Joost Gets Juiced
It’s probably no surprise that Joost nabbed a giant $45 million in funding yesterday, given it has positioned itself as Hollywood’s best hope for resurgence on the Web.
Now, I wonder, what the much-touted online video service–launched in beta last week–is going to do with that cash? Heavy-duty marketing, for sure, along with (I hope) making sure the service works easily for the millions of nontechie users it must aim to attract to be successful. Joost was created by Janus Friis and Niklas Zennström, who are also founders of Web phenoms Skype and Kazaa.
According to a story in the Financial Times, Joost got the big slug of cash for a small minority stake from an unusual mix of investors, including Silicon Valley’s famed Sequoia Capital (backers of Yahoo, YouTube and, of course, Google) and early Skype funder Index Ventures, as well as CBS, Viacom and the wealthy Hong Kong investor Li Ka-shing. (Here is the press release.)
It is a big deal that CBS and Viacom are involved in both the funding and in handing over programming to Joost. It is pushing its free, ad-supported professional programming over the currently popular short-form user-generated content that is now all the rage, spurred by the popularity of Google-owned YouTube.
That trend has given major media and entertainment companies the fits, since it feels as if they are getting pecked to death by these online video-service interlopers and also a myriad of Web-based entertainment and social-networking sites like MySpace that are sucking away young people’s attention.
Joost has struck deals to offer content, using a peer-to-peer technology distribution system, from CBS, as well as Turner and Warner Bros. and Sony. It has also picked up a slate of big-time advertisers like Coca-Cola.
They all like Joost because, well, it’s not YouTube, with its thorny copyright and piracy issues and, oh yes, billions of videos watched regularly (making it seem awfully powerful to a group that worships audiences).
But sticking with high concept, the Joost model is a good one for those old-media executives who need some level of comfort. It looks and feels like a replication of the old television broadcast model, except a lot noisier and faux hipper, and with a bunch of interactive options like instant messaging while viewing and news feeds.
And it feels TV-like in energy. I have not spent nearly enough time on the service, but I can say its constantly whirring promotion of programming, which I had to ferret around to stop, could either make it incredibly addictive or profoundly annoying. (It’s in beta, so I will also excuse its sudden closing down several times, as well as its hanging my computer.)
Now Joost will have the dollars to compete in an ever-crowded marketplace that includes a joint venture from NBC Universal and News Corp. They are planning to spend a reported $100 million to launch an unnamed online video service that will put their television and movie content exclusively on their joint Web site and also all over the Web, too, on sites that will use their video player.
While I firmly believe that Internet television will be the way most people will get their programming in the future, and I do like the movement in this direction from the we’re-in-charge-here way the entertainment industry has treated consumers, I do have my reservations that it will be the big, well-funded services like this that will prevail.
The swirl around Joost reminds me a lot of the hype that surrounded the IBM- and Sears-backed Prodigy in the early days of the online-services market, which served to educate the market enough so that a maverick and small service called America Online could come in and steal the thunder. As Prodigy got soundly beaten, the joke used to go that it was everything IBM knew about retailing and Sears knew about technology.
I think the amazing entrepreneurial record of the Joost founders speaks for itself. But I would hate it if it turned out Joost was everything Friis and Zennström know about Hollywood and everything Hollywood knows about the Internet.
Because so far, the answer to the latter part is clear: Not much.
Please see this disclosure related to me and Google (owner of YouTube).