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Viacom chooses rival over YouTube
START-UP JOOST WINS POPULAR PROGRAMS
By Elise Ackerman - MEDIANEWS STAFF
Article Last Updated: 02/21/2007 11:45:23 AM PST

Viacom, one of the world's biggest media companies, struck a deal Tuesday with two of the Web's biggest rebels to distribute shows like ``Laguna Beach'' and ``Road Rules'' on a free Internet-based service called Joost.

Viacom's embrace of Joost less than three weeks after it asked YouTube to take down more than 100,000 videos signals that the spat between YouTube owner Google and Viacom is serious and could end up in court.

Viacom Chief Executive Philippe Dauman said YouTube was continuing to post Viacom's films and TV shows without permission and warned that Viacom ``will take whatever steps are necessary'' to protect its content.

He contrasted YouTube's stance with the position of Joost's founders, Niklas Zennström and Janus Friis. ``They took the right approach,'' Dauman said in an interview. ``I think it will be a great experience for consumers.''

Currently available only to select beta testers, Joost plans to expand its service to the general public in about four months. It requires an initial download of a viewer, whose clean design lines evoke Apple's iPod. The simple interface lets users surf different ``channels'' or collections of videos.

National Geographic and Atlantic Records have channels, as does a competition for the World's Strongest Man. So do musicians including Green Day and E-40. Viacom will provide content from MTV Networks, Comedy Central, BET or Black Entertainment Television, Paramount Pictures and other popular brands.

Unlike
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traditional peer-to-peer networks, which let users download copies -- often stolen -- of movies and television shows, Joost won't let users keep copies of the videos they view. The bits of video distributed on the peer-to-peer network will be protected by encryption, so that no one will be able to watch a movie or TV show without special software.

To a user, Joost appears to operate more like YouTube by streaming content on demand. The experience closely resembles watching regular television, except the shows can be paused, rewound and fast-forwarded.

Similar to YouTube, Joost includes online tools so fans can build communities around content and interact with each other online.

The deal between Dauman and Zennström and Friis, the creators of Joost, is surprising because Zennström and Friis are famous for disrupting traditional industries. After the demise of Napster, a program written by the duo called Kazaa let people exchange pirated music over peer-to-peer networks.

Zennström and Friis followed up by creating Skype, which lets people place free phone calls from anywhere in the world. Zennström currently serves as chief executive of Skype, now owned by eBay. Friis is Skype's executive vice president of innovation.

They are running Joost as a virtual company, with engineers and other employees in five countries.

Eric Garland, chief executive of BigChampagne, a media research firm, said Joost's deal with Viacom shows that traditional definitions of good guys and bad guys have ceased to apply in the digital world. ``Many of the legitimate venture-backed companies have the same failings in terms of protecting intellectual properties that Napster, Kazaa and any number of tarnished enterprises have had,'' Garland said.

Dauman said he likes many things about Joost. ``It is a platform that is very secure from a content owner's standpoint,'' he explained. ``They respect copyright; they are allowing us the flexibility to program the channels to provide a compelling user experience for our viewers.''

Joost also will let Viacom control advertising sales, Dauman said. The entertainment industry repeatedly has contended that YouTube does not respect copyrights or give content creators any control of the environment in which their content is presented.

Dauman declined to discuss financial details of the deal.

``This is definitely not disruptive; this is a gift to content owners,'' said Yvette Alberdingkthijm, Joost's executive vice president of content acquisition and strategy. She spent more than a decade overseeing business affairs at MTV Networks before joining Joost.

Alberdingkthijm, who negotiated Joost's deal with her former employer, said the service was designed with the needs of content owners in mind. ``We know the entertainment industry likes to keep control,'' she said.

Joost will be free to viewers and funded by advertising -- which like everything else on the Internet can be precisely measured.

Viacom's content will be available when the service launches publicly, expected near June.

Michael Fricklas, Viacom's general counsel, said the entertainment company has reviewed the copyrights in its giant libraries in preparation for Internet distribution.

``We have a very extensive library of in-house-generated material that is fully cleared,'' Fricklas said. ``We are in the fortunate position of having self-produced a lot of the material.''

Viacom's ownership of content could give it competitive edge over other entertainment giants, which have made only a fraction of their content available online, in part because of knotty copyright issues.