CacheLogic Scores More Funding

Peer-to-peer content delivery player CacheLogic says it has raised a new $25 million round of financing from its standing investors, Amadeus Capital Partners Ltd. , 3i Group plc , and Pentech Ventures.

And we're all pretty excited about that.

The new funding will be used to advance a new technology initiative -- that of involving service providers in the content delivery business, according to chief marketing officer John Dillon.

Dillon says Internet service providers (ISPs) face a serious challenge in the video delivery value chain, as increasing volumes of rich media content drive up the cost of serving customers.

In what he called a "broken business model," Dillon said, "ISPs are sitting there and they're expected to deliver high-value content" to end users without receiving any revenue from content owners in return. [Ed. note: Speaking of, how many times has CacheLogic changed its business model?]

For each gigabyte of data that an ISP has to deliver to its end users, Dillon estimates that it costs 10 cents to receive that traffic, 10 cents to distribute it over its network, and an additional 10 cents to send the content to the end user.

As a result, CacheLogic is looking to collaborate between content owners and service providers to lower costs and enable revenue sharing by deploying its P2P-enabled content delivery gear deeper within ISP networks.

The company is working with national broadcasters, such as the British Broadcasting Corp. (BBC) , in establishing relationships with ISPs to install access caches that will allow network owners to lower the cost of delivery within their networks.

In addition to its efforts in Europe, the company is working with a Tier 1 service provider in the U.S. and has installed access caches in certain networks in Asia, according to Dillon.

CacheLogic isn't the only P2P-enabled CDN looking at caching content in ISP networks. Recently, Pando Networks Inc. announced a partnership with PeerApp Ltd. aimed at using caching to bridge the divide between content owners and ISPs. (See Pando, PeerApp Partner and Pando & PeerApp Partner on P2P.)

The new investment brings total funding to more than $50 million, with the company's last round coming in July 2006. That round, its third, marked a change in strategy for the company, as it shifted from a peer-to-peer (P2P) caching vendor to a content delivery network (CDN). (See More Cash for CacheLogic and CacheLogic Raises $20M.)

Funding for CDNs has started to heat up, as investors see massive opportunity in the space. Content delivery providers CDNetworks Co. Ltd. and EdgeCast Networks Inc. also announced financing in recent months. (See EdgeCast Scores Hollywood Cheese and CDNetworks Racks Up $96.5M.)

— Ryan Lawler, Reporter, Light Reading

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