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| Skype may not find Ebay stand-in for Joost |
| Jeff Segal / Apr 27, 2009, 00:29 IST |
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Skype’s founders are looking for another Ebay. They hit a home run when they sold the internet calling service to the online auctioneer for a whopping $3.1bn in 2005. Now they’re said to be working on a second act with online video site Joost. They’ll be hard pressed to find a similarly eager buyer. Joost lacks Skype’s potential and the promise of open internet riches has deflated since Ebay’s fat payout.
Niklas Zennström and Janus Friis looked downright genius when they convinced Ebay chief Meg Whitman to pay 43 times revenues for Skype four years ago. Since then, Ebay’s written down the value of the unit by nearly half as imagined synergies between auctions and live video never panned out.
That’s not to say Skype was snake oil. It has grown to more than 400m users and made earnings before interest, taxes, depreciation and amortization of some $130m last year. Ebay hopes that will help it spin off the unit in an IPO, which it plans to do next year, or find a buyer.
Now Zennström and Friis are looking for a repeat performance with Joost, which they founded in 2006 using Ebay’s money as backing. It uses peer-to-peer sharing technology to deliver online television. But after series of setbacks, it’s shopping itself to cable and satellite providers, with Time Warner Cable the frontrunner, CNET reports.
Joost’s video technology could add some value to cable providers with in-house online video ambitions. But the company will struggle to find buyers throwing anything even close to Skype-like valuations around.
For one, Joost has less potential. While Skype is still far and away the leader in internet telephony, Joost has fallen well behind competitors like Google-owned Youtube and NBC and News Corp-backed Hulu. Indeed, Joost just lost its licensing agreement with Sony Pictures, an important partner, to YouTube.
Moreover, the concept of "openness" on the internet, on which Joost's business was predicated, has withered alongside online advertising rates. Even Google hasn’t yet figured out a way to turn free YouTube in a money-spinner – despite its 100m monthly US viewers. There’s always the small chance that history will repeat itself. But Joost’s clever founders shouldn’t expect an encore.
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