Joost tries to be the anti-YouTube

(Reading this New York Times story on VeohTV reminded me of the feature I did on Joost that ran in the newspaper on Saturday, so I thought I would cross-post it here for anyone who missed it.)

Janus Friis and Niklas Zennstrom, the dynamic duo who revolutionized the online-music business with Kazaa and then the voice-over-Internet business with Skype, have their sights set on doing the same thing to the television industry with their latest creation: an Internet-based “network” called Joost.

Joost – formerly known as The Venice Project – streams TV-style content over the Web using “peer-to-peer” technology in which each viewer’s computer becomes a hub that streams the content to others. The service is in a limited “beta” trial, and is expected to launch later this summer.

The Scandinavian co-founders (Friis is Danish and Zennstrom is Swedish) had two very different outcomes with their previous ventures. Kazaa was sued into oblivion – the company paid a $100-million (U.S.) settlement earlier this year – while Skype was sold to eBay for $2.6-billion (U.S.).

It’s clear that with Joost, Friis and Zennstrom are aiming at something a little more Skype-like. Whereas Kazaa was seen by the record industry as a broadside attack, Joost has been cozying up to traditional TV content owners.

In that sense, Joost is the anti-YouTube. While the popular video-sharing site is in a legal battle with several major content owners, Joost has been signing deals at a rapid pace. So far, it has agreements with Viacom, CBS and CNN, among others, and is in the midst of a three-month trial arrangement with major advertisers such as Coca-Cola, Nike and General Motors.

And while YouTube is known for short clips of relatively low quality, Joost is meant to be a full-screen experience with longer-form content, more like regular TV. Although the amount of content available is small, it is increasing rapidly (Canadian contributions include archived shows and features from MuchMusic).

While the founders say they have “taken the best things about television and added the best things from the Internet,” Joost doesn’t have many of the features Internet users are used to: Shows can be paused, but they can’t be rewound or fast-forwarded, and can’t be saved to a computer, shared or embedded in websites.

At the moment, all users can do is watch and chat with others in an on-screen window (Joost says more interactive features are coming). Using “geo-blocking” techniques that are based on a user’s location, Joost can also prevent users in certain regions from watching certain content, which allows content owners to protect existing licensing deals with broadcasters.

There’s no question that restricting what viewers can do makes Joost more appealing to content owners, and that has helped the company build a stable of available shows. But will younger users see it as being too much like old-fashioned TV?

Dmitry Shapiro – whose competing Web video start-up, called Veoh, also uses peer-to-peer technology – calls Joost “your old man’s TV.” Although Veoh has deals with Paramount Pictures and Lionsgate, it also offers video from anywhere on the Internet. Veoh has financial backing from Time Warner and former Walt Disney Co. CEO Michael Eisner.

Stacey Seltzer, senior vice-president of content acquisition and strategy at Joost, says that the company came at the idea more from the TV side than the Internet side. “When we looked at the world of video on the Web 16 or 18 months ago, we had this feeling that there were a lot of companies that were giving consumers and viewers an Internet experience that then brought some video to it,” he says.

In contrast, Seltzer says, Joost’s founders believe that “television is the greatest medium for mass communication that there’s ever been, [so] let’s start with that experience and then bring all the cool aspects of the Web to it.”

One of the benefits of the Joost model, he said, is that the full-screen, immersive experience with streaming content is that people are used to it. “Each of the constituents that Joost works with – the content producers, the advertisers and the viewers themselves – are really familiar with that kind of medium,” Seltzer says.

Ted Riley of Alliance Atlantis describes himself as “a fairly enthusiastic supporter” of Joost. As executive vice-president in charge of international licensing – and therefore the go-to guy when it comes to CSI, the multimillion-dollar TV franchise – Riley says he “got to see what was then called The Venice Project at a fairly early stage” and liked what he saw.

“What impressed me was – just like Skype – the ease of use and the ease with which you could set it up and within minutes” be watching TV-style content, he says. Riley says he also felt that, since the software was free, it would appeal to university-age Internet users who would otherwise be downloading illegal copies of CSI and other TV shows. Joost seemed like “an easy and user-friendly way for people to access TV programming,” while still providing some protection from piracy, because the software provides the content “on a streaming basis rather than a download basis, and you can’t fast-forward and so on,” Riley says.

Maria Hale of CHUM International was also an early supporter of Joost, and says she liked the fact that it is “more like traditional TV” than a lot of other efforts at online video, in that it “gives audiences one destination to find content they like.” The fact that Zennstrom and Friis are involved sealed the deal. “These guys are rock stars in the online space,” says Hale. “They don’t just have tremendous expertise in the technology, but they are also very strong business people.”

At the moment, one of the main criticisms of Joost has been that is has very little content. There are 150 channels, but some of those are available only to viewers who live in the United States. While critics might quibble with the “content” on YouTube, the site has an incredible array of material, with thousands of new clips being uploaded every day.

Joost is clearly trying to solve that problem by signing new content deals with Turner Broadcasting, the National Hockey League, CNN and Sports Illustrated, and with popular 1970s TV shows such as Charlie’s Angels and Starsky & Hutch. Joost has also arranged with Warner Bros. to acquire some of its older shows.

Unlike Web-based services such as YouTube, which encourage users to upload and share their own video creations, Joost is focused solely on what Seltzer calls “professional content owners.” The service is open to video from small or independent filmmakers, he says – and already has deals with some – but is not interested in “user-generated content.”

Alan Sawyer, a media consultant who wrote a report called The Death of TV while at IBM last year, says he sees Joost as “evolutionary, not revolutionary.” Other companies have tried to do similar things, he says – including Corel founder Michael Cowpland’s ZimTV – but Joost “has done two things: It has popularized the idea by generating lots of hype, and it has legitimized it by having the guys who created Skype behind it,” Sawyer says.

Liz Gannes, who writes about online media for the blog, says Joost is in “a really nice position right now, because they are seen as someone that is respectful [of content owners’ rights] and so they have a leg up on competitors.”

But, she adds, Joost has had stability problems (particularly with the Mac version), and the content on the network is not easy to find. “It’s totally jumbled and disorganized,” she says. Joost needs to focus on solving those problems, she says, “before they lose some of the goodwill and favourable opinion they’ve built up.”

Their track record may have given Zennstrom and Friis a head start, but Joost still has plenty of competition. In addition to Veoh, the challengers include Babelgum, which is based in Italy and financed by Silvio Scaglia (who controls Italy’s second-largest telecom company) as well as Ooyala (a stealth start-up founded by former Google employees). Microsoft also recently launched a beta test of a video service called LiveStation, which – while not identical to Joost – is targeting the same market.

So to succeed, Joost has to find a way of balancing the interests of traditional content owners with the desires of a new generation of online video consumers. And that’s not going to be an easy task, even for a dynamic duo.

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