Peerflix

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Peerflix is a DVD movie trading service based in Palo Alto, California, launched quietly in 2004 by founders Danny Robinson, Tim Stewart and Billy McNair. The concept behind the service is similar to that of file trading that is done through peer to peer software such as Kazaa, except physical DVDs are exchanged instead of files. Users pay 99 cents per trade (as of 2006) for Peerflix to facilitate the trading through their website. Since physical DVDs are exchanged with no copies made, the service remains legal.

The service works similarly to that of Netflix, but Peerflix does not have or need distribution centers. In fact, as of 2005, the company has just fifteen employees, split between Palo Alto and Vancouver, British Columbia. All of the trading is done between users of each network (cross-border trading is not yet available). The users print shipping labels through the Peerflix website through Peermailers, a patent-pending do-it-yourself envelope. The user does not need to add postage as the DIY envelope includes printed postage. The DVD is then shipped out via US Mail or Canada Post (depending on the location). Users trade the disc without any original packaging. Users receive trading units called “peerbux” equal to the value of the movie once they agree to ship the DVD. The system then selects a DVD to ship back to the user, based on a list of movies maintained by the user. One criticism of the service is that movies that become old and unwanted end up with the last person requesting the movie and not the original trader, who retains the original case of the DVD.

Robinson and McNair had previously teamed up to launch Spinway, Inc., a provider of e-commerce and private-label internet service provider solutions for leading brick and mortar retailers such as Yahoo! and NBC. Spinway was acquired by Bluelight Internet Services, the ecommerce division of Kmart, in December 2000. Bluelight Internet Services is now a part of NetZero. Stewart was also integral to launching Clearplay a DVD Content Filtering service, and prior to that directed the technology for ALWAYSi one of the very first VOD subscription services, which is now part of Hollywood.com. Daniele Levy Joined the current management team in mid 2005 by way of Kibop.com and Ebay.

Much of Peerflix was funded privately by McNair and Robinson, but in November 2004, the company received funding from venture capital firms BV Capital and 3i. In September 2005, they closed a $8M Series B led by Battery Ventures, with participation from BV and 3i. They intend to expand the platform to allow users to trade video games, music and even collectors items such as baseball cards and stamps.