The Toronto firm behind Hotline has a powerful program and a PR headache
Jason Roks is a true believer. The 30-year-old vice-president of Hotline Communications Ltd. ignores his lunch at a Toronto bistro to enthuse about the first time he saw the Internet software that gave rise to his company. He was “amazed, just blown away” by the programs capabilities. He is just as passionate about the future for Hotline Connect, the software that features real-time chat and easy transfers of large files. Roks is convinced this is the new vehicle of choice to surf the Internet, providing for a thriving community of online debate and deal-making. “With Hotline, I no longer work on a computer,” Roks says. “I work on a communications machine—I work with people.”
The application may prove to be the wave of the future, but Hotline Communications has a big public relations problem before it gets there. A look at the sites and the users of Hodine shows a preponderance of software pirates and porn merchants. “Anything that’s good on the Internet, that speeds up things,” says John Wolfe of the Business Software Alliance in Washington, “the pirates are going to use.” Roks first learned about Hotline in late 1996, when a friend told him about the buzz surrounding a new program that someone had developed to browse the Net. He searched the Web for a week before he finally tracked down a copy to download. With the early version of Hodine up and running, he chatted with other new converts, and soon became an acquaintance of an Australian named Adam Hinkley. At the ripe old age of 17, Hinkley had written the program that still has people talking and downloading. Roks convinced Hinkley they could make money, and in July, 1997, they formed Hodine Communications with Canadians Terrence Gregory, David Bordin, Bachir Rabbat and Austin Page.
Then the walls caved in. After moving to Toronto to form the company, Hinkley abrupdy bolted in March, 1998, taking with him vital software used to develop Hotline. When contacted by Macleans, Hinkley declined by e-mail to comment, citing a court order barring him from speaking. “We were left with nothing,” recalls Roks. “Everything was encrypted on our end.” The company won a lawsuit against Hinkley and recovered its property. According to John Caliendo, Hodine’s chief financial officer, the company will not collect the “substantial sum” it was awarded. “We had the power to put him into bankruptcy, ruin him,” he says, “but that’s not what we’re about.”
In the early days of its development, the company tried selling copies of Hotline Connect, but found pirates were
breaking through protection codes and taking the program. Last April, Hotline Communications began offering the software for free on its Web site. To create a revenue stream, the program now carries banner ads, which appear when users boot up the browser. (While Hodine is still not profitable, revenues have been increasing by 20 to 30 per cent a month since the change in business strategy.)
But advertisers may be getting more action than they bargained for. As users surf from site to site, an ad stays on the Hodine window. As a result, the ads of reputable companies—such as Gateway Inc., the computer manufacturer; Mail.com Inc., the e-mail provider; and book retailer Barnes & Noble Inc.—are still on screens at sites offering access to The Porn Warehouse and Game Heaven, pirated copies of Sony PlayStation software and first-run movies. Caliendo acknowledges this happens, but says: “Let’s be really honest here. I can go to Netscape, and in three clicks, maybe four, I’m into bondage.” But a difference on the Hotline network is that the vast majority of sites—which are run by independent operators over whom the company has no control—contain stolen software, movies, downloadable CDs, video games and porn.
Caliendo and Roks prefer talking about Hotline’s ability to further academic collaboration, long-distance learning and corporate telecommuting. They are proud of their current effort to create an online experience free of cyber trash. To do this, the company has established its own network of 25 site lists known as “tracker” communities. Anyone who wants a spot on one of these company-sanctioned trackers must agree not to post anything illegal or pornographic.
The idea is to create 25 “channels,” based on interests like sports and health, and target ads to those groups. It may work, but so far the clean sites are mosdy vacant, while the piracy sites hum with online chatter.
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