Boxee Payments

Well I'm stuck at the Virgin America terminal at JFK this morning. Due to the stormy weather today in SF, my flight has been pushed back by three hours. Fortunately, I've got my laptop, wifi, my sleeper hoodie with headphones cranking, and some interesting stuff to write about.

Our portfolio company Boxee announced its payments service this morning with this line:

Users want to see more content on Boxee. Content owners want to be paid for what they produce (whether that’s TV Shows, movies, music, or applications). We don’t believe these are conflicting interests.

Contrary to what Boxee's competitors have been telling big media for the past year, Boxee aren't pirates. They have always respected rights holders and their desires to find a new business model on the open internet. And this payment platform should make that abundantly clear.

Here's how it will work:

users will be able to make purchases with one click on the remote. The content partners we launch with will offer shows, movies and channels that were previously not available to Boxee users. The content owners will be able to package and price as they wish, including pay-per-view and subscription. Content partners will have the flexibility to decide what they make available, whether it’s premium content, content from their existing library, or extras that will never make it “on air”…. Boxee will charge a small fee (i.e. lower than the 30% charged by many app stores) for transactions which we enable. 

For those who don't know, Boxee is free open source software that you can download and run on Windows, Mac, and Linux powered devices that are connected to your TV. Boxee's software is also free for consumer electronics companies to build connected devices and TVs for the family room and living room. I like to think of Boxee as "android for TVs."

I watch my kids and here's what I've seen. There is almost no difference between a laptop and a TV to them. They move seamlessly between the two. The only difference is what content is available on each. What do they want? They want all the content in the entire world available to them on their laptop and their TV. They want them to be the same thing. And they are very willing to pay for content. What they are not accepting of is content owners prohibiting them to watch what they want to watch where they want to watch it.

The new model for entertainment is "over the top" and it's going to happen. As Avner Ronen says in the Boxee payments blog post:

It’s our belief that the Internet is ready to become the 4th method of distribution for broadcast & premium content after Cable, Satellite, and IPTV (FiOS, u-Verse, etc.). In the case of Satellite and IPTV, it took an act of congress to open up these delivery methods. This time it’s people who are demanding this change.

If you are a content owner and want to partcipate in this new open model for content distribution, either free and ad supported or subscriptions powered by Boxee payments, please reach out to Boxee. They will be happy to help you make the transition and make money doing it.

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#VC & Technology

Comments (Archived):

  1. Paul Stamatiou

    Hopefully this means lots of HD content in the near future! I am an absolute huge Vudu box user spending at least $50 a month with them. I have no qualms paying $4-6 to instantly watch a new release 720p/1080p movie (although their “HDX” takes up to 4 hours before it can begin playing.. because their P2P infrastructure is slow. I have a 95mbit line.. so I’m not the bottleneck).

    1. fredwilson

      the cool thing about boxee is it supports multiple video services so they don’t end up being the gatekeeper or bottleneck. you are accessing netflix’ servers when you watch netflix on boxee. you are accessing Hulu when you watch Hulu on Boxee. etc. etc

      1. Paul Stamatiou

        Thanks for the reply Fred! I used the Boxee alpha quite a bit several months ago:…but had only found it useful for playing/managing my own content, and saw the integrated video services as more of a hodgepodge with not much attraction other than short SD clips and music videos here and there. Of course my sentiment has since changed as I’ve been seeing Boxee mature on this blog and elsewhere. I’ve got the latest Boxee running on my Win 7/Core i7 HTPC.(p.s. – just submitted to HN:

  2. jonsteinberg

    I’m personally very excited about this. When I was launching DropBoxee, I thought it made more sense as a paid-app. I think it’s a somewhat edge-case app that likely to find a home with a smaller base of paying users – unlikely to work on ad-revenue etc.If Boxee allows one time app purchases (here’s hoping!), I’ll invest to upgrade it and roll out a purchase version (probably just a few dollars to offset my dev costs).I probably will even build a second paid for app, now that I have a chance a breaking even.

    1. fredwilson

      the app store model is most certainly coming to your family room

  3. Buck

    Good thoughts Fred. I echo those who really only use Boxee for local content at the moment. I’m really hoping the “Boxee Box” turns out to be the media streamer coup de grâce!Side note:What’s with all this re-tweet spam in your comments?Does it really add anything to the conversation to have a bunch of links that just link to this anyways with no additional conversation within?

    1. fredwilson

      that’s why it is below the real comments. most of it is noise. at leastdisqus separates the two. others in the third party comment sphere combinethem.

      1. paramendra

        I don’t think it is noise. Retweets have major value. They have value on Disqus too. The retweet count tells how much a blog post is being talked about.

  4. Morgan Warstler

    Couldn’t they just use doubletwist to sync itunes with Boxee? 🙂

    1. fredwilson

      boxee finds all your mp3s on your network and plays them in boxee

      1. Morgan Warstler

        Yep. My point is that getting the i-tunes style content is going to be the issue. And as to the margins on content, even what apple has negotiated is much less than 30%.There are other ways to skin this cat. See mike robertson’s note on LALA / Apple yesterday at TC.

    2. Peter Clark

      doubletwist: the only desktop app that requires you to sign up and wait for email verification before you can use the app. what a joke.

      1. fredwilson

        and it doesn’t scrobble listens to last.fmbut it is a great way to get my itunes playlists onto my android phone

        1. Peter Clark

          would you use iTunes if you could? iTunes sucks so hard, but some of the Apple magic is lovely (eg: Airtunes, Apple Remote)

          1. fredwilson

            yes i would

  5. howardlindzon

    stocktwits tv will be boxxee soon so any ways we can help our distributed network of content makers package their shows and hard work is cool

    1. fredwilson

      free or paid, or both?

  6. Louis Berlan

    “Screen portability” is an issue, and is a real source of frustration, although it looks like we’re getting over that. Another one is “international portability”. Having to wait 6 months and put up with a horrendous translation to watch a TV show in Europe is ridiculously out of date. Fundamentally I love solutions like Hulu or Netflix streaming, but they’re blocked here (vice versa with Spotify). Obviously we all know how to get around that, but it feels oh-so-20th century.This is a more complicated issue (rights, etc.), but a great one to solve as well.

    1. fredwilson

      huge problem.

      1. Offbeatmammal

        huge problem, but… is it one that this model will help reduce?at the moment most of the zone restrictions are about recouping $ on the production.Sure, making “Caprica” available worldwide on Boxee on a pay-per-view / flat fee per season model (or even a ‘rent to own’ model) might reduce the value of some of the syndication and advertising… but how many of the people who choose to watch it on Boxee would have watched it on SyFy (live or DVRd, and if DVRd skipping commercials)SyFy and other affiliates may end up getting the season for a few $ less, or Boxee would work out a rev-share deal (in conjunction with the content creators) that helps maintain the value of producing and promoting good content no matter how the user elects to consume it.Who knows… this may even drive the Cable operators to actually realise there is money in an a la carte model (if not they’ll become dumb fat pipes with a smart Boxee box on the end)

  7. jaymeydad

    I gave Boxee a try since its early days. I am a big fan of its team & product. I really want them to succeed as I am a big believer in what they are creating.However, I could not make the switch from Dish Networks to Boxee or even form a habit of using it on a regular basis (say 1-2 hours / week) in conjunction to keep my Dish Networks service. Here’s why (in priority order):* Lack of live sports broadcasts – probably the biggest reason I watch TV. Unless those become available on Boxee there is no way I will disconnect from Dish Networks. I truly hope that Boxee payments open the door to that. * Seamless integration of DVR functionality – I have no build a DVR using Boxee running on Mac Mini & external HD. The Boxee forum has no info about it and I have not had the time to research open source solutions like MythTV. On the other hand, Dish DVR just works…* One box – two TV – The Dish Networks box I have at home is connected to two TVs located in different rooms (with IR and Wireless remotes Dish provides). I have no idea if Boxee can actually do that or will I have to purchase another mac mini (or apple tv/boxee box) which is out of the question as I will have more hw to purchase, manage and support. * Durability of remotes – I have three kids at home and the Mac Mini remote or an iPod Touch running the Boxee remote app won’t last long in their hands. On the other hand, the Dish remotes have survived many falls over time.

    1. fredwilson

      these are all great pointsi wonder if an over the air HD antenna in a boxee box would solve the livesports issue

      1. Offbeatmammal

        why rely on OTA? Solutions like LiveStation already support live peer to peer TV (and qaulity actually improves the more folks are watching!).The Indian Cricket League have just signed a deal with youTube to distribute sports that wayThe Sunday Night Football season was simulcast over the internet – actually a better experience… 5 user selectable camera angles including a 720p edited feed…. it’s more down to the media deals and contracts that are in place. Hopefully over time Boxee can prove their model is viable financially and that it’s not a zero sum game where “traditional” channels don’t get at least a few more years at the trough

    2. scottmag

      Those are exactly my hesitations to using something like Boxee. My household’s current video viewing is about 80% TiVo, 18% Netflix streaming, and 2% DVDs. We watch no live TV at all, unless we want to tune in to some major breaking news event. I know it’s trendy to complain that TV is all lowbrow crap these days, but there are actually several really good shows on TV. It’s just that it’s a few hours per week and spread across several channels, primarily basic cable these days. TiVo solves that for me. I can peel off only the very best shows regardless of where and when they air. Since I feel I only watch the best 1% of TV (by my own subjective measures), I don’t want to abandon the concept of broadcast TV.Live sports is also killer for any medium trying to compete with broadcast TV. Theoretically the sports leagues could develop alternate, online (paid) distribution channels, but I doubt it will get much traction in the short term. It has all the more opposition now that cable TV providers own TV channels and media publishers. Or is it the other way around?

  8. Kenny Ma

    This gives indie content producers another business model other than ads and product placements. I hope this will result in more indie producers and more contents. Good contents make money while bad ones sink. At the end, consumers like me win.

  9. aripap

    Strongly considering investing in a sleeper hoodie based on your impassioned description last night.

    1. fredwilson

      it’s worth it

      1. Mike Tatum

        So bummed that Burton is sold out of the sleeper hoodie! I’ve been looking for something like that forever….

      2. kidmercury

        need to launch the AVC fashion line

  10. Trevor Goss

    I’m really excited about this because of the opportunity it represents for sports. For some time access to sports content (especially the more lucrative content: NFL, College Football, and March Madness, World Series) has been the thing that’s convinced a lot of people to maintain their cable boxes. No one is happy with the user experience or the price, but the downside of losing sports content was seen as a more painful alternative.Now with Boxee’s revenue model that allows direct from consumer monetization, leagues like the NFL will have the capacity to charge users for content directly as opposed to going through the networks who pay for access and then through the cable companies which pay per sub for the right to display certain networks. If leagues and teams make their content available for reasonable rates, I think (and hope) we’ll finally see the a la carte model of tv consumption flourish.

    1. fredwilson

      MLB has a subscription offering on Boxee already. but its the same offering they have on the web and it doesn’t allow you to watch the home team live. that’s the kind of restriction we need to see go away over time for live sports on the web to go mainstream

  11. Glenn Gutierrez

    Going to have a team member buy a boxee box for the group. It would be cool if we could pre-order.

  12. Alex Kaminski

    Boxee should try to get some unique content – it would be amazing if you could watch Conan on Boxee but had to pay a small monthly fee. That would be really interesting; are they in talks with any content providers / producers to get their shows up on Boxee?

    1. fredwilson

      they are having a lot of discussions. i don’t know if they are pursuing exclusive content though. it doesn’t seem like its in keeping with their ethos

  13. Michael Johnston

    I’ve long hoped that content owners and producers would begin to offer direct access to their offerings, bypassing the traditional (and limiting) distribution mechanisms. It would be wonderful, for example, if I could just watch OTA (over the air) TV and subscribe to HBO online, thereby sidestepping the ridiculous bundles I’ve been forced to accept for years from the cable and satellite companies. Of course, this bodes ill for the the satellite and cable companies, and it puts the cable companies in the interesting position of being disintermediated from their core business by their very own offering: cable Internet. Expect them to fight this tooth and nail, perhaps by threatening to not carry HBO and other channels if they’re offered direct, or even by jacking up the price of broadband for those who choose not to buy their TV packages. That this will happen in one form or another seems likely; that it is legal or will remain legal is questionable.

  14. markslater

    screw boxee ;)- loving that sleeper hoodie – big asian trip coming up…….how are the sizes?

    1. fredwilson

      i got a large and it fits nicely. that’s what i normally wear.

      1. markslater

        you look about my size! i’ll give it a waz – cheers for the referral

  15. ShanaC

    I saw this earlier today -The New Yorker on the Economics of Cable BundlingAnd I couldn’t help wondering about the economics of Boxee. If they are right, there are benefits to bundling rather than slow bleeds. Would Boxee be amendable to the custom bundle?

    1. fredwilson

      i read that this morning too. i think we’ll see lots of different packaging and pricing on boxee. no reason why companies can’t try bundles. as the piece you linked to says, many consumers seem to like bundles.

      1. ShanaC

        I’m more curious what will actually happen if there is a move to unbundle (which seems to be the move now).(thanks for the TED recommendation, I had seen their stuff before, it’s much better on Boxee on my laptop which functions better in the open Beta…)

  16. Aviah Laor

    This path is great to to monetize “fringe” videos. There are amazing indi videos on YouTube, but apparently Google blocks the emergence of economic eco-system around it (see If Boxee can support a small payments based eco-system for indi videos and video creators, the more talented guys, and some good YouTube channels, may move to it and Boxee can carve another niche away from the Google and Apple grip.Examples could be video aggregation by topic, hyper local video news, bundles of great animation videos etc.

    1. kidmercury

      yup i think that’s exactly what may happen

  17. scottmag

    Fred, I am crazy confused about what content Boxee offers. Maybe I am just plain crazy, but I don’t understand it. The web site (I am registered) defaults to showing me friends’ activities (huh?) and lets me enter RSS feeds. Where’s the content? What do I get access to with Boxee? If it’s just an open-source application for geeks to hack onto their AppleTV, then fine. But for a company talking up “6 days, 4 awards, 2 booths” at the *Consumer* Electronics Show it sure seems to be turning normal, non-geeks away.I am not looking for the answer so much as making an observation. Maybe things will change to a consumer-orientation when the Boxee Box ships?

    1. fredwilson

      the boxee box will certainly make boxee easier to install for non geeks.the website today doesn’t offer have to download the software and connect it to your TV to get the value of boxee

      1. Eric Leebow

        I like the boxee box, yet wondering about its slanted shape, which definitely makes it aesthetically differentiated from other boxes. It’s actually a very smart marketing, as the boxee box would always have to go on top of any other box, yet for those who like to have built in home and audio theaters, it might be interesting to think how they would put the box into their pre-existing box setup. One way boxee could market this is through other boxes as well, if it were to figure out a way to do that, now that would be neat. How to link your Wii to your boxee might be a good combination.

        1. fredwilson

          it will be the first of manyyou could even make it as thin as a kindle and slide it behind the TVbut the first one is designed to make a statementboxee is like android, there will be a ton of options when it comes tohardware

  18. Eric Leebow

    Boxee is super cool, and I’m wondering if I will eventually disconnect from any other service and simply depend on Boxee for all of my viewing needs on the Internet, and as time goes on I see Boxee as the Walmart of viewing video content. I still think it’s very important for people to leave the the box at home and go to the movie theaters as well, when you can. That’s the challenge the Internet brings us, and other companies such as Foursquare are certainly motivators to get out. Boxee is just one way to view videos and movies, and there is value in other ways as well. I do see the importance of Boxee. Congrats to Boxee for its continued success to Ravner and Union Square Ventures for continuing to innovate!

  19. saieva

    Perhaps Boxee can make an offer to Scripps Network so its CableVision customers can watch FoodTV and HGTV again.In time, if the Boxee payment arrangement is widely accepted, at least I will be able to choose which subscriptions to terminate.Sal.—Salvatore Saieva

  20. tomnahigian

    Fred, What are your thoughts on Sezmi and other companies with a similar model?

    1. fredwilson

      there will be winners in the device/CE world, sezmi has a compelling conceptbut i am more interested in open source software, like what android is doingin handsets

  21. Tom Turnbull

    I love Boxee, but it has a bit an old-Napster bad boy/outsider rep. I’ll be surprised if many content providers sign on. Perhaps if they can dramatically expand their audience size.

    1. fredwilson

      that rep is partially their doing and partially their competitors doingits something they are working on and the payments service is part of that

      1. Tom Turnbull

        The proof will be in the business development pudding. Hopefully, Boxee can put some high profile content deals together. Boxee’s success or failure, at this point, is not about the great UI, ease of use, social features, etc. It’s about content procurement. I’m rooting for them.

  22. paramendra

    Old media was never dying. It just needed to make use of new channels now available.

  23. Lawrence D. Loeb

    Fred,It’s always interesting to hear how children are using these things. For us (okay, many of us) there has been a revolution in technology over the past 30-40 years. I remember when calculators that could just add, subtract, multiply, and divide (sometimes determining that 1+1=1.999999) cost over $100 (and $100 was a lot of money).Those of us who have lived through this transition, and have been willing to integrate new things into our personal and professional lives have experienced this as a progression. For us, we evolved from typewriters to massive, dedicated, word processors (remember Wang?); then to an ever changing, and shrinking, number of choices in word processor programs for PCs (and/or Macs).We remember what it means when we say “you sound like a broken record.” Given the evolution to mp3s, I’m’ not sure of what relevant analogy could replace it – but kids have no understanding of LPs (long playing records – for those who are unfamiliar with the acronym) from their normal experiences.It is my belief that we can learn a lot about how to be more efficient by viewing how children (tweens, teens, etc.) integrate these new technologies into their lives. Much of it is irrelevant, but we might pick up some pointers!

    1. fredwilson

      i agree. i study my kinds habits with technology and media and it informswhat i want to invest in

  24. dave eisenberg

    I’m more excited about paid apps on the Boxee platform that can interact with Live TV. That will revolutionize how we watch TV and I will build my dream app.

  25. maverick00010

    That is really interesting!

  26. daveschappell

    Thanks for the Sleeper Hoodie reco – looks awesome (added it to my universal Amazon Wish List). I’ll definitely pick one up before I start another fundraising pilgramage.

    1. fredwilson

      it’s like a security blanket when you are feeling the tyranny of businesstravel

  27. fredwilson

    if that recorded TV is on hard disks that are indexable by boxee, then you should be in good shape with the current versions. if its inside a proprietary device, then that’s going to be tough.

  28. kirklove

    I agree. Boxee has such great potential. And I really admire how they are growing and adding great new stuff. I sometimes forget they are still in beta. What can I say I’m impatient.I love the idea of paid a la carte content. Something I think we’ve all been wishing for for some time now. As like many folks I probably watch about 2% of what’s “on” cable, but pay 100% of the bill. Dumb. Just give me my PTI, Daily Show, Colbert, The Soup, and LOST and I’d be a happy camper.One other thing I’ll add: I don’t want anything hooked up to my TVs or computers. I just want to be able to login on any device (TV, Computer, iPhone, iTablet) and poof there is my content all managed nicely by Boxee. That would be sweet. If they can do that, they win.

  29. fredwilson

    that’s a valid criticism. support and documentation is fairly non existent.when you install boxee it searches your network for drives with audio,video, and images and indexes them and makes them available on your TV

  30. fredwilson

    when they cross over from early adopter to mainstream and/or when they starting charging. i wrote a post a few years ago about the new cash flow models for web startups and i said that you can get started and scale pretty inexpensively but once you reach scale, the costs go way up. support is one of the reasons why.…i went back a re-read that post just now. i think its one of the best posts on this blog.

  31. fredwilson

    or both. free content to build the audience and paid content to monetize it.

  32. fredwilson

    me too. but its not just avner. tom, yuval, gidon, zach, and a host of othertalented people on the team

  33. paramendra

    I went ahead and read that blog post. No Disqus? 🙂 It is a great blog post. It feels panoramic. You take a long view.

  34. kidmercury

    i agree, but that is why i think we won’t see big things. i think the path to scalability is not in creating something big and centralized with lots of users, but rather creating a lot of small things, and then connecting them, and the small things share the cost of scalability. plus, big things lead to “one world internet,” and google has already won that game.

  35. fredwilson

    i don’t think that’s right. we have a number of companies in our portfoliothat serve tens of millions of people every day and several more that looklike they are headed there

  36. kidmercury

    but alas, serving tens of millions is quite different than monetizing tens of millions.

  37. fredwilson

    as zynga has shown, you only have to monetize some of those tens of millionsto make a lot of money

  38. kidmercury

    true, but then what is the point of having all those extra users? i think the incentive will be to maximize share of wallet rather than trying to get a lot of users. if this is true, then companies will want to focus on serving and monetizing the core users, perhaps at the expense of the users who cannot be monetized. the un-monetizable users may end up being a liability.of course there will be exceptions, and i think it is quite possible that zynga is one of them. though still, when everyone else realizes what zynga already knows — which is that social gaming is where it’s at (i still see youngsters calling it a fad… — then the economics surrounding zynga and the whole social gaming biz may change.

  39. fredwilson

    i like the freemium modeli like that the NYT has adopted it