In August of last year, I anticipated a bit of a blood bath in the overcrowded online video space. With capital harder to come by, an ad money deluge that never happened, demand for semi-pro production growing too slowly, and big incremental video hosting costs, a bit of online video carnage was inevitable.
Yesterday, one of the previous front-runners, Veoh Networks, called it quits. Veoh’s plight was exacerbated by a copyright infringment lawsuit from Universal Music Group last year. Veoh won a summary judgement, but took a beating in what founder Dmitry Shapiro called Universal’s “relentless war of attrition.” Last year, the San Diego-based company laid off about a third of its staff.
The fact that Veoh focused on full-length, long-form, high resolution content probably didn’t help its balance sheet. The company had raised $70 million in venture capital from Shelter Capital Partners, Spark Capital, Goldman Sachs, Adobe Systems, Intel Capital and Time Warner Investments. Its audience had grown to over 28 million users a month and was attracting millions in revenues per month, but that wasn’t enough to avoid a Chapter 7 bankruptcy.
In a blog post Thursday, Shapiro listed some of Veoh’s legacy accomplishments: “Some of the technologies we pioneered now form the basis for standalone companies and many are now standard features of video services […] We eventually prevailed in a decisive summary judgment that has set an important precedent for the entire industry.”
That judgement constituted a sweeping ruling that Veoh was protected against the music label’s copyright claims by the Digital Millennium Copyright Act.
