Mike Volpi gives Joost a boost
TV remains the dominant medium, so Joost wants to make the Internet more like TV. Fortune's David Kirkpatrick interviews the former Cisco exec who should help Joost get there.
NEW YORK (Fortune) -- One thing that's easy for we Internet partisans to forget is how little time people spend online, even still. For all our legitimate passion about the connected age, Web 2.0, user empowerment, social networking, etc., the fact remains that most people worldiwde still spend vastly more of their media time watching TV.
Mike Volpi's appointment as the new CEO of Joost may be the best sign we've seen that that could change. But if it did, it would be because the Internet was becoming more like television. That's exactly what Joost aims to achieve: a free broadcast-quality TV-viewing experience with all the added bells and whistles of the Internet thrown in for good measure.
To use Joost, which is currently in a public beta and won't formally debut until later this year at the earliest, you download the company's software onto your PC or Mac, and peruse the service's many on-demand channels, which span a dizzying array of topics. (You need a medium-speed broadband connection, about 500 kilobits per second.)
Besides esoterica like Futbol de Nicaragua and PokerHeaven TV, channels include top-quality content from CBS (Charts, Fortune 500), Time Warner (Charts, Fortune 500), and Viacom (Charts, Fortune 500), including several flavors of MTV and Sports Illustrated Swimsuit on Demand. Unlike almost all other online video, Joost's is viewed full-screen.
I had breakfast with Volpi the day his appointment was announced. When I walked in, he was already sitting at the table, Macbook open on the table in front of him, with a big Joost sticker affixed to the back of the screen. "I put it on yesterday," Volpi told me.
He is one of the most impressive people in tech. Volpi recently left Cisco Systems (Charts, Fortune 500), where he was widely viewed as a potential heir to John Chambers' CEO slot. At Cisco, Volpi ran the critical multi-billion Routing and Service Provider Technology Group, which sells switches and routers sold to the world's largest telcos and cable companies.
What makes Joost different, aside from the quality of the video it offers, is the way its content is organized and its viewers tracked by its software. "We give content owners and advertisers all kinds of control they never had before," says Volpi.
Joost delivers its video signal using peer-to-peer techniques, like other services such at BitTorrent. Each show you watch is sent to you in chunks drawn from the computers of many other viewers. The software assembles the show on the fly. In contrast to most of today's online video, which becomes harder to access the more popular it becomes because so many people are trying to pull it from the same servers at the same time, on Joost the most popular video is the easiest to get and the quickest to load, because there are more people from whom to draw from.
But Joost is different from BitTorrent and other systems in two fundamental ways Volpi explains. First, each bit of video is separately encrypted, making it all but impossible to see it in any way other than how Joost wants you to. In addition, there is a separate, centralized portion of the system that tracks how the video is used and by whom. "We know who you are, what ads you've seen, and how many ads you've watched since you became a customer," says Volpi.
Because Joost knows so much about its users (including information it gets when you sign up), it should be able to make money even as it shows you fewer ads than on TV. The ads it does show you, however, are likely to be ones that either you want to see or that some advertiser is willing to pay a lot to show you. Joost will be able to target its video precisely. If a content-owner, for example, has sold video rights in the UK, a show can be locked out there but be visible anywhere else. "We could even make a show available only in three specific zip codes," says Volpi. "Or a content owner could automatically replace the soundtrack with French when it's shown in France, Belgium, or Papua New Guinea." (Volpi, born in Italy and raised in Japan, is a very international fellow.)
Joost intends to make money by selling advertising. If you're a big content-producer, it will share around 70% the proceeds of the ads with you, but little ones like, to use his example, "David Kirkpatrick TV," will get more like 50%. Joost advertisers can be guaranteed their ads will never run next to certain programs, and content-owners can be assured that unpalatable ads will never run in their shows. At some point Joost may allow viewers to see video without advertising, but if it did, customers would have to pay. It can also offer pay-per-view programming. By later this year, says Volpi, it will have the capacity to broadcast live events.
Joost is not for what Volpi calls the "clip culture" of YouTube, but rather for "traditional television and long-form video, like films and sports." An interesting article at In-Stat suggests that one of the biggest challenges likely to face Joost is the resistance of ISPs like Verizon, for instance, which offer their own video services. But the article, by Gerry Kaufhold, notes that if that's the challenge, Volpi may be the best guy to navigate the shoals, given his longtime experience and relationships with service providers. With a consummate professional in charge, this ambitious form of Net TV could get a real chance to succeed.