Joost, the online video company launched by the creators of Skype, has failed to live up to its own hype as a consumer service. Instead the company will concentrate on providing white label platforms for third parties. Mike Volpi, who joined the start-up from Cisco, has stepped down as chief executive but will remain as chairman.

“In these tough economic times, it’s been increasingly challenging to operate as an independent, ad-supported online video platform,” he said in a statement. “After much analysis, we have decided to change our focus and to start providing white label online video platforms for media companies and distributors.”

Despite announcing distribution deals, Joost failed to secure premium programming to attract and retain an audience.

The venture raised over $50 million in funding and counted CBS among its investors. However, CBS did little to support Joost and since its acquisition of CNET has been building its own portal at

Matt Zelesko, who was previously brought in from Comcast, will take over as chief executive of Joost and continue to head up engineering. Stacey Seltzer, who has been responsible for international business development and acquisition at Joost, will run business operations.

Joost will wind down its development centre at Leiden in the Netherlands. A core team of around 25 will remain in New York and London to manage technical development and to operate and support the web site and its associated video applications.

The company hopes to make its platform available to media companies to provide their own branded experience.

In April, informitv reported that the little used platform was up for sale. Some suggested that a couple of cable companies might be interested. It seems they were not. At the time we described the future for Joost as bleak. “We’re not close to being done yet,” said chief executive Mike Volpi. Now it seems they may be closer.

Back in February he became an advisor to Ooyala, another online video company that provides a platform of its own, known as Backlot. He has also been named as a possible successor to Michael Grade as chief executive at ITV, which might be seen as jumping from frying pan to fire.

No word on the wunderkinds Niklas Zennström and Janus Friis, the creators of KaZaA and Skype, who set out to build a global broadband video platform based on a peer-to-peer network, initially codenamed The Venice Project, which was unveiled as Joost in January 2007.

Joost eventually abandoned its native application and became browser based last October. At the time Business Week quoted informitv as saying that there was a risk that Joost had lost its window and was doing the right thing, but it could be “too little, too late”.

It could also be too late for Joost to enter the white label platform business, which already has many competitors and room for consolidation. The hope may be that a media company will acquire Joost for its own online operation. Either way, it looks like an admission of defeat for the start-up that held so much promise.