Will Venice P2P Streaming Site Surge in 2007?

Why stop at a 10-minute online video when you can produce and distribute your own channel?

That's the reasoning behind the latest contender for broadband video supremacy from the same P2P wizards who brought us Kazaa and Skype.

Dubbed Joost (code-named The Venice Project during development), it's already generated breathless buzz from developers, media insiders and analysts as the venture that may finally achieve the long-awaited breakthrough in Web-based video distribution.

Its founders are counting on the cost-effectiveness and efficiency of P2P networks to stream long-form, high-def video, whether from individual or corporate sources, to eager viewers weary of the clunky, amateurish, short-form videos already available on YouTube and other sites. The Joost game plan breaks down into strategies to please each of their three core constituencies: users, content providers and advertisers.

To wow audiences, Joost proposes making the video experience one of ease, quality, personalization and community. Users can build their own channels, tweak shows while using DVR-type controls, communicate with others using Skype conference calling, and share playlists within their social network. Sort of an integration of MySpace and YouTube, both of which, by the way, are of course working towards this very goal themselves.

Joost founders Janus Friis and Niklas Zennstrom have strong ties with the open source community, which will provide one major key to the development of Joost's wow factor. Letting a bunch of code freaks loose on your software can yield radical, addictive enhancements. Widescale beta-testing only began late last year, so it's too early to tell what these features might be.

Content owners worried about copyright protection will be assuaged by the security inherent in streaming. Joost execs are quick to emphasize that though it employs peer-to-peer technology, it is not a file-sharing service like Kazaa. Streaming will ensure "the highest standard of encryption" within Digital Millenium Copyright Act strictures, they say.

Finally, there's the business model, which counts primarily on targeted advertising to allow providers to monetize their content. How much advertising this targeted audience will take remains uncertain.

A primary reason for all the Joost hooplah is simply the founders' pedigree. Friis and Zennstrom scored their first P2P success in Kazaa, selling out to Sharman Networks just as the latter became embroiled in a lawsuit from content providers.

In 2003, the duo founded Skype, capitalizing on the growing bandwidth potential for VoIP. They sold Skype last year to eBay for $2.6 billion in cash (plus another $1.5 billion in bonuses). How eBay will tie in to Joost (Friis and Zennstrom are still on board) remains another mystery sure to unfold in the coming months--though beta testers have already spotted eBay ads.

While the plan sounds good, the venture already faces some stiff competition and other hurdles.

Major video content providers certainly seem to be accepting the inevitability of Web-based distribution--in contrast to their music peers over the last decade. They've already seen several spectacular cases of Internet distribution boosting TV viewing levels and vice versa. For example, ABC has trumpeted its 12 million streamed episodes of shows like "Lost" and "Desperate Housewives."

But the big TV networks and their parent conglomerates all have their own Web distribution of free programs or other Web video distribution ventures they're backing. Along with independents, including BitTorrent, Brightcove and Video Egg, one of these, Veoh, already employs a P2P model and has backing from Time Warner and former Disney boss Michael Eisner. Another, Akimbo, has already introduced its own box, a VoIP syndication player.

Meanwhile, Apple's iTunes offers episodes from more than 150 TV programs, and Steve Jobs is certainly not going to sit on the sidelines of this fray knowing the logical evolution of the iPod is towards video and communication.


The ever-present bottleneck bugaboo also looms. If every U.S. broadband user suddenly started streaming video, networks would clog. The question is whether capacity can keep up with demand; so far that's been the case, but analysts warn streaming video represents a quantum leap in bandwidth usage.

Finally, there's the simple but potentially massive hurdle of human passivity. To date, no video distribution model other than Netflix has been able to make inroads into viewers' desire to sit on their collective fannies and exercise their thumbs. Unless Joost plans to integrate with DVR manufacturers and suppliers to ensure that Web-delivered video winds up on DVR platforms, it will never attain the convenience attractive to most viewers.

But that approach runs counter to the socializing and community elements of the founders' strategy. They want streamed channels that are customizable and "mixed with all the wonders of the Internet."

Sound like a wonderful way to "fix" TV, as they say. But I'll have to see how the fixes work before I'll be convinced. And whether passive viewers will want to engage with all that Internet interactivity remains a dubious proposition.