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May 22, 2006
vpod.tv Founder On The Business of Online Video
Rodrigo Sepulveda Schulz is the co-founder of vpod.tv, a nine month old European online video publishing and distribution service provider. We talked to him about his business model and the firm's strategy after he announced a €5.1M first round commitment from Innovacom*.
Anyone who has been to a tech ventures event in Europe in the past year will recognize the gregarious Sepulveda Schulz and his ubiquitous slab of electronics.
First point, although the functionality of vpod.tv is similar to that of YouTube and Google's venture in this area, the French entrepreneur is not planning on taking them on in the US market. The focus is Europe.
It's not as weak an approach as it sounds at first hearing. Kellkoo, an online shopping directory, took that approach and it managed to achieve a valuation of €500M by the time Yahoo acquired it in 2004. It was also backed by Innovacom, among others, pointed out Schulz.
Second point, vpod.tv has a viable business model. It is set up to support three revenue streams. For the consumer market it will insert super short ads into selected videos via its own ad serving technology. The startup hired a team from TVMadrid to do the development, confirmed Schulz.
Publishing and distribution of videos is free for consumers but users have to agree that vpod.tv will insert ads into their content, either at the beginning, middle, or the end. A revenue sharing model is the plan.
Not all video pulbishers will want to have ads inserted into their content, goes the theory, so they will pay not to have ads. The payment scheme is not being disclosed yet but will be a based on a volume/traffic/file size calculation. vpod.tv already has a first customer in this category, a FilmFestival.com, an organization with 40,000 members.
A third category of sales is targeting online retailers to encourage them to make their own videos of products and product demos. "We can offer ecommerce sites time and costs savings," said Schulz.
The startup has a peer-to-peer technology partner to save on its bandwidth costs and is working with a US-based content distribution network, also to manage bandwidth, but it is not disclosing either name yet.
Services like vpod.tv and its rivals are set up to be easy for mobilephone users to shoot send and publish videos.
But a spoke in the wheel for this concept is the cost of using wireless networks for video file transfers. "The price for GPRS is outrageous," comment Schulz. He believes that new MVNO will focus on data service and offer some smart packages for consumers that want to use the networks for video file transfers, which should boost the use of his company's video platform.
In the meantime, the founder is travelling Europe and the US to sign customers and advertisers for vpod.tv, aiming to win a chunk of advertising sales away from traditional television and broadcasting channels.
Update: At least two rivals exist in the French market with a similar approach to video publishing online, Banex Ventures-backed Kewego, and DailyMotion.
(*Ed. We reorted earlier that the Innovacom invests on behalf of France Telecom, but that was not correct. FT owns a share in the management firm Innovacom. And Innovacom has a mandate to manage an older Orange Ventures portfolio. But the firm's funds are invested and raised independently of the telco.)
Posted on May 22, 2006 11:22 AM | Posted to News And Updates | Venture Capital | Permalink
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Tracked on May 28, 2006 11:35 PM
