The $40 Million Free Directory Assistance Bet

Last week, my colleague Peter Krasilovsky wrote a blog about 1-800-Free411 launching category search and took the opportunity to update how Jingle is doing. According to SVP Lyn Oakes, Jingle is receiving 16 million calls per month, with 60 percent repeat traffic and 500 advertisers.

Peter wrote: “The path to self-sustaining revenues for free directory assistance isn’t clear yet. But if there is any real money to be made it is going to come from category search.”

Yesterday, I received a press release announcing that Toll-Free Yellow Pages Corp. (1-877-yellowpages) has finalized negotiations that give it $32.5 million in funding and an additional $7.5 million once it meets certain milestones.

According to Rob Weinstein, corporate vice president of Toll-Free: “We feel that our service will become highly viral and will spread like wildfire. Our investors also saw this opportunity. We spent four months writing the business plan for this concept, and within the first 20 minutes of presenting the idea to our investors, we were able to attract the start-up capital.”

The investor is Saudi Prince Al Hussein Bin Talal. When I called the 877 number to inquire about advertising, I spoke to Mr. Weinstein, who said that the service will launch in the second half of this year.

What a market this is turning out to be. Between the big telephone companies, start-ups and wealthy princes, a huge number of companies are getting into the toll-free Yellow Pages business, which is now in its 26th year. The bar keeps getting higher.