I have used the Chat feature before but not for some time now. Some folks like it, some don't. It is great for fast moving topics. To answer your questions though...
1. Cannibalizing public posts.
Probably not as much as you might think. The kind of commentary in a chat room is more fluid than a message board. More oneliners and because it's not "permanent" some people are a little "looser" tongued than they would be on a message board.
2. It's available to free members, so iHub may never see a dime from its presence here.
Easy fix. Make Live Chat free for 30 days only, then they must upgrade to premium membership to continue. Incentive!
3. I understand it's a bit unreliable.
That's one of the things I don't like about it. Go for the five star restaurant and get it inhouse, just be ready to upgrade the horsepower.
That said...
You should be able to toss a banner into the page displaying the Chat, everyone else seems to be able to. Refreshing the banner every 60 seconds or so doesn't seem to interfere too much on other chat sites. Some get a little nutziod with the banners IMO. Offer Live chat the same way you offer IH. Free with ads and premium removes ads and adds extra features (smilies, etc). Include it as part of the IH premuium package. adds value.
That would cover all the bases, those that want Chat for free, those that are willing to pay for just chat and those that want it all. And IH can mint some coin from each group. even if it is just a few pennies from the banners.
BTW, is IH still doing text ads at the end of messages on the Free side of things? Might be some room to add those in Chat as well. Also if they were bringing in capital and were dropped because of the complaints you should consider adding them back to the free section somehow. After all you do have to pay for the bandwidth they are using.
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