PalTalk is where it's at in chat. Here's why
		David Coursey, Executive Editor, AnchorDesk Monday, March 4, 2002

Are you looking for a better way to chat with friends online? Well, I've found one for you. It's called PalTalk, a mostly free service that, happily, has survived the dot-com meltdown.

Based in New York, PalTalk operates a chat-room service that attracts about 3 million users a month. Jason Katz, PalTalk's president and a recent guest on my daily radio program, says that at any given time about 40,000 people worldwide are logged on. They are spread across thousands of chat rooms devoted to age groups, religions, languages, hobbies, music groups, and yes--ahem--adult topics.

As I write this during the middle of the day, there are 1,700 groups listed in the public directory. Many, if not most, are created by members, who can give other members administrative privileges and throw out people who get out of line. It's also possible to create invitation-only private rooms.

WHAT MAKES PalTalk especially interesting is the way it merges text, audio, and video into a single integrated environment--and how much of this service PalTalk gives away for free.

If all you want to do is type, or use the audio features, PalTalk is free. Yes, there are some advertisements, but the pop-ups arrive only at login and shutdown. This is a pretty good deal, especially considering that you and all your friends can set up a 24-hour chat room, which you administrate yourselves.

Recently, PalTalk added streaming video, allowing chat-room participants to see up to three other Webcam-equipped chatters. Depending on the camera you're using, the video can actually be pretty good, running at speeds of up to 3 frames per second. Subscribing to the video feature costs $24.95 a year, which I think is more than reasonable considering some other services charge up to four times as much and don't give users nearly as much for their money.

Subscribers get something else besides the video: No ads. When you pay the $24.95, you get what's called "bannerless" PalTalk, which means the advertising banners and pop-ups go away. This option--paying to avoid annoying ads--is something I wish many more sites and services would offer.

PAYING PALTALK CUSTOMERS, about 100,000 strong, carry most of the freight for everyone else. Katz says about two-thirds of his company's revenue comes from paid subscriptions, with the rest from advertising.

Adding the paid service has made the company profitable, although I doubt anyone at PalTalk is getting rich. But I'll bet the investors are happy. Just having something--anything--to show for an Internet investment would make me happy, especially considering that something like PalTalk could generate giddy levels of revenue in a better economy.

During the early days of the Internet boom, it was popular for entrepreneurs to talk about "building communities" and then "monetizing" them to make a profit. The idea was that if you could draw enough of a crowd, you could find some way to make money off them.

On most occasions, this made me laugh. The idea was that people were lonely and yearned for a place to call home in the new world of cyberspace. Most of these companies quickly went out of business. I guess people weren't as desperate for company as the entrepreneurs had counted on.

PALTALK HAS SUCCEEDED where many have failed, however. Why? Partly because the company has stayed very close to what it does best, and has managed to find a feature that drives revenue. Katz could have cut expenses by discouraging his non-paying customers, but he's been wise enough not to.

Instead, PalTalk will continue adding features for both paying and free members. Currently in beta is a link from your PalTalk "pal" list to your America Online buddy list. Given that AOL considers such unauthorized access to its network tantamount to hacking its servers, I can't condone PalTalk's effort. But a number of companies are already doing this, and I can't blame PalTalk for joining the fray. Maybe AOL will eventually give in.

To use PalTalk, you need to download a free Windows client. I've tried running it atop a Windows emulator on the Mac, and it seems to work OK. Katz told me Linux users have PalTalk running on their Windows emulators as well.

So if you're looking for a place to make new friends--or a free gathering spot for people you already know--try PalTalk. I've been using it long enough to recommend it.