Peerflix

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Peerflix is a DVD 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 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 trading through their website. Since physical DVDs are exchanged with no copies made, the service is completely 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 16 employees in Palo Alto. All of the trading is done between users of each network (cross-border trading is not yet available). Members mail DVDs to each other using a PeerMailer, which is printed directly from a member's printer and is comprised of two standard sheets of copy paper. Easy-to-follow folding instructions and a couple of pieces of tape quickly yield a complete do-it-yourself mailing envelope. US-based members do not need to add postage as the PeerMailer includes printed postage. The DVD is then shipped out via USPS or Canada Post (depending on the location). Discs are traded without any original packaging, although some members do include cover art from time to time.

In December 2006, Peerflix changed from a token-based trading platform to one based on US and Canadian dollars. Members earn trade cash for sending the DVDs they have, and spend their trade cash to get the DVDs they want. Additionally, Peerflix charges a transaction fee of $0.99 (plus postal fees for US members) for each title received.

Also in December 2006, Peerflix launched more social networking features on their website. The new site allows members to build profiles, connect with others, write reviews, add tags, join groups, etc. The company plans to launch many additional community features throughout 2007.

[edit] History

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!, AT&T, Bell Telephone and NBC. Spinway was acquired by BlueLight Internet & Phone Services, the ecommerce division of Kmart, in December 2000. Bluelight Internet Services is now a part of NetZero, Juno & Private Phone.

Much of Peerflix was funded privately by McNair and Robinson, who act as CEO and Chairman, respectively, 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.