Hearst Corp. is listed as a lead investor in Jingle Networks' new US$30 million financing round, along with Goldman Sachs. Jingle is the two-year-old provider of 1-800-FREE411, an ad-supported, "free" directory assistance service. Other investors are repeaters from earlier rounds. They include Comcast Interactive Capital, Liberty Associated Partners, IDG Ventures Boston and First Round Capital. The new round of financing comes on top of earlier rounds, including US$26 million from Liberty Associated.
Free DA is currently something of a black hole. Most of Jingle’s new money will probably need to go to subsidize money-losing calls, while the company perfects its automation and builds up the market, market share and its targeted inventory. Many calls to 1-800-FREE411 today, for instance, do not have any advertising. In addition, many calls revert to live operators, which is good service but highly costly. Earlier this month, the challenge of building the marketplace claimed InFreeDA, the provider of 1-800-411-METRO, one of Jingle's highest-profile competitors.
Hearst's investment suggests that it might seek synergies for free DA beyond the national advertisers that currently dominate the category (and which it reaches via its magazines). Hearst's local properties include Hearst Newspapers and White Directory, an independent Yellow Pages publisher.
Hearst doesn’t have much of a track record in pulling off cross-media "synergies." The acquisition of White in 2003, for instance, might have led to a directory presence in various Hearst newspaper markets, which include Houston, San Francisco, San Antonio and Albany. But the development of such ties has been a non-starter. To this day, there is no apparent relationship between the divisions. Still, the appeal of free DA might provide another way in.