Azureus Makes Its Commercial Bid

Azureus, maker of the popular peer-to-peer client, has revamped its software to include video publishing and distribution tools with a much slicker and user-friendly interface. To support the new platform, called Zudeo, the company has raised a $12 million second round of funding.

This space is hot; BitTorrent last week said it had raised $20 million from Accel Partners and Doll Capital Management. Much like BitTorrent, Palo Alto-based Azureus incorporated, took venture money, and came up with a business model only after the massive success of its open source software.

The main difference in approach is BitTorrent is cozying up to Hollywood, while Azureus is trying to be the high-resolution, long-form equivalent of popular clips sites like YouTube (well, the old YouTube). Any content creator can upload video of any length and size to Zudeo.

Though it’s commonly used for illicit distribution of copyrighted files, Azureus has been able to pitch itself as business due to its tremendous reach. The company’s BitTorrent client has been downloaded 130 million times, with half a million new downloads per week. It has “north of 10 million” active users per month, 40 percent in North America and 40 percent in Europe.

Azureus is working on commercial deals of its own, but they will tend more towards talent sponsorship and promotional material, according to CEO Gilles BianRosa. “It’s really about launching things, not providing the same content you can get elsewhere,” he told us in an interview Friday. The business model will be revenue sharing with content creators — including micropublishers — based on sales and ads.

BitTorrent (the company) has chosen a harder path of trying to cut deals for top-tier content. The BitTorrent store has seen repeated delays, and still remains unlaunched, but the company last week said it had signed a number of major partners. It’s undeniable that studio content is all that matters to a very large number of prospective users.

Azureus currently avoids liability by staying clear of indexing and searching content, but the new platform will comply with DMCA and all that. The old Azureus isn’t getting cut off, though; it is readily available through an “advanced” tab. (Zudeo is still in beta, and won’t be pushed out as an update for a while.) We must say, you can’t just write this issue off. The coexistence of illicit and licensed content is volatile (see iMesh, for example).

Though it doesn’t include a video player of its own, Zudeo incorporates channels of content — such as a HD channel and a Tony Hawk channel at launch. Individual users can also syndicate their own channels of content they find within the platform. This differs from Brightcove, says BianRosa, because the nature of P2P is (ironically) better served by a destination site, which facilitates a swarm of viewers to share the load of distributing a piece of content.

Zudeo has a few features that should really make it stand out, if implemented right. First, Zudeo will allow for progressive download, so users get the instant reward of a streaming experience rather than waiting on a download.

Next, Azureus is working on an embedded player, to be available next quarter. Giving users the ability to embed movies within their own sites and profile pages was key to YouTube’s phenomenal popularity. While every video company and their mother has an embedded player now, the prospect of embedded streaming of high-quality, long-form content is pretty compelling.

Last, Azureus offers the option of making a video private. While private video-sharing has not been the silver bullet companies like Grouper and imeem thought it might be, in every case we can think of the experience was hampered by storage and usage limits. Zudeo, on the other hand, has no limits whatsoever, and will use its seed farms to speed video-sharing for small groups. That’s a pretty sweet freebie.Azureus has 20 employees, all based in Palo Alto. Redpoint Ventures, BV Capital, Jarl Mohn, Greycroft Partners, Stanford, and Berkeley participated in this latest round of funding. BV Capital had provided the company’s first round.

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