VMIX Views its Online Video Service as Silver Lining for Newspaper Industry

8/12/09Follow @bvbigelow

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to happen, the bandwidth just wasn’t there,” Kostello recalls. Unfortunately, within a few months of getting their initial venture funding in 2005 ($5 million from San Diego’s Mission Ventures and Enterprise Partners Venture Capital), Kostello says the founders realized that YouTube, also founded in 2005, was going to take off in a big way.

VMIX continued to operate as a video-sharing site until the spring of 2008, when the company adopted a new strategy—serving media companies—and raised an additional $16.5 million in a second round of VC funding that included the existing investors and two new ones, JK&B Capital and ATA Ventures.

Kostello says that Glickenhaus, who joined VMIX in May 2008 with 27 years’ experience in radio and broadcast media, has served a key role in leading the shift toward providing Web-based software for uploading, storing, and managing video on customers’ websites. “What we offer is an end-to-end solution,” Glickenhaus says. “We help our customers upload it, transcode it to Flash [Adobe's Video Technology], publish it, stream it, manage it, and syndicate it.”

Glickenhaus adds, “That’s really important for most of the people we deal with. The staff at most radio and TV stations and newspapers is not technical.”

The San Diego company has moved aggressively over the past year in pursuit of its new strategy. In mid-2008, VMIX announced an expanded agreement with Akamai Technologies (NASDAQ: AKAM) to provide dynamic streaming, a deal that also secured Akamai as the primary content delivery network for VMIX’s video software as a service.

VMIX generates revenue primarily from license fees that customers pay to use its technology. The San Diego company counts a number of major newspaper publishers and media companies as customers, including the Tribune Co., McClatchy Co., Lee Enterprises, Minneapolis Star-Tribune, The San Diego Union-Tribune, Penguin Books, Lin Television, and Raycom Television. Today, VMIX has about 40 employees, and views its primary competitor as Brightcove, a Cambridge, MA, Internet TV service that Wade has frequently written about and that is used by several newspaper operations, including the New York Times and the Boston Globe.

And even though many newspapers seem imperiled, Glickenhaus voices confidence in the industry’s staying power, especially on the Internet. “We still see considerable upside, even on the advertising side,” Glickenhaus says. “There are better strategies down the road, in my opinion.”

Bruce V. Bigelow is the editor of Xconomy San Diego. You can e-mail him at bbigelow@xconomy.com or call (619) 669-8788 Follow @bvbigelow

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