NEWSWEEK: Why start a TV company? Niklas Zennström: We actually wanted to do it for many years but it was just too early. A year and a half ago, we thought it was time. We got really good insight because we were dealing with many of the media companies through litigation. [Laughs.] We actually started to develop relationships with them and started to understand their challenges and how they were looking at things.
Janus Friis: At Kazaa we were trying out many different schemes for advertising-supported business models. But back then no one was ready for that. [Content-holders] were ready for litigation. Now they’re totally ready for it, and they see the broadband audience of hundreds of millions of people, and while they have to protect the existing business mode they’re extremely eager to exploit the Internet.
Is Joost supplementary to traditional television, or will things like it supplant the current TV model? Zennström: New technologies very seldom completely replace things—they’re usually complementary. Certainly TV is not going away. It is exactly similar to what we’ve seen with Internet telephony. Skype didn’t make telephony go away. There are actually more telephone calls being made each year. The same thing with file sharing—it’s actually making people buy more music.
Don’t people buy less music and incur fewer long-distance charges? Yeah, it becomes a competitive pressure on the established medium. But in the near term, this is certainly complementary, and then we’ll see in the long term [what happens]. Obviously we think that the Internet offers tremendous benefits for how you can deliver television. There hasn’t been a lot of innovation in television distribution since the TV was invented 50 years ago.
What distinguishes Joost from all the other Internet television companies? Many other companies are being very focused on video. We’ve tried to make a TV experience here, and at the same time, you also have companies like cable companies doing IPTV, which is kind of bringing, just taking TV and sending it down the Internet pipe. So we’re trying to [take] the good thing from TV, with the full-screen experience and everything, but still the good thing, the interactivity from the Internet.
Did you have any doubts whether the big content companies would deal with the former Kazaa guys? Friis: If you asked that question six months ago, probably we would’ve said that we didn’t have any doubts, because we have to present a brave face. But we would certainly have had doubts, because we were just getting started. We spent a lot of time out there, explaining what we were doing, explaining to all the whole range of media companies, small ones, bigger ones, independent and established. We had really tried to take all their concerns into consideration from the beginning. We know that they want a certain level of security. We built that in. We know that rights are a very fragmented thing. I think over time the momentum built up.
On one hand, it’s impressive that you have deals with companies like Turner. But while you have “Anderson Cooper 360,” it’s not the regular broadcast. You have Comedy Central but not “The Daily Show.” When do you guys get all the good stuff? Zennström: At some point we want to have everything, but you have to take it step by step.
Friis: With the current roster of deals, you have TV classics, but you also have some of the current big hit shows. You’re tasting what’s to come. You need to have patience to do this.
How will people eventually get Joost on their living room sets? Zennström: A TV screen and a computer screen are kind of the same today, there’s no big difference. One has a built-in tuner, the other one doesn’t. If you also take a look in our technology, there’s no proprietary software that requires Windows. We could relatively easily compile this for a set-top box. It’s something that we thought about from day one with some technology choices that we made.
Are you planning a live component for Joost? Friis: Live is one of these things that obviously we’re working on and we’ll build into the peer-to-peer fabric so that people could do it.
Will Joost eventually be able to handle high-definition television? The peer-to-peer network gets more and more robust as it grows, but the video quality itself comes down to the actual last-mile connection. Right now we’re doing TV quality, or in some cases, near-TV quality on a very low broadband connection, actually around half a megabit, because we want everyone who has any broadband, even fairly slow broadband, to be able to use it. But then we’ll be improving everything so that it will also be able to take advantage of higher bandwidth connections. On an 8-megabit connection, for instance, you can do HDTV. So it’s totally within the realm of possibility to do HDTV, as well.
Who are the competitors that you guys worry about? When we launched Skype, you could already talk for free on Microsoft instant messenger. A sane, rational human being would see that Microsoft was already doing the same thing, and probably wouldn’t do a start-up.
Zennström: We couldn’t raise money because of that. Investors said, “But Microsoft is in this space. Are you guys crazy?”
Friis: So we don’t tend to think so much of competition. If you look at it from a broader perspective, we’re competing for people’s entertainment time.
But even your content deals aren’t exclusive. People will be able to watch some of the same shows in four or five places. Zennström: That’s why we need to be really focused on executing our vision, really looking to what our users want. And of course we need to think about getting as much content as possible.
You say you will have hundreds of thousands of channels. How will people find what they want? It’s a matter of having smart technology that makes sure that the channels you’re getting are not necessarily the same as the ones I’m getting. Based on my preferences and viewing habits and all these kinds of things, people should be able to stumble on content in different ways. Obviously, the very specific one is search. That’s easy. We’re also experimenting with new user interface metaphors to make it really easy to browse through hundreds and thousands or tens of thousands of channels and see what’s on. Another interesting course is visiting things that are recommended by your friends—channels that are inspired by what your friends are watching.
Are you interested in pay-per-view? Friis: Some high-value content like movies and sports events will be pay-per-view, just because that’s the way the economics for those things work. But right now we’re totally focused on opening up the ad model.
Are either of you big TV watchers? I don’t watch TV at all. I buy DVDs, and that means that I typically get the shows several years late, but then I have them and I can watch them when I want.
Zennström: I’m a frustrated TV watcher. I tend not to have a lot of time available, so when I come home at night or whatever, and I turn on the TV and go through my programming guide, either I have to jump into a show and miss the beginning or have to wait. I don’t have the patience to wait, so I tend just to watch the news.
Friis: And you also don’t have the patience to program a TiVo.
Zennström: Sometimes I do that, but I’m not very good at that.
You sold Skype to eBay. Would you consider a similar sale with Joost? When we were building Skype, we had absolutely no plans for exit or to sell the company at all.We were focused on building a long-term sustainable great business that would change the way people communicate. We had a fantastic opportunity do this at eBay. At Joost we don’t even have any discussions, contemplations or anything about what is our exit strategy.
Friis: There’s a big difference between us and entrepreneurs who are building a company to try to sell it. What you tend to do then is build products, and we are not building products. We want to change the way people consume TV. That’s much bigger than building a product.
