Jointly started as the secretive “Venice Project” by Skype founders Niklas Zennstrom and Janus Friis in 2006, Joost is amongst the emerging rash of internet TV distribution channels. With some 250 channel partners from MTV to Australian Food TV, the company arrived at the Mipcom TV content market and conference to announce the addition of ITN - and told us of plans to add live programming in 2008. In an interview with paidContent:UK, CEO Mike Volpi, the former Cisco exec who moved to England with his family this summer to head up Joost’s London HQ, talked about this new network’s approach.

I was speaking with the CEO of another internet video company who is of the belief that the thing that works best on a desktop or on a laptop is short-form clips, people don’t want to consume long pieces of content in a lean-forward mode - maybe they’ve been at their desk working all day. But it seems like Joost offers a lot of long-form clips, including movies. Would you agree - what works?

We don’t do long-form exclusively. We have a lot of short-form things like music videos and news as well. I think it’s somewhat naive to say ‘it works’ or ‘it doesn’t work’ because you have to look at it by demographic. Would a 45-year-old use their desktop computer to watch a film? Not likely. Would a teenager go up to their bedroom and sit on their bed and watch a film on their PC? Absolutely. So to say ‘it doesn’t work’ (or) ‘it works’ is, to me, incorrect. Especially in these early stages for full-screen-type things, you want to throw some stuff out there to see what it actually working, to let the market tell you, especially since we’re sort of in a shared-risk model with our content owners where we take dollars or advertising ... Films do well for us in Europe right now, maybe they’re just the demographic that we’re hitting or something like that but they’re doing pretty well in a relative sense. We do find the music videos do pretty well. Music videos, interestingly, a lot of people set the video to go and then minimise it on their desktop and then go off and do their work, they’ll do email or whatever, and the music videos just playing in the background. Very typical usage model. Is that a long-form or short-form? It gets very blurry, I think, because you are watching it for a couple of hours while you’re doing your email so it sort of feels like long-form but it’s snippets.

So to already discard usage modalities at this early - we really are truly at the very entry point in to this market segment - is just premature.

So you don’t think you need to be in the lounge, on TV? Do you see yourself there? I guess it might be quite easy to get Joost software installed on some kind of set-top box quite cheaply

We could, and we’ve had a lot of people that asked us to do that. But, for now, our view is, let us perfect the platform on the PC and find out and learn more about how people use it on the PC. The problem about the set-top box is that your technology really has to work completely flawlessly. On a PC, people are forgiving - a website goes down, a server is not available, it’s okay - on television, it’s just got to work, right? So the view is, when broadband reaches a point where 99.9 percent of viewers can watch it all day long without problems with it, then we can do a set-top box. In our case, our software has been designed, from the ground up, to be resident on a set-top box. It will run on Linux, it will run on a variety of operating systems, and it has the facility to be navigated from a remote control.

So it’s something that’s clearly in the long-term?

It’s in the long-term but it’s not in the next six months and it’s not in the next year. The other thing to keep in mind is - very important - people look at the thing technically and say ‘well can you run it on a set-top box?’ And the answer is ‘yes’. But you have to have a returns process, you have to have a retail strategy or maybe you have to have an organisation that goes and installs them in people’s homes. There’s a lot of business processes to be built around it - you can’t just slap it on a box and throw it out in a store and hope it sells. So, when we do it, we’re going to do it right and we’re going to do it professionally. In the meantime, we’ve been learning a lot about the usage characteristics from the PC.

How about portable, mobile media? We have the iPhone and iPod aiming to become mobile viewing devices, as well as other types of handsets.

I do think that’s a viable platform, for sure. I don’t think that you’re going to see us do it right now. We put a lot of work in to a quality viewing experience. I do think it’s going to be rare that people watch long-form stuff on their iPhone ... That’s not our sweet spot right now. We’ll observe it. We have technical ideas for how we would run it in an environment that is power-constrained and bandwidth constrained but we haven’t really gotten to (planning it yet).

You probably have to look at it market-by-market a little bit. In China, there are a lot of people who don’t have television sets at home but they do have mobiles. Would they watch a football game on their mobile phone? Yeah, they probably would.

So where in the world is Joost now? You have offices in London, New York… ?

We have three primary offices. London’s our headquarters and myself, Niklas and Janus and our CFO (are based there). Our development centre is in Holland, just outside of Amsterdam. And then all of our content acquisition and our advertising sales organisation are based out of New York. We’re not fully staffed up yet, we’re a startup - we have people doing three jobs! We want to grow with the opportunity and with the market segment.

Niklas and Janus, they’re both active board members. They do spend varying proportions of their time on it. Until recently, Niklas couldn’t spend hardly any time at all because he was essentially full-time at Skype, so he was effectively just a board member for us. And Janus spent some portion of his time - it’s hard to say (exactly) because it varies from week to week.

Last week, Niklas kind of cashed out of Skype and eBay last week. Do you think that will result in him spending more time with you on Joost?

I think he’ll spend a little more time on Joost, a little more time on his own investing side because they have an investing fund, Joost will be one of their portfolio companies.

BBC has iPlayer, which is the same Kontiki platform as 4OD and Sky’s Anytime, the same principle as your own, P2P; what little Five is doing are direct web downloads; ITV has an embedded web player. What do you think about this proliferation of methods of watching internet TV? I’m sure many consumers would rather have one route to internet TV? Do you see these methods having to each come together in the future?

There’s the notion of which technology to use to deliver it and then the notion of who owns the viewing portal. In terms of methodologies of delivery, there’s CDN and peer-to-peer like ours and you can make up arguments as to which one’s better, obviously we think ours is better, but I think that’s a technical question. There are three basic blocks in the supply chain - those who create and originate content, those who distribute it and then those who create devices that consume it. Of course, companies always want to transcend those building blocks because you can make more money by being in two places at once. In the United States, for example, News Corp. with Fox and DirecTV have both content creation and have content delivery over satellite.  I think that, historically, companies that have been very good at creating content have not been particularly good at being distributors of that content, nor have distributors of content been particularly good at creating content. So we think, at some point, what will emerge is clear delineation between those blocks. Many of these companies that put content on their website or that have their own player to show their content will eventually just say ‘okay, I give up’; users like to go to a place where there’s aggregation and that will become (dominant).

That would suggest that the projects being launched by the likes of the BBC, ITV and so on are just wasted money at this point for a few years, until they realise?

We understand that you want to try to have your own player, and that’s okay. What we don’t understand is why you want to keep it exclusive to those players. The analogy I tell them is this - you make Coke, why would you only have one vending machine for Coke? You want hundreds of different vending machines. In the case of the BBC, your job is to make great content, that’s its national stature - why are you quibbling over whether it goes over an iPlayer versus YouTube. It seems like you’re using tax-payer money to make great content - (so) put it in as many places as you can. CBS gives everybody content - they give it to us, they give it to our competitors; why not? It makes sense to me. You make Coke, you’ve got to put it in as many places as possible, you’ll probably win that way. (Ed. note: BBC and BBC Worldwide publish teaser clips on YouTube; BBC runs full shows via iPlayer only; a commercial equivalent is thought to be ready for development by the commercial BBC Worldwide arm.)

But many content makers do operate that way and favour distributing over as many platforms as possible. Isn’t that a problem for you? Do you think exclusivity is important for Joost? Some content creators like Ministry Of Sound, which you have in the UK - goddamnit if I don’t see every week they’re on another platform.

We’d love to have exclusive content ... We operate on the assumption - Amazon doesn’t have an exclusive on books, do they? You can get those books anywhere, but you go to Amazon to buy them because the experience of buying them there is better. Our assumption is, content is like books. We don’t try to compete by having some kind of exclusivity where you can’t see the content elsewhere and you have to come to us - that’s not a good relationship with the user, we want a relationship where the user comes to us because they like watching it with us versus watching it somewhere else.

Who do you see as your competition?

Truthfully, I don’t think as much about competition right now because the landscape is so nascent. In the broadest definition, everybody - from cable operators, satellite operators, Apple, YouTube, is a competitor. But, in the stage we’re at right now, I worry less about my competitor and more about - let’s create the right market, let’s understand what our niche is, which users do we suit well for, which content do we suit well for and let’s create that market. Once the market is created, then let’s worry about competition. All the companies that have been successful have worried less about competition and more about the creation of the market. Whether it’s search or portals or auctions - every time they’ve started, there have been five or six and then over a period of years that’s narrowed down to one or two, and I think you’ll see the same thing.

How do you feel about Babelgum? Have they stolen your clothes?

I think they’ll try to approach it in a way that’s somewhat similar, somewhat different than us. I read the same things you do, they say that they’re going to try to go for niche content, so maybe niche content will be a right approach; we’re going for niche and mainstream. We should all be worried about having 10, 15 million users - and then we can worry about who has seven and who has five (million). Right now, we’re all sitting in the hundreds of thousands of users on a daily basis.

Could you tell me about your different ad formats?

We have three. The primary one is the television ad spot, which is either five seconds, 15 seconds, 30 seconds, one minute or two minutes, the principle one is 30 seconds - we’ll play an ad and then restart the show, so it’s all mid-roll effectively. For some content, like a music video, we’ll show a five-second at the very beginning and that’s all we’ll ever show. The second style is what’s called a hand razor, it comes up and it reminds you that the show is sponsored by X, Y and Z, and it’s clickable so, if you click it, to further information. And then there’s the overlay where a HTML page appears in a translucent manner on top of the viewing surface - a little more intrusive, a little stronger positioning. We haven’t seen a lot of that yet.

How popular are each of those models proving with both viewers and advertisers?

The TV spot is the most popular because advertisers have that asset - in other words, they have an ad to play, they understand it, it’s something that they can get their arms around pretty straightforwardly.

YouTube recently launched overlays - what do you think of how they are using that format?

They have multiple monetising methods. They do banners, they have small keyword ads and they do overlays. It’s too early to tell if that’s a premier advertising format ... Our ads are targeted by information you provide to us when you log on - so, name, birthday, sex and zip code; then we look at your viewing history. We have relationships both with the advertisers themselves, we have 37 advertisers on the platform right now, nice brand names - Coca-Cola, Vodafone, Kraft foods, Gilette, L’Oreal, Nike - and because they principally buy through agencies - GroupM or Ogilvy or something like that. One third of them came from agencies, two thirds of them were direct contact, 10 came from IPG Media Lab. We have a lot of demand for very little inventory. As user count goes up, so we’ll have more inventory and naturally prices will come down a little bit. Advertisers totally understand the 30-second spot, it’s mother and apple pie to them. It takes a little bit of explanation to have them understand overlays.

When do you think you’ll come out of beta?

These days, it’s such a loosely used term for software. At some point, we’ll come out of beta but I don’t know that it matters so much - we are publicly available, anybody can get it, it’s called beta because our idea is ‘please give us feedback’. It’s completely premature to say (how much money we’ll make) because it’s dependent on pricing of ads, level of inventory, the mixture of the type of content that people watch.

How about distribution economics?

When we launched, half our content was from our servers and half was from our servers. After about a day, we climbed up to 65, now it’s over 70 percent of the content is viewed from the peer network, so only about 30 percent of the content comes off of our servers. That gives us a lot of hope about the technology.

It seems like a lot of the big broadcast networks, in the UK at least with Sky, Channel 4 and BBC iPlayer, have realised that this is a cheaper distribution mechanism than streaming, but some ISPs have complained P2P will swap their networks. What’s your view on that, since it’s a similar model to yours?

It’s such a hypothetical conversation. I would bet that, if you took all of the IPTV that’s out there right now and add it all up and put it on one ISP, they couldn’t tell the difference. We have designed our peer-to-peer so that it doesn’t hog anything from one given user - we clip it up in to different segments and then I give some of it to you and some of it to you and I have some of it and then, if a fourth person wants it, we all send it to him.

It’s more likely to make customers upgrade their service, from 1Mbit to 5Mbit to 10Mbit. I have more experience with American service providers but, if you told Comcast ‘I’m going to get all of your users to go from a 1Mbit connection to 6Mbit or 10Mbit and you’ll double your subscription price’, they’d jump for joy. It’s great - I’m creating demand for them.

Maybe somebody didn’t tell Tiscali?

If you own your own facilities, it’s good news. Tiscali rents, so that’s a little harder.