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by Grant Robertson
The Globe and Mail
May 31, 2007
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Splashy Joost ads at Indianapolis 500 don't necessarily mean the time has finally come for the industry
When the flag dropped at the Indianapolis 500 last Sunday, it was a big day for fans of the concrete oval in Speedway, Ind. Perhaps more surprising, it was also a significant moment for Web video.
Special race content was made available for the first time on Joost, the Internet television site being launched by the founders of Kazaa, the notorious file-sharing application, and Skype.
Splashed across the side of South African driver Tomas Scheckter's car - prime real estate where brands such as Budweiser and Kodak pay hefty sums to reside - was an ad for Joost. It was a coming out party of sorts for the emerging Web TV broadcaster, which is still in test mode and hasn't done very much offline advertising.
But glitz is deceiving. While Joost may appear to be gearing up for a run at the mainstream in the next month or so, the pace of development is happening slower than much of the hype would suggest.
Joost has been toiling away for months signing content deals with television networks and movie distributors. And to its credit, it has made the most headway of any independent startup.
Rather than adopt the YouTube model, which has landed owner Google Inc. in the middle of a billion-dollar lawsuit with Viacom Inc. for not doing enough to prevent copyright-protected content from being posted on the popular video site, Joost wants to be legitimate.
To do that, it is pursuing the slow road - a route the networks may be willing to embrace after a few years of their own failed efforts to establish a Web audience.
That was apparent a few weeks ago, when the new chief Internet strategist at CBS Corp. quipped to the Wall Street Journal that the network's ambitious Innertube project launched in 2006 should be renamed "CBS.com/nobodycomeshere."
Innertube was supposed to be the place where the network's audiences in the United States went online to watch shows such as CSI: Crime Scene Investigation and Jericho. NBC and Fox have also been building their own portals.
But the strategy hasn't been drawing enough viewers. Audiences have been all too willing to surf around content clearinghouses like YouTube, even if the video quality and legality of the outside sites is questionable.
"A lot of people who may want to use these [network] services don't even know what's there," said Kaan Yigit, a consultant at Toronto-based Solutions Research Group, which tracks the emergence of new media. "For example, Innertube, what does that mean to anybody? They spent 100 years building the CBS brand name and then call it Innertube. It sounds like a replacement tire."
Another problem that has hindered Web TV's development is the networks' reluctance to put their full content online.
But after years of protectionism, some networks are more open to doling out their shows to other portals, provided there are legitimate deals to be signed. CBS is offering some of its video to as many as 10 websites, including Joost. In Canada, MuchMusic, movie distributor Alliance Atlantis and small Canadian Web player JumpTV are doing the same.
At JumpTV's annual meeting in Toronto a few weeks ago, the Web startup announced a new strategy. In the coming years, it will increasingly pursue an advertising-based model, offering many of its channels for free and pulling in revenue from commercials embedded in the content. Currently, it charges users a subscription fee to watch the local television stations from around the world that it streams online.
It has introduced the "Jumper," a downloadable display that lets other websites, including blogs, stream JumpTV's channels.
"It's not just the big portals. A blogger can take JumpTV's content with the jumper if you register with us," chief executive officer Scott Paterson said after JumpTV's meeting. "Sell ads all around it, build your business if it helps your value proposition. What we're trying to do is build an army of thousands and thousands of resellers - from the blogger all the way up to the bigger portals."
Mr. Paterson is no stranger to bold predictions about the future of Web businesses. As an investment banker during the dot-com bubble, his reputation was tarnished when several Web stocks he eagerly touted later collapsed. Today, Mr. Paterson says he is leaving the predictions on when JumpTV will reach profitability, and on the company's stock price, to the analysts.
But the tone across the Web video sector over all is less frothy this year than last, with sites still searching for the best model to attract audiences.
And while Joost's advertisement at the Indy 500 may suggest the industry is preparing for its debut soon, the lack of major content deals indicates the race is only getting started.
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