It’s been over a year since we covered Skyrider, and for good reason: We hadn’t heard anything more since the company revealed its business plan, based around monetizing peer-to-peer networks with ads, in late 2006.
In the space of about three months, we’d reported that Skyrider raised first $8 million, then $12 million more from Sequoia Capital, Charles River Ventures and ComVentures. Hopes appeared to be high, but some recent digging suggests that the company may have run into trouble.
The basic idea behind Skyrider is that P2P sharing networks like eDonkey and Gnutella (also known by the programs that use their protocols, including Morpheus and Limewire) receive massive amounts of search traffic from people looking for files to download. But unlike Internet search, which is monetized by giants like Google, ads don’t automatically pop up on P2P searches.
Skyrider, which began life as anti-piracy firm CRight, stumbled upon a clever way to force ads into search results by posing as users with highly relevant files to share. The idea must have seemed like a good one — it’s rare that two venture fundings come as close together as they did for the company in late 2006.
But then came the silence. No news or appearances came from the company, and, tellingly, Skyrider vanished at some point from Sequoia’s list of portfolio companies. (Update: Looks like I’m incorrect, it actually is on there at this point.)
However, there’s reason to believe Skyrider hasn’t gone to the scrap-heap. Finance documents recently sent by a source to VentureBeat reveal that the company has raised $5 million more. The funding is listed as a series A-1 round, which may mean the company has gone through a restructuring of some sort.
Although contacts at the company either didn’t respond or let us know that they had moved on, we did manage to get in touch with a current investor. He asked to remain unnamed, but did tell us that the technology behind Skyrider is “incredible” and “totally wicked.”
And the idea still sounds valid, as well. Despite an apparent gradual decline in users (excluding Bittorrent), P2P networks still have millions of users. So what went wrong? Perhaps search software adapted to block the ads, or the idea was just too early. But hey, if you’ve got a better idea, let us know — could Skyrider still succeed?
5 Comments
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IdeaTagger said:
I don’t know if the investor quoted above said anything else but I note he talks in the quote about the technology and not about its current known application. Perhaps the technology behind SkyRider is being applied on a different platform, i.e. not P2P sharing networks. I don’t know much about the technology but it seems to me that if one could somehow pull it off, placing ads in Twitter tweets or in Facebook news feeds “by posing as users” could be very lucrative indeed.
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Liz Gannes said:
FYI, just clicked on your link to the Sequoia portfolio and Skyrider is there.
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Chris said:
In regards to…
“clever way to force ads into search results by posing as users with highly relevant files to share”
I thought we already learned that deceiving people is generally not a successful business strategy.
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David Baxtin said:
I said this before and I will say it again, you cannot advertise on P2P. I said it on GigaOM about a hear and a half ago. Here is my post:
http://gigaom.com/2006/08/03/skyrider/#comment-59243
Even Om Malik did a follow on post and mentioned my comment. The reality is that P2P is a conversion opportunity not an opportunity itself. I think firms like divinity Metrics with their BitTorrent piece have it nailed down. They do all types of measurement and engagement ranging from YouTube to MySpace with their Scope platform but they also measure P2P which is very cool. They deliver P2P data so you can do event planning, syndication research, etc. I was most impressed by them.
I have no idea why a company like SkyRider is on Sequoia’s portfolio. I think it is embarrassing. My interest is to see who gets divinity Metrics especially since Visible Measures and Tube Mogul are now funded.
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Chris Morrison said:
Liz: I’d doubled checked, but you’re right, damned if it isn’t there. This was probably my error, so I updated with a note — thanks.
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