Adconion, an online advertising company, has acquired most of Joost, bringing to an unhappy end the online video venture backed by the founders of Skype.

Niklas Zennstrom and Janus Friis, who founded Joost in 2006, raised $45m from investors including Sequoia Capital, Index Ventures and Li Ka-shing, the Hong Kong tycoon, before launching the service to great fanfare in 2007.

But Joost struggled to compete with online video sites run by broadcasters, such as the BBC’s iPlayer and Hulu, owned by NBC and Fox. It abandoned its consumer-facing business in July to focus on selling its technology to other media companies.

Last month, its UK arm was put into liquidation. Now Adconion has acquired some of Joost’s technology, staff and content deals for an undisclosed fee, along with the rights to Joost.com.

Like Joost, Adconion sits in Index Ventures’ portfolio. A provider of targeted advertising technology to 2,000 publishers, Adconion raised $80m (£41m) in February 2008 from Index and Wellington Partners, making it the largest digital media investment by European venture firms.

Mr Friis said in a statement: “Over the past few months we have been actively exploring strategic options for Joost, and have concluded that the sale of certain of its assets to Adconion is in the best interests of Joost.”

So is the Joost saga finally over? It’s not entirely clear. Nobody was able to explain what exactly remains in the company formally known as Joost, stripped of its name and most of its content and technology. A likely explanation is that Mr Zennstrom and Mr Friis retain ownership of Joltid, the peer-to-peer technology that helped distribute video content efficiently and also lies at the heart of Skype (and its recent legal dispute).

For Adconion, which has in the last year put video at the heart of its vast network of targeted advertising, Joost.com provides new branding and visibility, as well as content to share with its partners. Adconion claims to reach 400m people through its partner sites, and just as it looks at the web pages they’ve visited to infer purchasing intent to sell to advertisers, it can also provide more relevant video content based on their browsing behaviour.

More significantly, Joost’s rights management technology – which allowed content owners to specify that their shows could be watched on a particular device in one country but not in another – will enhance its video-ad server.

Adconion expects its revenues to grow 65 per cent this year, and it is already profitable, so Joost’s technology and employees have found a happier home than their recent limbo. But this deal – presumably costing Adconion a tiny fraction of $45m – is a long, long way short of the Skype-sized exit that its backers had in mind less than three years ago.

Tags: Adconion, joost

November 24, 2009 8:23pm in Digital media, Internet, Tech | Comment