Joost to Spin off as New Company With Focus on Video Ads

Hyped Internet television startup Joost is once again a stand-alone company, over a year after it was swallowed up by an advertising network. Its renaissance suggests a more profitable future for advertising-funded web video, where many service providers have struggled to cover their costs.

Adconion Media Group, the company that bought Joost's assets in November 2009, has now decided to spin off Joost Video Network into a separate stand-alone business as it tries to grab a larger share of the online video ad market.

Joost began life as a project to shake up the distribution of Internet TV content using P-to-P (peer-to-peer) software, a strategy company founders Niklas Zennström and Janus Friis had already tried with Kazaa for music and Skype for IP telephony. However, they were less successful with video than they had been with music and phone calls, and in late 2008 they turned off Joost's P-to-P service and began serving video from a Web server using Flash instead.

Less than a year later, after another switch in strategy to selling video-serving technology to other media companies, Zennström and Friis sold "certain assets of Joost" to Adconion for an undisclosed sum, the company said.

In March 2010, Adconion put those assets to use and launched the Joost Video Network, an online video advertising platform. It allows advertisers to present their products using, for example, pre-roll video ads, which are played before regular video content, or in-banner video ads, which is video content integrated into traditional banners, according to Adconion.

Adconion makes money by first buying ad inventory in bulk from a wide a variety of sources, then reselling it to advertisers that are interested in reaching a certain demographic, rather than specific sites. The advertiser won't know where the ads will pop up, only that they will be presented to the intended audience. The advantage for them is lower costs compared to buying directly from websites, according to Adconion.

The reasoning behind spinning off Joost is to take better advantage of the growing interest in video advertising, which goes hand in hand with a growing amount of video content on the Internet. In less than 12 months, Joost has quadrupled its revenues to nearly US$30 million across the globe, and expects triple digit growth into 2011, according to a statement.

In March, a dedicated Joost website for advertiser and agency partners will debut, according to Adconion. The spin-off will also include Joost.com, a video site that is closer to Zennström's and Friis' original vision for Joost.

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