Grouper and Buy.com Team Up for Video Product Reviews by David Kender Published on Aug 31, 2006 7:00 AM

August 31, 2006

"This partnership is significant because it's the first time that user-generated video is being used in a business context to allow shoppers everywhere to have more dynamic dialogue about products available via Buy.com. Interactive comments and discourse will result in more informed purchase decisions and happier consumers," said Josh Felser, the co-founder and CEO of Grouper Networks, in the official press release.

According to Red Herring, no cash will be exchanged in the partnership, and the no new advertising deals will be struck. Grouper will take on the bandwidth responsibilities, while Buy.com will administer the duties of reviewing the reviews, ensuring their quality and appropriateness.

The companies are claiming mutual benefits, but some analysts question the value of the deal. A Gartner analyst points out that they may be working on a flawed premise. If the value of user-generated video does not exceed the considerable bandwidth costs, as well as the time it takes to evaluate each video, then the experiment may be a failure.

Just last week, Grouper.com was purchased by Sony for $65 million. The website, like YouTube, allows users to post and share videos, and export them simply to MySpace, Blogger, Friendster, as well as iPod and PSP devices.

Buy.com, an online commerce site, seems to be in the midst of planning its second IPO. The first offering fell through in 2000 after founder Scott Blum was forced to re-privatize the company and buy back stocks after failing to turn a profit.

Users interested in creating video product reviews will have to register with both sites, but no software download is required.