May 10th, 2007
Why Joost landed the big funding dollars
Joost's position as a potential YouTube killer has been cemented by $45 million from a bunch of venture capitalists and CBS and Viacom.
Joost, currently in beta, says its funding will "accelerate product development, global expansion, localization, and service offerings." The list of investors–Index Ventures, Sequoia Capital, Li Ka Shing Foundation, CBS and Viacom–is certainly impressive. Those last two stick out–largely because Viacom is lined up against YouTube and CBS is Viacom's sister company.
So how did Joost, which is relatively unproven beyond a lot of buzz, land the big dollars (release and Techmeme discussion)?
- The founders. Joost was founded by Janus Friis and Niklas Zennström, the two behind Skype. Skype sold out to eBay and naturally VCs think Joost could also be acquired.
- Joost may have a better model. Joost plans to provide ad-supported copyright protected video. With just a little critical mass Joost could land more content partners. Meanwhile, Joost's peer-to-peer architecture seems like a better way to manage bandwidth (and keep costs down).
- CBS and Viacom. Both of these Joost content partners will do everything possible to make sure the startup is a hit. Why? Old media needs Web outlets other than the ones controlled by Google. Whether its Joost, joint ventures or Google foes like Yahoo traditional content companies need to balance the playing field. These traditional media players can't afford to cede control to Google. That means anything with a smidge of promise is going to be funded.
Given those dynamics expect Joost to secure another meaty round of VC funding–unless it gets acquired first.
Larry Dignan is Editor in Chief of ZDNet and Editorial Director of ZDNet sister site TechRepublic. See his full profile and disclosure of his industry affiliations.
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