More on MagicJack

August 2, 2008 by Garrett Smith

Rich Tehrani, Editor in Chief at TMC and prolific VoIP industry writer, penned a recent post with some thoughts on MagicJack, current industry media darling and scourge of ITSPs everywhere.

Tehrani gives MagicJack high marks for their marketing campaign and product branding. I agree, they have done a good job of getting the word out about their service.

Rich also gives MagicJack props for letting their freak flag fly, daring to include mention of the technology gears behind their service and not hiding in the closet from an often VoIPoPhobic consumer audience. Heck they even modded the USB stick ATA so you can see the board, chips and circuits inside.

So I’m reading Rich’s post and nodding in agreement right up until the end, when he remarks:

I suspect we will see more companies doing similar things and packaging their products in a like fashion and switching to pricing plans that are very close to this offer.

I disagree here. One fact missing from the analysis of MagicJack is that their business model is built off the idea of subsidizing their service delivery costs by borrowing a monetization strategy that is the foundation of most web services…..ADVERTISING!

Rob Beschizza at BoingBoing Gadgets peeks behind the curtain and sees that the devil is in the details, and that privacy advocates are not likely to be signing up for MagicJack anytime soon.

From MagicJack’s EULA (End User Licensing Agreement):

“You also understand and agree that use of the magicJack device and Software will include advertisements and that these advertisements are necessary for the magicJack device to work … Our computers may analyze the phone numbers you call in order to improve the relevance of the ads”

Any claims, legal proceeding or litigation arising in connection with the magicJack device or Software will be resolved by binding arbitration … in Palm Beach, Florida.

Hmmmm…..”Our computers may analyze the phone numbers you call in order to improve the relevance of the ads”….

Does that allude to geo-targetting of local advertisements based upon area codes dialed? Or something more sinister like packet sniffing and keyword targetting based on actual conversation snippets from private phone calls?

I don’t buy the notion of consumers buying into ad supported phone service at a massive level, creating a trend that would shape the overall industry. That’s just my opinion, and I may be called out for it in the future and I’m willing to take the heat for it.

I wrote about using MagicJack to emulate POTS service with an IP PBX last year. At least one of our readers was working on gaining access to MagicJack’s SIP proxy in order to bypass the need for their USB dongle.


  • It’s really interesting that the freakshow aspect of the service has taken off. For example, there’s an unofficial MagicJack forum where people give instructions on how to hack HP thin clients so that they become hosts for the USB device. This gets around the requirement to leave your PC on 24/7. Someone even sells hacked thin clients for those who don’t care to DIY.

    I’ve posted about using thin clients as small Asterisk servers, something that I’ve done for years. The UMJ forum sends me a constant stream of traffic as a result.

  • Hondo

    Pardon my lack of tact BUT are you stuck in the 80’s? 90’s? Behavorial, semantic, contextual, and other forms of characteristic tracking are now the norm. Unlike another phone service launched in 2007, magicJack has no Big Brother intention into listening to calls….all 25 million or so every day. I am sure that a Google-like algorithm can simply “track” call patterns and return relevant ads to the million plus users. Body is elling this info to third-parties. This is the modern advertising era and not some shotgun approach. magicJack is revolutionary on many fronts. Also, to think that you privacy is “private” in today’s camera everywhere, cookie tracking society is proposterous. Give me a few minutes Mr. Andrews and I can tell you wher you live, what your house looks like and that it needs new windows and a paint job. Oh, your car needs a washing and your Visa bill is do next week…you might want to pay off the high balance too.

  • Cory Andrews

    Hondo, I agree with you that contextually relevant advertising is not necessarily a bad thing, and is prevalent these days. Also, please send me some ads for replacement windows, car cleaning products and debt consolidation services because your algorithm was right on the money there.

    I don’t have a problem with any of it, I am just a proponent of disclosure and transparency. If the technology they are using is good for consumers, why not tell them about it instead of burying vague legalese in the user agreement.

  • Trina

    To be fair, the folks at MagicJack are not burying their intent to serve relevant advertising in their TOS anymore than Google does in their TOS when you sign up and opt to become a Google gmail user or Yahoo mail, MSN, Hotmail etc or any other online service provider. And guess what, the mobile (cell) phone providers – Verizon, AT&T , TMobile leading the pack will soon be serving contextual ads to phones & PDAs, and how are they gonna do it? Thru tracking user behavior to determine how to target relevant ads. Get used to it folks…and more importantly, take ADVANTAGE of it!

  • Garrett Smith

    @ Trina:

    I think that mobile operators, because of the widespread usage, will need to be much more upfront with disclosing that they will be serving contextually relevant ads.

    At the end of the day, as a consumer, if I have to have ads, I would rather have contextually relevant ads than random ones.

    However, I still want to know that the company I am working with is logging my usage to do so.

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