Running out of Joost

2 Jul 2009

Internet TV start-up Joost, brainchild of the founders of Skype, has re-jigged its business model – losing most of its staff along the way, including CEO Mike Volpi – and will now be focusing on white-label video services for media companies.

What started out as a promising desktop application with streaming peer-to-peer specialist TV channels that looked like it could give YouTube a run for its money, Joost was suddenly downsized to a website-only service in late 2008, albeit with the same choice of music and film channels.

This business model was shuffled again yesterday, with 70 of Joost’s 90 staff made redundant, according to AdAge, in an effort to cut costs and focus on white-label services that could generate more revenue than the existing service.

“In these tough economic times, it’s been increasingly challenging to operate as an independent, ad-supported online video platform,” said Mike Volpi on the Joost blog.

“In order to position ourselves well for the future, we began investigating additional lines of revenue for Joost.”

He added that the “solid technology platform” has a demand in the marketplace, and that and its associated video applications will continue to operate.

A free iPhone app of Joost, released in November 2008, already had over one million downloads from Apple’s App Store. The app is ad-supported and there doesn’t seem to be any danger for now that it will be discontinued.

While Joost has over 40 advertisers, including Sony Pictures and BMW, what really killed the potential YouTube killer was its delay, until recently, to convert to the Flash format.

“People don’t want to have to launch a new piece of software to watch video on their computers. They want to watch it in their browsers,” Erick Schonfeld, writer for TechCrunch, said at the time.

By Marie Boram