Money Continues to Pour into CDNs

We might like to think that the content delivery network business is skating on thin ice, thanks to a large number of players desperately trying to gain market share, but that’s not stopping venture capitalists from backing CDN startups.

EdgeCast, a Los Angeles-based CDN that launched in August, says it has raised an additional $6 million in Series B funding from current and new investors. Steamboat Ventures, the VC arm of Walt Disney Co., is the lead investor in this round; it joins previous investors Mark Amin, chairman of CinemaNow, as well as Jon Feltheimer, CEO of Lions Gate.

EdgeCast believes its business model has certain advantages over those of its competitors.

Most CDN companies charge fixed bandwidth prices along with other services…In EdgeCast’s pricing model, the cost for bandwidth remains flexible, decreasing for customers as the bandwidth use increases.

Will that be enough for the company that counts IMAX Corp. as one of customers? Can it keep up with deep-pocketed rivals such as Akamai, when companies like VeriSign are ready to throw in the towel? The way I see it — it would take a lot more than $6 million for EdgeCast to become a major player in the CDN business.