Skype Founders Launch Beta of Internet TV Service 'Joost'

AMSTERDAM, Netherlands – The co-founders of the Internet telephone service Skype unveiled the brand name and details of their latest project Tuesday: a new Internet-based television service called Joost.

Entrepreneurs Niklas Zennstrom and Janus Friis, who sold Skype for $2.6 billion to eBay Inc. (EBAY) in 2005, said the new project combines aspects of file-sharing software and regular broadcast television.

Joost — pronounced "juiced" — may eventually try to move onto television sets, but it will initially focus on making it easier and more fun to watch TV on a computer.

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Joost, like Skype, requires users to download free software. In this case, the program will help them browse the Internet for channels and clips they're interested in, rather than make phone calls.

"We're currently in a test phase with a limited 'beta' release, so we have content matching our base," Chief Executive Fredrik de Wahl said in a telephone interview. "Comedy, sports, music, documentaries."

He said the company has deals with Warner Music, "Bridezillas" producer September Films and "Big Brother" creator Endemol NV, among others, but plans to make content deals globally as the service grows.

Joost is owned by Luxembourg-based TVP Holdings SA, but it has offices in New York, London and Leiden, Netherlands, and expects to incorporate under the Joost name.

The Joost browser will be open for other software developers to create their own features.

"They may be able to make interactive plug-ins we can't even think of," de Wahl said.

The service will be ad-supported, but advertising will be briefer and less frequent than on regular TV. Viewers will have a broader selection of programming and will be able to watch whenever they want.

Daiwa Securities telecom analyst James Enck said that Joost's biggest challenge will be competition it faces from a host of rival products and services, but with Zennstrom and Friis behind it, it has to be seen as a serious player.

"I would be tempted to back them as people who will do well," Enck said.

Zennstrom and Friis succeeded under similar circumstances with Skype, and earlier built and sold the file-sharing program Kazaa.

"History suggests, they introduced two of the most revolutionary — disruptive — products in the history of the Internet, and the most viral. Possibly this is a hat trick," Enck said.

Enck, who has tested Joost, said that at the moment, so-so video quality was a potential problem.

But overall, the product is noteworthy for "ease of use, a nice interface, and intuitive design" he said.

The same ingredients played a key role in Skype's success.

CEO de Wahl said that unlike the original Kazaa, Joost will be seeking to work with content owners to prevent piracy. He said he hoped telecommunications companies wouldn't see it as a potential threat the way that Skype is.

Many telecoms hope to sell services streaming video onto television sets using the technology known as IPTV, or Internet Protocol TV.

Joost faces stiff competition from many other corners. The Internet is already crowded with free online channels, file sharing programs like BitTorrent, and video download services such as Google Inc.'s (GOOG) YouTube.

And then there's plain old television, and devices that piggyback off of it like VCRs, digital video recorders such as TiVo (TIVO) or more recently, gadgets like Slingbox that send TV shows elsewhere.

Friis said that Joost was the logical successor to Kazaa and Skype.

"Peer-to-peer technology is perfect for delivering broadcast in a very scalable way on the Internet," Friis said in a videotaped interview on the company's Web site.

Translation: Joost's users will contribute some of their bandwidth to sharing video streams at the same time they download them for viewing, making it possible for the company to broadcast to a large audience from just a few computer servers distributed around the world.

The company is accepting applications for a limited number of people who want to try out the service, and said it intends to "rapidly expand."

It did not set a date for an official product launch.

Friis said the pair began building the company under the code name "The Venice Project" immediately after selling Skype and it now has around 150 employees.