Two years ago, in the wake of Google’s $1.65 billion acquisition of YouTube, Joost was suposed to solve a very 2006 dilemma: Fearful media companies wanted to distribute their video over the Internet, but didn’t know how they’d do it.
But that was then. Now TV networks are happy to distribute their content, via conventional Web sites, as widely as possible. And that makes Joost, which requires an unwieldy download before users can play a single second of video, looks like a clumsy solution for a non-existent problem.
Now Joost has one shot to reinvent itself, via new service that launches within a Web browser — just like every other Web vide service. That product is weeks away from launch, CEO Mike Volpi tells us, and this time he thinks his company has figured it out:
Silicon Alley Insider: What mistakes did Joost make the first time around and what are you doing to fix them?
Mike Volpi: We introduced what was the 2006 vision of the best product out there. The product came to market and I think we learned a lot of things from it. We’re the first to say it didn’t exactly hit the sweet spot. We have a great brand and great content that we still have access to today. But we had a product that wasn’t quite right.
SAI: When you started out, you had by far the most content of any legal aggregator on the Web. Now content is everywhere, so where does that leave Joost?
Volpi: The world has migrated from an exclusive model of content distribution to a non-exclusive model. Our view is that content is available in a lot of places, but by packaging it and merchandizing it better, hopefully we will be a better place to come to. As people come to us, the content owners will say “I’m not going to upload this to 25 places” — they won’t be bothered — “I’m just going to upload it two or three places.” That will give us an advantage — not because we have contractual exclusivity, but because it’s a place people like to go to.
SAI: How will Joost be different from a Hulu, Veoh or AOL TV?
Volpi: We are designing a platform that is hopefully well-suited to large content owners, but also one that will serve the purposes of the midtail–the indie content, music videos, comedy channels, and so on. There are users out there that don’t know what they are going to watch today, or they want to browse in a genre. We will help them find what they’re looking for. We host a lot more indie content than Hulu — and we are doing a lot more work to distribute and sell advertising on that content.
SAI: Do you need to do more content deals to be successful?
Volpi: Today we have 7,500 hours–one of the largest portfolios out there. We’d love to have more, but our success or failure will not be dictated by signing another deal.
SAI: You raised $45 million in 2006 and sources tell us you’ve been in talks to raise another round of financing. Is that true?
Volpi: No. We have ample cash to get the platform out, work out the kinks and accumulate users. If all goes well hopefully we won’t have to raise any more money. A lot of it depends on how quickly we grow. Rapid international expansion would require more capital. The pace of rollout of territories will determine if and how much more funding we might need.
SAI: What kind of ad rates will you need to charge in order to make your service profitable?
Volpi: I am convinced with our business model that TV-level CPMs will work just fine. Online CPMs are higher now, but they will fall back to TV levels. When you operate peer-to-peer, you save on three things: bandwidth, storage, and CPU capacity. It is harder if you look at the “buy-your-own bandwidth, buy-your own-servers” model, which we’re not doing. We have cost advantages, which is particularly important in a non-exclusive market. The margins are going to be thin in this industry for an aggregator like us. The first job is to get users but long-term we have to make money. Having a low-cost delivery system is the survival strategy for a content aggregator.
SAI: The last time you launched, it was a big media event. Any plans for a splashy relaunch?
Volpi: It was a different situation, because we had two founders who were so well-known. We were very fortunate that we got the enormous coverage and frankly we still have a wonderful brand because of it. But the expectations pinned on us were so high. It was a difficult situation to manage. organising a big party might get us a few headlines, but trust us, we’ve been through the PR cycle before. We want the product speak for itself and then let the users speak for us.
Business Insider Emails & Alerts
Site highlights each day to your inbox.