If you stepped in late, it sounds awfully dull.
An announcement Tuesday tells us all that "certain assets" of a "white-label" online video service called Joost have been acquired by Adconion Media, which calls itself "the largest independent global audience and content network." The acquisition "will be able to provide advertisers, content owners, and Web site publishers with an end-to-end global video platform and cross-channel video and display ad-serving solution," according to a statement from Adconion CEO Tyler Moebius. Financial terms were not disclosed. Yawn.
But really, it's an exceptionally anticlimactic ending for Joost, a company so secretive and hyped that it was once known, James Bond-like, as "The Venice Project," and which was supposed to kill YouTube and that dastardly Cold War villain known as your cable company. It was a scrappy start-up with roots in lawlessness--founders Janus Friis and Niklas Zennstrom had built onetime file-sharing hub Kazaa--but major street cred, too, as they'd also founded Skype and sold it to eBay. There were impressive backers, too, including CBS (which owns CNET).
What went wrong?
Well, there was a big issue with Joost's downloadable peer-to-peer app. By the time it was released, Web-based video was advanced enough so that a required download was a barrier to entry, not a technical leg up. Some of the big-name content partners seemed to be putting in a halfhearted effort with Joost, offering up reruns and esoteric programs instead of the new programming that people actually wanted to watch.
But perhaps what really doomed Joost was something that was itself supposed to be a flop: When NBC Universal and News Corp. announced their plans to create an online video hub that would rival YouTube and address the rampant issue of piracy, it was referred to disparagingly as "Clown Co." We all know how that one turned out. The finished product, Hulu, was extremely well-received and continues to expand its video library.
There was, briefly, a time when it looked like there was a slight chance that things might turn up for Joost. It did, after all, beat most of its competitors to the release of an iPhone app, and a focus on niche content like Japanese anime seemed like a viable business choice as Hulu increasingly placed an emphasis on the mainstreamiest of the mainstream. Unfortunately, that didn't work either.
There was "a major retrenchment" as Joost reined in its lofty plans. Then it switched business models altogether to the far less glamorous "white-label video solutions" modus operandi.
And then the management debacles became evident. CEO Mike Volpi resigned and then was ousted by shareholders from his role as chairman. Oh, and then the company sued him. Nasty.
Sometimes hype plays out well. Sometimes it just doesn't, and Joost was one of those cases. In spite of the founders' prior successes, truckloads of venture capital dollars, and a few early and impressive content deals, it flopped. The end. Now, per Tuesday's release, it'll be "(adding) many dimensions to Adconion's existing video services and further will solidify its position in the online video and content syndication market."
That's a pretty nice way to put it.
Mike Volpi's battle with his former employer Joost is now headed to court.
Joost announced on Friday that it has filed a lawsuit against Volpi, alleging that the former CEO used trade secrets and other confidential information in a bid to acquire a majority share in Skype from eBay.
The lawsuit comes just days after Joost relieved Volpi of his duties as chairman and a member of the board, saying that it was investigating his actions while he was chairman.
The fracas has its roots in the complicated relationship between online video provider Joost and VoIP provider Skype.
Joost was launched in 2006 by Janus Friis and Niklas Zennstrom, who also co-founded Skype. Volpi met and befriended the pair after serving on Skype's board of directors.
Once considered a contender for CEO at his former company Cisco, Volpi was tapped by Friis and Zennstrom to become CEO of Joost in June of 2007.
After a two-year stint, Volpi left Joost this past July to take a position as a partner at the venture capital firm Index Ventures. This same firm was part of a group that made a deal to buy a 65 percent share of Skype from eBay.
The question of Skype ownership between eBay and Friis and Zennstrom has been a dicey one. Though they sold Skype to eBay in 2006, Friis and Zennstrom kept certain rights via a company they formed called Joltid, and claim they still own the core technology and source code behind Skype. A licensing issue between the two companies triggered a suit that's set to hit a U.K. courtroom next summer. And a separate copyright suit was filed by Joltid this week in Northern California alleging Joltid's technology is being infringed on by Skype users "in the United States at least 100,000 times each day."
Joost's lawsuit filed against both Volpi and Index Ventures alleges that Volpi accessed and used confidential information while at Joost to help his group's bid for Skype. It alleges breach of fiduciary duty against Volpi and Index Ventures, aiding and abetting breach of fiduciary duty against Index, interference with prospective business advantage, misappropriation of trade secrets, breach of contract against Index, breach of confidence, and civil conspiracy.
Joost is looking for an injunction requiring Volpi and Index Ventures to return all confidential documents and files that were allegedly taken from Joost. The suit also is seeking to prevent both defendants from using the alleged misappropriated trade secrets.
Among the specific claims in the suit:
"This action arises out of the acts of a faithless fiduciary, who has taken advantage of the trust and confidence placed in him to steal confidential, highly proprietary information relating to an extremely popular Internet-based technology...Using that misappropriated information and in utter disregard for his fiduciary obligations, Volpi, acting in concert with other participants, put together a successful bid for Skype that has shocked the investment community."
"Numerous sophisticated strategic bidders (including, among others, Google and Microsoft) who initially expressed an interest in Skype could not get comfortable proceeding with formal bids. The reluctance of these sophisticated parties is hardly surprising given that intellectual property that is essential to Skype's business currently hangs under a cloud of litigation. Yet somehow the successful bidder, led by Volpi, was able to get comfortable with the enormous risks of proceeding with a Skype transaction. That comfort level could have been obtained only with knowledge of and an intent to use confidential information that had been misappropriated by Volpi..."
A phone call placed to Index Ventures for comment was not immediately returned.
Joost was launched more than two years as another portal for online videos but has struggled to gain a foothold in the market against competitors such as YouTube and Hulu.
Note: CBS, which owns CNET News, is investor in Joost.
Former Joost CEO Mike Volpi has been stripped of his post as chairman and removed from the board by a shareholder vote, the online video service confirmed Saturday. Joost also said it is investigating Volpi's actions during his time as chairman and chief executive.
Joost was co-founded by Janus Friis and Niklas Zennstrom, who also co-founded Internet phone company Skype. Volpi left Joost as CEO a few months ago, taking a position in July as a partner at Index Ventures, a global venture capital firm. Index Ventures is part of the consortium that earlier this month signed a deal with eBay to acquire a 65 percent stake in Skype, with eBay retaining 35 percent.
Reports earlier this year cited sources saying that Friis and Zennstrom were attempting to put together a bid of their own to buy back Skype.
Former Joost CEO Mike Volpi has been removed from the company's board.
(Credit: CNET TV)"Mr. Volpi was removed from the board of directors and from his position as chairman of Joost by shareholder vote," a London-based spokesman for Joost said in a statement. "The company and its board of directors is conducting an investigation into Mr. Volpi's actions during his tenure as CEO and as chairman."
CNET News sent an e-mail to Volpi requesting a comment. Volpi told Reuters on Saturday, "I am no longer associated with Joost."
A story in the U.K.'s Times said the investigation is believed to be about intellectual property issues.
Friis and Zennstrom's relationship with eBay concerning Skype hasn't been exactly rosy. In 2006, eBay bought Skype for $2.6 billion, but Skype's co-founders retained the rights to some of the service's technology via a company they formed called Joltid. In a licensing dispute, Joltid said it might take back some of the technology. eBay is suing Joltid to keep it from doing so, but the case isn't set to go to trial until June 2010. In July, eBay said it was building new software to run Skype.
So how does all this affect the sale of Skype?
A Wall Street Journal story Friday noted that in eBay's SEC filing regarding the sale of Skype, it "said consummation of the deal was subject to 'no settlement of the pending litigation with Joltid Limited having been effected without the consent of the Buyer (subject to certain limitations).'"
Launched a few years ago, Joost was once a competitor of YouTube and Hulu. In June, however, CNET News reported that Joost was getting rid of its consumer service and instead would put its efforts into building "white label" video platforms for "cable and satellite providers, broadcasters and video aggregators."
Before joining Joost in June 2007 as CEO, Volpi was on the board of Skype and spent 13 years at Cisco Systems.
The peer-to-peer magic that helped Kazaa and Skype dazzle consumers and disrupt the music and telecom industries has failed to produce the same kind of success with Web video.
Mike Volpi has stepped down as CEO but will remain chairman.
(Credit: CNET TV)Joost, the third major creation by Niklas Zennström and Janus Friis, the duo that also founded Kazaa and Skype, announced Tuesday that it will dump its consumer-video service and will now focus on building "white label" video platforms for "cable and satellite providers, broadcasters and video aggregators."
The move marks the end of Joost as a YouTube and Hulu competitor and also closes the book on the attempt to resuscitate the company overseen by former Cisco executive Mike Volpi. Joost announced that Volpi has stepped aside as CEO but will remain chairman.
Joost had signaled that it might be ready to throw in the towel. In April, Sony Pictures decided to pull the studio's content off Joost. Soon after, CNET News reported the company was shopping itself to cable providers, including Time Warner Cable.
Last week came word out of London that Volpi was up for the CEO job with a British public service network.
The truth is Joost never gained enough steam to challenge YouTube and Hulu. Its early missteps included requiring users to download a software client and then, despite boasting Viacom as one of its backers, failing to sign the kind of premium content that made Hulu a force.
The company, which had been heavily hyped, largely on the reputation of its founders, eventually launched a browser-based video service. By then, however, Hulu offered lots of top TV shows and movies in high-quality video.
Joost's opportunity had passed.
Microsoft has also "scaled back" its own consumer video service, Soapbox, according to a story published earlier this month by my colleague Ina Fried.
Joost may be in for more bad news, as a report out of Great Britain says Mike Volpi, CEO of the video site, is a candidate to take over as chief executive of ITV.
Joost CEO Mike Volpi is on the short list of candidates for the chief executive job at ITV, according to a report.
(Credit: CNETTV)ITV is a British public service network and a BBC competitor. British newspaper The Sunday Times reported that Volpi is among a small group of candidates scheduled to be interviewed over the next two weeks.
The report comes two months after CNET News reported that Joost was shopping itself to cable companies. One of the companies that made inquiries was Time Warner. Joost, created by the founders of Skype and Kazaa, has failed to live up to its early hype and has steadily fallen behind Web video plays, such as YouTube and Hulu.
Joost representatives were not immediately available for comment.
Before joining Joost two years ago, Volpi was a senior executive at Cisco. If he is indeed a candidate, he's up against Malcolm Wall, former boss of Virgin Media's channels arm, and Guillaume de Posch, a Belgian who ran the German broadcaster Prosiebensat.1, according to the Times' report.
Joost is actively seeking a buyer and the beleaguered video service has told cable and satellite providers that it could be their online video solution, said sources close to the companies.
Time Warner Cable is one of the companies that has expressed interest in Joost, the sources said. Spokespeople for Joost and Time Warner Cable said they don't comment on rumor or speculation.
Joost is a story of missed opportunities, bad luck, and the folly of thinking whiz-bang technology alone is enough to forge a winning entertainment site.
Joost launched in 2007 with seemingly everything going for it. The company's founders are Janus Friis and Niklas Zennstrom, the same pair who founded Skype and Kazaa. The thinking in the media was the site couldn't lose with Friis and Zennstrom's peer-to-peer technology, which was supposed to be more efficient and provide higher-quality video.
Two years later, and after the company struggled with management shakeups, technology setbacks, as well as a failure to land top TV shows and films, Joost's traffic and content library are mediocre at best. In the Web video sector, Joost has fallen far behind the leaders: YouTube and Hulu, the site formed by NBC Universal and News Corp.
The latest setback came earlier this month when Sony Pictures did not renew its licensing agreement with Joost. At about the same time, Sony Pictures was striking a licensing agreement with YouTube, the much larger and more successful Joost rival.
It should be noted that CBS, which owns CNET News, is investor in Joost.
(Credit:
Joost.com)
At the same time Sony Pictures prepared to post some of its TV shows and films onto YouTube, the studio's material quietly began disappearing from Joost.
Earlier this month, Joost CEO Mike Volpi, who is attempting to engineer a comeback for the once high-flying company, wrote on the company's blog that Sony Pictures' shows were removed but was vague about why. He said that content from entertainment companies often comes and goes due to licensing restrictions and "we are optimistic that we'll be able to reach a new arrangement with Sony soon."
He can stop waiting. The licensing deal with Sony Pictures expired and the studio decided not to renew, according to industry sources. The reasons are not totally clear but one thing is certain, YouTube and Hulu are landing full-length content partnerships while the already thin Joost library shrinks.
Kerry Vance, a Joost spokeswoman, confirmed that the licensing deal with the studio ran out but said it "was a mutual business decision by both companies" to remove the content. Did Joost's anemic traffic have anything to do with it? Vance denied that. "We continue active conversations to reach a new agreement."
Whatever happened, this much is clear: Hulu and YouTube are much more like the Internet video service that Joost once promised to become.
Joost, is the brainchild of founders Janus Friis and Niklas Zennstrom, the duo that brought us Skype and Kazaa. They declared that Joost would one day deliver a reasonable facsimile of the TV-viewing experience to the Web. With the help of a downloadable peer-to-peer video client Joost was supposed to offer crystal-clear high-def images and be super simple to navigate.
As for offering the best shows and other video content, Viacom and CBS (parent company of CNET News) were investors, and these strong Hollywood links would help it acquire premium shows and films. Those things all occurred of course--at Hulu.
During the dark period, when Joost was wrestling with management shakeups and technology setbacks, Hulu pounced. Formed by NBC Universal and News Corp., Hulu provided the best streaming video on the Web and offered plenty of full-length episodes from hit TV shows, such as "24," "30 Rock" and "The Office."
Hulu began attracting the audience that Joost dreamed of.
Now, YouTube, Godzilla of Web video, is scoring full-length features and TV shows.
Is there room for a third top-tier player in this market? Maybe, but if Joost wants to hop into that spot, the company has to offer more, not less, content for viewers to watch.
Joost isn't letting the public try out the site yet but that will change soon.
(Credit: Joost)Finally, Joost is going to correct the error that badly hobbled the Web video service many once considered to be a serious YouTube competitor.
Currently available for Windows and Mac, Joost is planning to launch a test version of its new site later this month that will feature a browser-based plug-in and will no longer require users to watch via the company's much maligned desktop client. In a not so surprising move, users will be able to embed Joost's videos.
CEO Mike Volpi acknowledged in an interview with CNET that the desktop client was one of the company's missteps but that the new browser-based player would provide ease of use, a high-quality video experience, and more content. The new site, according to Volpi, will even be less taxing on laptop batteries. News of Joost's new site was first reported by The Industry Standard.
But the big question that Joost must answer is whether the site overhaul comes too late to catch to Hulu or Google's YouTube.
Joost pounced onto the online-video scene with seemingly the right combination of founders, investors, and technology. The media instantly christened it a legitimate YouTube killer.
The start-up was the brainchild of Janus Friis and Niklas Zennström, the founders of Skype and Kazaa. Among the backers were media conglomerates Viacom and CBS, parent company of CNET, publisher of News.com. Joost was powered by the same peer-to-peer technology that turned Skype and Kazaa into the most disruptive forces in the telephone and music sectors, respectively.
The public wasn't impressed. The content offering was thin. The player often stalled or stuttered, and it relied on the desktop client--meaning that you couldn't just log on to the Web from any computer to access your Joost account.
Volpi came on a year ago, and not much changed until January, when the company's CTO left and Volpi initiated a house cleaning. Volpi says it's still too early in the game to crown any site a winner.
"There is still ample opportunity to create a portal or aggregation site," Volpi said in an interview last week. "People will go where they can find the content they want."
Yes, but are Web video fans already used to getting what they want at Hulu, the company created by NBC Universal and News Corp? The competitor launched last spring to glowing press reviews, and traffic has continued to mushroom. A report issued this week by LiveRail reported that Hulu is probably already generating as much revenue as YouTube, which launched in 2005.
When it comes to YouTube, the Google property is still far and away the Internet's most popular video site. More than a third of every video viewed online is at YouTube. But YouTube is a user-generated site, with most of its content 10 minutes or shorter. Joost is much more like Hulu, a distribution platform for mostly professionally made content.
Volpi said Joost has greatly enhanced the content selection. The site will feature shows from Warner Bros., CBS, and Comedy Central, as well as other Viacom properties. Volpi said Joost will eventually offer a greater selection than Hulu. Volpi said Hulu offered little outside of the shows from NBC and Fox.
He called the selection "tired."
Joost's videos will follow a five-second advertisement or "preroll." Despite enabling users to embed video, the site will not concentrate on syndicating content.
"Our plan is to be a destination site where people go to watch their favorite shows," Volpi said.
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