’t care about Google (yes, it’s true!), or browsing on their phones to look stuff up.

    They want directoary assistance, and if they can save a buck, they will, since all those 411 calls can really add up.

  25. Adam

    October 23rd, 2006 at 10:50 pm

    1-800-411-SAVE is doing the exact same thing, but apparently they don’t need $60 MM to do it. What are the differences between these two? 411 Save has lower costs? Better targeting? Fewer giant exec salaries to pay?

  26. pwb

    October 23rd, 2006 at 11:31 pm

    It may be a good model but by taking that kind of money it will be forced to do things that will leave the market open to competitors.

  27. bunni

    October 24th, 2006 at 12:34 am

    You misspelled 1-800-MATTRES, leave off the last S for Savings.

  28. BlueCheese2

    October 24th, 2006 at 3:34 pm

    Well if you ask me if a company has people backing them with 60 mill, then it is obvious who is going to have the better service 1-800-FREE-411. I think FREE411 is going to wash the floor with the rest of competition. I think this FREE411 is a company to watch, cause it is only going to get better and better for us consumers who are tired of paying for DA calls.

  29. Alec Andronikov (Founder, inFreeDA - 1800-411-METRO)

    October 24th, 2006 at 7:34 pm

    You would be surprised at the real economics of the free 411 business. Think intrinsically about the nature of the business: diverting a customer looking for a business from getting what he/she wants to something that is about 20-40% relevant; rarely ever even close to 90% relevancy. At the end of the day, the conversion rates is what makes this business very challenging to monetize.

  30. M Alvanez

    October 25th, 2006 at 1:35 am

    I believe the key to succeeding like Alec mentioned is having a service that provides highly relevant results. People are very fickle when it comes to searching, once they have had 2 or 3 non-relevant result, we develope a distrust for the service. In this case, the services that provide the most relevant results are google-sms and 411sms (both have advanced search engines as opposed to a simple database/directory search). An article in news.com addressed some other issues:

    http://news.com.com/5208-12-0......p;start=-1

    In my experience, 411sms http://www.411sms.com provides slightly more relevant results than google and is more reliable.

    The real question is are free411 users part of the 411 market share (ie were they converted or are they new users that discovered free411 rather than the regular 411).

    In response to Jorge, you missed a very important detail about “normal people”. Normal people text (a lot). US cellphone users have sent more that 10 billion text messages this year alone. So accessing information by text messaging is not as geekish as you think. Once someone who knows how to text tries it, they’ll love it.

    For example, text coffee (you don’t have to put a zipcode) or costumes
    to US411 (87411) - i.e. 411sms’s access shortcode. I am not sure what their business model is but I know that they are self funded and seem to be doing well.

    Its just great to have all these options as a consumer.

  31. Dreceptive

    October 26th, 2006 at 5:28 pm

    The problem with the 411sms.com service is you get charged for both an outgoing and inbound sms. With free411 http://www.free411.com, I’m not charged as long as I don’t go over my minutes. Given that the whole issue is me being p)(*#$ off by being charged outrageous fees for 411 calls, the free 411 is just that, free. Yeah, 20 cents ain’t much, but it’s the principle of the matter.

  32. M Alvanez

    October 26th, 2006 at 8:33 pm

    411sms does not charge for their service. Like Google SMS, Yahoo SMS - 411sms although freely provided, you could get charged your regular text messaging rates from your provider. For most people with unlimited or a large number of text messages, these services are not a problem. However, like Dreceptive most people may be price sensitive, in which case calling free411 is only free if you call during nights and weekend (assuming this is free for you). Although free411 is a 800 number, its not free if you call from your phone. The cellphone carriers charge you for the call or count it against your minutes. In which case you charge 40-60cents/minute by your carrier. Dreceptive will not only still be paying for 411 but also paying to listen to an ad.

    I appreciate Dreceptive concerns as is the concerns for most people. What’s the cheapest way to get information on your cellphone. If you have free minutes (like nights and weekend) using free411 works fine if you search only during nights and weekend. If you have unlimited or high number of text messages, texting your search to US411[87411] give you free access any time of the day or week.

  33. Dreceptive

    October 26th, 2006 at 9:24 pm

    My last call to free 411 took less than a minute. I generally have 1-200 extra minutes every month. For a user like me, I position it as a free call. I don’t have a sms plan, so it’s going to cost me 20c no matter when I use 411sms, day or night. Free 411 will be free no matter when I use it as long as I’m under my minutes. I won’t pay 20c for them as long as I have free minutes every month. Until I have a SMS plan, which will add a minimum of $10 bucks to my bill every month, I’ll use free411. Until T-mobile wants to give me free txt messaging on nights, weekends, business hours, blue moons, , I’ll use free411, or until the volume of my txt messaging warrants getting a sms plan. All that said, even 20c is a great deal compared to a buck seventy.

  34. NCNC

    October 30th, 2006 at 12:03 pm

    Actually, the best SMS 411 service is Yahoo! Most comprehensive results with an embedded wap link to more detailed info (map, ratings, reviews, etc). text 92466 (Yahoo) to check it out.

  35. CHAMP

    November 18th, 2006 at 4:39 pm

    I believe that the next evolution will be loyalcom. Yellowmouth is a company that provides cashback rebates and tracks word of mouth referrals via D.A. if you want to speak to the founder and invest call 706-951-2671.

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