Joost Feels the Squeeze

Just three years after launching in a fanfare of publicity, Joost, which provides professionally made TV on the Web, is shifting directions.

It will now provide white label online video platforms to media companies and distributors.

Joost is closing down its offices in the Netherlands, retaining offices in the U.S. and the UK.

Joost on Tuesday said it will provide the market with a cost-effective, end-to-end solution for media companies to publish videos under their own brands.

It also said it is winding down operations in its development center in Leiden, Netherlands. A core team in New York and London will work on providing white label video solutions.

Joost is reportedly slashing its 90-strong workforce to 20, and outgoing CEO Mike Volpi referred obliquely to the layoffs in his blog. However, company spokesperson Kerry Vance declined to confirm the extent of the layoffs.

Static in the Background

The change in business model is accompanied by a handful of changes in Joost's top offices.

Mike Volpi has been replaced as CEO by senior vice president of engineering Matt Zelesko, but he will remain actively involved as chairman of the board, Joost said. Zelesko, meanwhile, will concurrently lead the engineering organization.

Stacey Seltzer, currently senior vice president of international business development and content acquisition, will now run the business operations.

The Birth of Joost

Joost began life as an Internet TV service created by Niklas Zennstrom and Janus Friis, the founders of Skype and the peer to peer (P2P) file-sharing application Kazaa.

In May 2007, Joost announced that five parties had invested about US$45 million in the company. European venture capital firm Index Ventures led the financing jointly with Sequoia Capital.

Joost's management rushed about setting up deals for the company. Last month, it signed up 12 new content partners, including Spider-Man creator Marvel Entertainment; ReelzChannel; Japanese anime studio Toei Animation; and Internet music video network Blastro Networks.

In March, Joost announced that it had added 11 content partners in Germany and partnered with European social network Netlog.

In December of last year, Joost announced that Nippon Television Network and Yoshimoto Kogyo would offer Japanese anime and comedy programs on Joost.com through dedicated channels. Advertising sales would be handled by Japanese advertising firm Dentsu.

These deals will remain in place, and the content will still be available on the Web. "We'll continue to operate Joost.com as a video portal," Joost's Vance said.

Joost's Leaders

Outgoing CEO Mike Volpi was Cisco's chief strategy officer, and the networking giant acquired more than 70 companies during his 13-year tenure.

Incoming chief Zelesko held the same post at Comcast Interactive.

David Clark, executive vice president of advertising and marketing , was previously VP for MTV Networks global marketing partnerships, where he oversaw advertising sales and integrated marketing for various MTV properties worldwide.

Henrik Werdelin, Joost's chief creative officer, was vice president of product development and strategy at MTV Networks International, where he spearheaded the development of many award-winning innovative products.

Jason Gaedtke, Joost's chief technology officer, was chief architect at Comcast and a Comcast Fellow. Lisa Gelobter, vice president of business operations, was on the senior management launch team for Hulu at NBC and led product development functions and organizations at Brightcove, Miva, ThefeedRoom and Macromedia.

The Invisible Hand

Though Joost was relatively early to the scene in providing free, ad-supported, mainstream TV programming to users via the Web, its buzz was largely outmatched by that of its rivals. For example, Hulu, a video site developed and funded by deep-pocketed TV networks themselves, emerged as a leader in the field. Given its roster of talent, why couldn't Joost keep up?

"A lot of bright CEOs and business managers have been hammered by this economy," Laura DiDio, principal at ITIC, told the E-Commerce Times.

Another reason may be disagreements over direction, which might have played out in the management reshuffle announced on Tuesday.

"They had conflicting priorities," Yankee Group analyst Josh Martin told the E-Commerce Times. "First, it was about the technology -- P2P was a great content distribution medium. Then it was about the content itself. And now it's about white label video service. It's tough to compete on three or four different levels."