Joost exits consumer online video business

Struggling online video startup Joost, begun with much fanfare in 2007 by the same people behind Skype and Kazaa, is restructuring its business after discovering that it can't survive on advertising to fund its operations.

The chief executive, Mike Volpi, has stepped down but will remain as chairman.

The London-based company said it will shift its focus from being an online video site for consumers supported by advertising — similar to Google Inc.'s YouTube. Instead, it will help businesses manage their videos on the Internet as they build brands.

Its target market will be media companies such as cable and satellite TV providers, broadcasters and video aggregators.

"In these tough economic times, it's been increasingly challenging to operate as an independent, ad-supported online video platform," Volpi said in a statement.

Joost was co-founded by Janus Friis and Niklas Zennstrom, the same people behind Internet phone service Skype and the file-sharing site Kazaa. It has minority investments from Viacom Inc. and CBS Corp.

It started as a peer-to-peer sharing site but wasn't successful, then switched to online video. But Joost has suffered from poor traffic and had trouble making money.

Joost, which also has offices in New York, is closing its Leiden office in the Netherlands. The company declined to say how many people it's laying off.

Volpi will be replaced by Matt Zelesko, who's currently senior vice president of engineering. Zelesko will continue to head the engineering division.

Stacey Seltzer, senior vice president of international business development and content acquisition, will run the business operations.

Copyright 2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.