Joost’s Fredrik de Wahl

April 2007

By Mansha Daswani

In much the same way as the peer-to-peer site Kazaa revolutionized the music world and Skype shook up the telecommunications industry, the new online content platform Joost is looking to turn the television-viewing experience on its head. All three were created by Niklas Zennstr�m and Janus Friis, who used the funds from the sale of Skype to eBay to finance Joost, which has lined up deals with Viacom, CHUM and i-concerts, among others, in advance of its launch later this year. As CEO, Fredrik de Wahl is working on making sure that the platform provides a good experience for users, a safe environment for content owners and a money-making opportunity for advertisers.

WS: How is Joost planning to change the online viewing experience?

DE WAHL: Joost offers the best TV experience and the best Internet experience in one combined package. It is taking the TV experience and what is good with TV today—high entertainment value, full-length programming, full-screen experience, and channel concepts—and bringing that online. [The best feature Joost offers is] that when you switch it on, you instantly start to watch video. We fundamentally believe that there is good entertainment value in the TV experience. But there are also bad things about TV, which we remove. We can [offer content] on demand. You can watch what you want to watch, when you want to watch it, and where you want to watch it. You can bring many more interactive features, social networking, all of the best Internet technologies.

We’re also different compared to other TV ventures online in terms of how our business model is set up. That is very important for us. We fundamentally respect the content owners, the advertisers and the viewers of this platform. You cannot have a long-term sustainable business model online unless you respect all of these three groups. Other ventures cater to one or two of these groups and do that very nicely.

If content owners don’t feel that this is a secure platform that is good for their brand and good for their dialogue with the viewers, they will not go online. If they cannot monetize they will not go online. Content is a high-cost business. You need a return on investment, and if you cannot do that online you will not move online. The infringement issue that exists on the Internet today is something we really want to limit on our platform. It’s not only about protecting leakage from our platform. It’s also about association with infringement going on on the platform. We create a walled garden where the content owners will be in an environment that is secure and protected.

Before Joost, advertisers and their [potential] online business models had been fairly neglected. They had been offered text-based strings, searches, pop-ups, ugly and crude advertising, which is what you do on websites today. We offer the same kind of advertising and the same kind of branding and storytelling that they do today on TV. At the same time, we give them the holy grail—the targeting ability of the Internet and the individualization of the Internet.

And if viewers don’t find us to be a good platform, they will not come to the platform. When you develop a platform, [you have to create] an ecosystem that will be sustainable in the long term.

If all of these groups are not working together, there will not be content produced for the platform, there will not be advertisers moving their dollars to the platform, and the viewers will not be there.

WS: What content-protection measures will you have in place?

DE WAHL: The most important anti-piracy measure is that we don’t allow user-generated content on the platform. We only have professional uploading tools, which means that only content providers we have a relationship with can upload to the platform.

WS: How has the response been from the advertising community?

DE WAHL: That’s probably the one industry that has been raving about us the most. We let them do what they do well—video, 30-second spots, 15-second spots—online. They don’t have to reinvent their business model. They don’t have to start to think, How can we make money in a digital era? We give them a tool set for the future. They can do better targeting, they can play with more interactivity, and we can integrate
e-commerce into the advertising. We offer them a playground for the advertising experience of the future.

WS: And how are your content negotiations progressing?

DE WAHL: We are in conversations with most of the major content rights holders in the world today. All of these conversations are at different stages, depending on how their own digital strategies are going.

Viacom is of course the first partner we announced that is of this size. It’s a very good partnership in the sense that they have very good content for our demographic online. They have a good global brand, and it demonstrates the trust and the confidence the content industry has in us.

WS: What’s the key to bringing users over from pirate sites to legitimate platforms?

DE WAHL: I’m not in the business of convincing people to change platforms. I am in the business of providing the best experience there is on Joost. People will come to our platform for their viewing needs.

Also, if you look at other platforms, which are more technology driven, Joost is a much, much simpler, broader mass-market product. Especially if you look at the illegitimate things—those are �basically for tech-savvy college kids who go to great lengths in order to watch [pirated content].

WS: Have you also considered using a download-to-own model?

DE WAHL: No. Joost is a pure streaming platform. We’re not doing any downloads at all. More importantly, those are technology choices we do not present to the viewer. This is not a technology experience, so the user doesn’t know if we download or stream the bits and bytes to their computer. This is all about consuming media, which TV is fundamentally all about. It’s not about having a file or technology or a network where you can look at a bit and byte and burn it onto a DVD. It is all about watching TV, and that’s what the platform is created to do.

WS: Are you looking at any other revenue streams, beyond advertising?

DE WAHL: There will be many opportunities for having additional revenue streams. One may be pay per view; another may be e-commerce solutions that you can integrate into advertising or even to the content itself. That is not the focus of what we’re doing today. We’re delivering TV with advertising, and that is our fundamental business model.

WS: When will the beta process, in which you are testing the software, be completed?

DE WAHL: Most software stays in beta for a very long time. It’s a gradual process. Today we have about 20,000 [or] 30,000 users of the platform, which is a very small �community. In the next phase we will be going into the hundreds of thousands, which means we can test out viewer behavior much more. So far we have �tested the technology, now we’ll start to test the viewer behavior. The phase after that will be general availability. We may still be in beta, but anyone will be able to go in and access the platform. It’s a three-step rocket here. The first two stages of that will happen before the end of the second quarter this year.

WS: Can you tell me more about what you’ve already learned from the beta process?

DE WAHL: The stage we’re in right now is the technology-driven test phase, where we run it on different operating systems, see how the network is building and how we interact with it. So far we have received almost disappointingly positive feedback! There’s very little you can do when people are happy! If you get people saying this is great, keep up the good work, there are very few tangible changes for us to make. Most of the negative feedback has been about the content, meaning that we are fairly limited in the volume of content we offer on the platform. That’s a choice we made, because when you have 10,000 users, of course you don’t put up the high-end productions, the top-tier programming. It would be foolish to waste that media value on 10,000 people. As we go into the hundreds of thousands of viewers, that’s when we will add the content that caters to a mass market as well.

We’re very grateful for our beta test community, because that’s what drives this software development. It’s interaction with the people who use it.

WS: For how long has Joost been in the works?

DE WAHL: When do you really start a start-up? In some shape or form, this project has existed for a longer time than Skype has. We’ve been talking about doing a video project or a TV project since 2002. The market had not been mature for that. Two important things had been missing: first of all, the infrastructure of the Internet had not been quite there yet to do video. We see that is coming together right now. But most importantly, what’s been missing is that the content has not been moving online. That is happening right now, and that is why we’re doing it right now.