Veoh Networks, which specializes in developing video-sharing technology for the Web, has filed for bankruptcy protection. CEO Dmitry Shapiro says the company's fight with Universal Music Group and the sour economy forced Veoh to close its doors.
Veoh Networks, a startup that had been
developing video-sharing technology for the Web, has filed for bankruptcy
protection, following a lengthy court fight over copyright infringement in the
context of
the
sluggish U.S. economy.
In an open letter dated Feb. 11,
Veoh CEO and founder Dmitry
Shapiro wrote that the company had filed for Chapter 7 bankruptcy
protection and planned to close its doors immediately. From the letter, it's
not clear what will happen to the company's intellectual property and patents.
When it closed, Shapiro wrote, Veoh had 28 million users a month and a run
rate of $12 million. By helping users share high-quality video on the Web, Veoh
was
competing
against YouTube, which is owned by Google.
"Veoh launched in September of 2005 with a bold goal: to make it
possible for anyone with a video camera and a computer to broadcast video to
the world," Shapiro said in the letter, which has been posted on the
company's Website. "While others were working on helping people share
short video clips, Veoh created technologies that made it possible to cost-effectively
transport full-length, long-form, high-resolution content."
In the last five years, according to Shapiro, investors had supported the
company with about $70 million in financing. Under Chapter 7 rules, companies
are usually liquidated but businesses can continue under the guidance of a
court trustee until the matter is resolved.
Shapiro also wrote that the company was the victim of the sour U.S.
economy and a drawn-out legal fight with
Universal Music Group. The lawsuit
involved copyright infringement, but Shapiro said his company won after a
two-year fight.
However, the cost of the court fight drained Veoh's finances, he wrote.
"I would like to thank all of my fellow team members and their
families, our courageous, dedicated investors, our suppliers and attorneys, and
all of the passionate people that have made it possible for us to be a part of
this great revolution of social media," Shapiro wrote. "This is a
critically important time in the evolution of the Internet as an open
communications medium, and all of us at Veoh wish those companies that continue
to innovate in the space great success."
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