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Summary:

Joost, the P2P TV creation of Janus Friis and Niklas Zennström, the co-founders of Kazaa and Skype. The company, just raised a whopping $45 million in funding from five investors. “This funding represents a tremendous vote of confidence in Joost’s platform,” said Janus Friis, co-founder of […]

Joost, the P2P TV creation of Janus Friis and Niklas Zennström, the co-founders of Kazaa and Skype. The company, just raised a whopping $45 million in funding from five investors.

“This funding represents a tremendous vote of confidence in Joost’s platform,” said Janus Friis, co-founder of Joost. “We’ve carefully selected these investors from a variety of interested parties”

Selected! Interesting choice of words, from Friis, pretty much letting everyone know who’s da boss. More importantly, it also indicated the premium valuation Joost got received. Investors lucky enough to put their money in Joost: Sequoia Capital, Index Ventures, Viacom, CBS and Chinese tycoon, Li Ka-shing.

While Index’s Danny Rimer and Joost co-founders go back a long way, aka Skype, CBS and Viacom are just ensuring that they get their pay-off both ways – from eventual sale of Joost and advertising on their content – for helping Joost get some traction. Ka-shing, is also an old friend – his Tom Online got Skype into China, helped grow the traffic and subscribers by millions, that led to eventual payoff pitch – sale to eBay.

What is even more interesting, Sequoia – the house that funded legendary companies like Cisco Systems, Yahoo and Google – being part of the syndicate that was “selected.” Did anyone else feel the earth move?

I hope Joost puts some of these new dollars to use in building an infrastructure that can actually handle the traffic loads, and not like this past week when the service went on fritz for many of the Joost viewers. That’s the kind of thing that can prove to be a buzz kill.

And for investors who are suddenly looking at P2P TV companies, here is a short list of names that might come in handy: Babelgum, RawFlow, Jaman, Zattoo, and Neokast.

Also: Seven Reasons why Joost could fail.

  1. I guess I am going to be an awfully unpopular guy. I just blogged an article on “7 reasons why Joost could fail… and one reason it might not”. http://l3media.blogspot.com

    Oh well, I still think I am right. :-)

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  2. Anil,

    Good points. Just linked to your post.

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  3. Anil – you make some very good points – watching the presentation from Joost ( http://www.scaryideas.com/video/2362/
    ) just a couple of days ago, I arrived at some of the same observations. But I also think the Joost Team is aware of the QoS and QoE issues you have put forth – how they address those issues that’s a whole different topic. I think Akamai could duplicate the “utility” of Joost, but deliver on the QoS and QoE with far more efficiency (their peering architecture with some combination of their recent P2P technology purchase). Your thoughts?

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  4. May want to add Network Foundation Technologies to the list of P2P solutions? We’ve been around since 2001; first patent issued in early 2006; stream more with less bandwidth…

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  5. Bryan Pilsworth Thursday, May 10, 2007

    I think Joost is simply over-rated.

    I recently managed to get my beta account and downloaded the software with great trepidation. When I ran the software, it simply didn’t work. I got an error message with something obscure like “Error 221″. Unlike Skype which loaded and worked flawlessly, this software (albeit Beta), simply didn’t do anything.

    Now, when I see obscure error messages, I just have to think that the average user will give up. That’s why Apple TV and not Joost will win. Apple realizes that even if the hardware app doesn’t have every feature, it always works.

    Too bad. I was really hoping Joost would be a winner.

    Has anyone else had problems?

    Bryan Pilsworth,
    Toronto, Canada

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  6. Anil – I agree with some of your thoughts on Joost, particularly that it replicates current cable TV. Do you think players like Babelgum and Jaman that offer more niche, “can’t find it anywhere else” content have a better chance at succeeding? Babelgum is actually entirely funded by its founder.

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  7. Anil,

    Most of your points are flat-out wrong – whilst there are a number of reasons why Joost could fail, but I don’t think you’ve picked a single one.

    Points 1 & 2 – Joost uses p2p streaming for one good reason, bandwidth. Don’t even think about the possible bandwidth needed for millions of clients sucking content from a centralised content farm, it just doesn’t scale.

    Point 3 – Wrong, Joost is all VOD.

    Point 4 – No user contribution, one word, copyright. Look at the legal mess GooTube are in.

    Point 5 – Open source software? Since when is using industrial quality reliable code a flaw? Not being locked in to a particular supplier or technology is not a downside.

    Point 6 – You can lean back with Joost, hell I do, and the rumoured set top box will make lean back a more heavily used choice.

    Point 7 – Ok, you’ve got a slight hit here, but bear in mind that Joost is run by a company based somewhere in the West Indies, with a dev team in Europe and global server farms. Whose laws apply? Europe has taken a lead in deliberately not applying broadcast regulations to internet content, it may be that the rest of the World will follow suit. Joost has geo-restrictions on its content, so it can self regulate to fit most regional restrictions already.

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  8. Though some (parts of) his reasonings are certainly arguable, Anil’s made the right bottom-line call here: Joost is waaaaaaaay overrated.

    The average non-techie (er…that’d be 95%+ of the world’s population) will never, ever use it.

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  9. Steve, someone mentioned (rumoured) settopbox – if true, the 95%+ will find their way to Joost, no worries.

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  10. Why would any other broadcaster make its content available to Joost, knowing that a direct competitor (Viacom, CBS) will directly benefit.

    Bad strategic move.

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