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Summary:

Not quite sure what to make of Jajah’s announcement today of free in-country, ad-supported calls in parts of Europe. As Jeff Pulver notes, Jajah is not the first to try this twist of marketing-supported telephony, but the world is still waiting for the first one that […]

Not quite sure what to make of Jajah’s announcement today of free in-country, ad-supported calls in parts of Europe. As Jeff Pulver notes, Jajah is not the first to try this twist of marketing-supported telephony, but the world is still waiting for the first one that is a runaway success.

Our pal Alec Saunders says that Jajah’s turn to ad-supported calling (apparenty diverging from its previous plan to focus on upselling conference calls, etc.) “has a plausible revenue model,” but put me in the skeptics’ corner on this one.

The good thing about the VoIP-based minute-stealers (as Om calls them) is that they help shatter the old telecom per-minute, long-distance billing model. And maybe by leveraging partners via a “powered by Jajah” strategy, the company can sign up new users it wouldn’t have reached before.

The skeptic question is — how many of those users will turn to ad-supported calls as their primary mode of communication? And even if that starts happening, how long before big telcos strike back with their own low-cost, no-cost plans? My problem with zero-cost telephony is that it eventually becomes a war of attrition, and those usually go to the outfits who can withstand a revenue drought. Skype may have such a war chest now, but others like Jajah and Rebtel face a more uncertain future.

Erick Schonfeld has done the math over on Business 2.0 blogs, and it isn’t pretty.

The economics, however, are not exactly clear. Today, Jajah charges 2.5 cents/minute for a call between Germany and Austria or within those countries. The free ad-supported calls are only national, and not international at this point, so Jajah might be eliminating costly cross-country termination and connection fees. Scharf gave me a scenario of two banner ads per call with a $2 CPM (i.e., $2 per thousand ad impressions). That would mean he is getting only about half-a-cent per call in advertising revenues ($4/1000 = $0.004)—and even less if he has to split those ad dollars with the media companies he is partnering with to power free phone calls on their sites.

  1. Hi Om. Just left this note at Ericks post:
    At the first sight the maths look disappointing.
    But I would just refresh the advertising every 30 seconds or so. That turns the approach into a money machine. Would be a suprise if this thinking is new to the Jajah guys …

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  2. That service makes no sense at all. Calling a national fixed line from a fixed line is almost free anyway. How many people want to be bothered with ads to save single euro cents?

    People in general call from mobile phones to mobile phones. And it costs 20-40 times more to deliver a call to a mobile phone. So the ad supported model won’t work to mobiles.

    But its not my money, so give it a shot.

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  3. Jajah hopes to provide this service in parts of the world where services like voxbone are available for them. Where they pay nothing per minute but only a fixed amount for a certain amount of carriage capacity . In that case they can retain 100% of the ad revenue and hence be profitable .

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  4. Jajah isn’t sustainable or a VC ‘success’ as a standalone business – at least not until they wash out the founders.

    As a service it’d be useful for connecting parties that want to be anonymous or who wouldn’t know each others numbers or have a need to – porn, dating sites, eBay, shopping sites and engines, etc. Problem is, that’s worth $30M done really well and quickly sold off, but not $100M+.

    Who needs another download, another plug-in, or another address book in order to save a few pennies on phone calls when they’re already capped or free? Nice to have, but not paradigm shifting. Lot of hype due to Sequioa funding, but even they are only spectacularly right some of the time.

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  5. Thanks for your post about our service Paul.

    International phone calls, either from a fixed or landline, are still pretty expensive, especially in Europe. Jajah was able to knock these costs down to zero (when both users are registered) or close to zero,using either your cell phone or landline. And Jajah Mobile even frees you from having to initiate the call at our website. http://www.jajah.com

    Anyhow, with Jajah there is no headset, no download, no software and no broadband connection needed. You are using your existing phone (landline or mobile) and so is the person you are calling and you can call your friends for free, no matter if they are online or not.

    People are saving money using our communication services around the globe, knocking down their phone bills by 80% and more. Click-to-call solutions and anonymous calls are already available and more is to follow.

    Thanks for you feedback and regards,

    Frederik

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  6. Ingenio (initially Keen.com) has been doing anonymous party-2-party calls since 1999. So what’s new this time around? I notice that Ingenio now also has a click-to-call offering.

    The knocking down of telecom costs is nothing new: SIP, Skype, Vonage, and every other VOIP service that have been around for several years have already done that. Unfortunately, Skype and Vonage can roll over, hit the snooze button and turn this service on when they wake up.

    It’s a tough space to find a good niche – perhaps Ingenio and Skype have both missed a crack that Jajah can slither into.

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  7. Landline calling is almost free anyway, or something around 2cts/min. I’m not bothering to start a webpage for that. What would make a big change for me, is free calling (from and/or to) mobile phones, as most of my friends only have mobiles. But, as that still costs some 15 cents, they can’t do that for free…

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  8. Thanks for your excellent writing. A long time ago, the editor of Phone+ Magazine Gary Kim, write an article called “Near Zero Pricing” where he suggested that inevitably long distance would becomes very very cheap and that it would be the demise of every carriers when price is the single commodity;

    This has taken place, and we are now starting to see VOIP providers (ITSP’s) go out of business as well.

    JahJah and others make for some temporary inconveniences to prototype technologies, but in the long run, JahJah and most others will be out of business.

    Even models that rely upon carrier-compensation like the USF and CABS termination fees will be short lived.

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  9. I found jajah better than others in terms of voice quality. however with an ad-supported model and giving away FREE calls might last for some days but might not be a good long-term proposition. Afterall FREE VOIP companies likes jajah, betamax try to make up from paid services.
    I myself covered many articles mainly on FREE VOIP providers around the globe on my blog at http://voipguides.blogspot.com

    You guys might wanna take a look.

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