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Q&A

Skype founder sees online TV opportunity

Niklas Zennstrom's software changed Internet phone calling. Now he hopes Joost alters the way people watch shows.

March 27, 2007|James S. Granelli | Times Staff Writer

SAN JOSE — They are legendary programmers whose software changed the way people make phone calls and swap music.

Skype made them rich. Kazaa for years kept them out of the U.S. to avoid being served a lawsuit by the recording industry -- then cost them millions to settle last summer.

Now the two Scandinavian entrepreneurs, Niklas Zennstrom and Janus Friis, are working on the future of television through their new online video service, Joost. They're also rolling out features for Skype, the Internet phone service they created, that include its first major collaboration with parent company EBay Inc.

In his second U.S. appearance since the Kazaa suit was settled, Zennstrom talked with The Times at the Voice on the Net Conference here last week.

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Skype recently petitioned the Federal Communications Commission for a ruling that would force cellphone carriers to open their networks to Skype calls. What's that about?

The Internet is the great equalizer and facilitator for communications, transactions, learning, everything. We think it's important to try to do the same thing with the mobile Internet that you can do on your personal computer.

What we've seen so far is that the mobile Internet is very much a walled garden. And that's removing the freedom of choice for consumers and also stifles innovation.

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Is it ironic that a maverick company known for disrupting the telephone industry is asking the government for help?

I wouldn't think we're a maverick. When we started Skype back in 2002, we had a vision that we could change the way people communicate and we thought we could build a great business around it. We have always had a good dialogue with regulators, trying to educate them on what we're doing. This is just normal business for us.

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Your latest venture is called Joost. What are you trying to do with it?

The objective is to take the best from TV and the best from the Internet and mix them together. We're liberating people from time schedules. There is a level of activity on the Internet that we want to bring to Joost. We have static channels and we have smart channels that are more adaptive to what you want to see.

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For instance?

The system can learn what things you like, what you don't like. You can get more recommendations on what to watch. You can have much more collaboration with friends who are watching the same program in their homes. For example, if you want to watch basketball games with your friends, you can do it at the same time and you can chat, maybe even have a Skype conference call around it. You can comment; you can vote; you can annotate.

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When you say you put the best of television and the best of the Internet together, are you talking about specific shows, such as "Desperate Housewives"?

What I meant is the best in terms of the distribution of the product itself. Now about content: The objective of Joost is to get a lot of great quality content. It's just a matter of getting agreements with content owners.

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Unlike Skype, Joost doesn't appear to be very disruptive. What is new and different about it?

A lot of companies were doing voice over the Internet before Skype was. But what we did was to try to do something that was very easy to use and would appeal to a broad amount of users, and then we could create a very good business model on top of that.

I think we have the same approach with Joost. We see a great opportunity. We think the timing is right with so much proliferation of broadband. We have content owners who want to propagate their content on the Net. We have electronic devices which are much more intimately connected with the Internet, and there's a huge opportunity for the advertising market.

So that's what we're going after. It doesn't mean we're the first ones who are doing Internet television.

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Are you repositioning Skype to promote EBay and its PayPal unit?

There's a certain natural evolution to Skype. What's been so fascinating is that every six months -- now it's almost like every three months -- there's always a new challenge, always new opportunities emerging. We are continuing to focus on the growth of the user base. Where we make the revenue today is really with SkypeOut and SkypeIn [calls to and from conventional phones].

Then there are the synergies we are exploring, such as Send Money [to transfer money to a PayPal account]. I don't think it's a forced synergy. The approach we have with EBay is that we should do synergies when they make sense. If something's not broken, you shouldn't fix it. That could slow down your growth.

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Are some people dropping Skype for what may be the promoting of EBay and PayPal?

This is a very important question because it's what we don't want to do. What we could do is say, 'OK, the only payment option is PayPal.' That would be a bad business decision on my part because then people would [leave] because they would not want for some reason to sign up with PayPal.

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