Social networking melds with videoconferencing

(continued from previous page)

Founded in 1998, Paltalk began as a small player in the instant-messaging sector. Profitable since 2001, Paltalk began in the same year to build the foundation for group-centric video chat.

To get started, visitors must download software. Any user can create a chat room on any subject and invite up to 3,000 people in to discuss the subject through voice, video and text.

Everything is free except the ability to view the video feeds from others in the community. To do that, you have to pay $15 a month or $60 a year. Room owners can moderate their groups to make sure they can run their "clubhouse the way they want to," said Smernoff. They can even boot people out.

When someone enters, their user name appears. An icon will indicate whether the person is video-enabled. All a person needs to do is click on the icon and the person appears. Click on another person's icon and he, too, will pop up.

Leah McLellan, 51, likes to go into the karaoke chat rooms. Retired after working in developmental psychiatry, McLellan says the video and audio on Paltalk surprised her when she first started using the product two years ago.

"They are crystal clear," she said. What McLellan likes most about the service is that if she doesn't want people to see her, she just pushes a button and her video feed is cut off. "If I want to chat with someone one-on-one I can...They allow me to control my privacy completely."

Privacy is very important to people, and fear of losing it may be another hurdle Paltalk has to overcome, said the Yankee Group's Simpson.

Frankel said he owns a Webcam, but sometimes prefers to converse on Paltalk in audio-only mode. Sometimes, when he's arguing politics, he prefers to stay anonymous.

"I don't have a specific reason," said Frankel, 47. "Chat programs are still a new concept. People like to keep their anonymity. It gives them more freedom to say what's on their mind."

Paltalk has begun offering a videoconferencing service that targets businesses. The company is also betting that other social-networking services will want Paltalk to create video chat rooms for them.

"The cool thing is we can take our little video chat rooms and we can embed them in other people's sites," Smernoff said. "We can embed real time group video chat in places where online community already exist, such as MySpace or YouTube or CBS Sportsline. That means someone interested in surfing can build a room and invite other MySpaces users to join them."