Spoke Software opened up free access to its database of 30 million business contacts Monday, threatening traditional business contact providers such as Hoover’s, OneSource, and Harte-Hanks, but also raising privacy concerns.

The San Mateo, California-based company is mainly targeting salespeople, recruiters, job seekers, and marketers who could find this information useful. The database consists of contacts at the executive, managerial, and directorial level, mainly at organizations in the United States.

The database contains the corporate contact information of individuals, including their title, job history, email patterns, phone numbers, and address.

However, to get free access to the database, Spoke members will have to validate the contacts in Spoke’s database with their own address book.

Spoke has proprietary software that tracks its users’ contacts and makes sure that Spoke’s database is updated with the latest contact information. The software is compatible with Microsoft’s Outlook email client.

Web-Driven Contact Gathering

Until now, the four-year-old company has created its database by scouring the web, using third-party providers, as well as asking its members to share their address book contacts.

Spoke CEO Frank Vaculin called the models used by competitors like Hoover’s “archaic” because of the cost associated with maintaining their data, which is done by humans instead of software.

“If you don’t have the power of [the web] constantly improving your data, it can be enormously costly,” said Mr. Vaculin.

Spoke intends to get users hooked on its free database and then charge them for value-added services such as importing the contacts to a customer relationship management system.

Spoke also plans to charge users $50 per month in case they don’t want to validate the database with their own address book entries. The company will have special offerings for corporations and charge them $39 per user per month for revenues, said Mr. Vaculin.

So far, Spoke has raised $20 million in three rounds of funding from investors Sierra Ventures, Doll Capital Management, and Partech International.

Among the newer breed of web-related business contact providers, Spoke competes with Jigsaw and LinkedIn. Both these companies rely on individual members to share their contacts to create a bigger database.

Revenue and Privacy Concerns

Yankee Group analyst Sheryl Kingstone said Spoke is trying to drive user adoption by offering its contacts for free. Spoke could also be trying to get its members accustomed to using the service before beginning to charge them for it, she said.

However, she was concerned about how the company would eventually generate revenue.

“My concern is for Spoke’s business model and where they are going to start generating revenue down the road,” she said.

To convince customers to pay for Spoke, the company has to find a way to create additional value for the information it already provides by offering research and other content, said Ms. Kingstone.

Another hurdle could be data privacy and accuracy issues, and the company could even face the possibility of litigation, said Lauren Weinstein, co-founder of the nonprofit group People for Internet Responsibility.

Mr. Weinstein is concerned about opening up the database of contact information on 30 million people to the general public. Mr. Vaculin argues that all the data the company is aggregating is already public and is not a threat to privacy.

But Mr. Weinstein pointed out that data accuracy could be an even graver issue. It will be difficult for Spoke to update all the contacts and keep the information current just by using software.

“Any kind of database becomes practically worthless if you don’t know whether an entry is accurate or not,” said Mr. Weinstein. “Even if 10 percent of it is wrong, you can’t trust it.”

Contact the writer:FBhuta@RedHerring.com