Now Kozmo founder Joseph Park is putting together deals to help his company get videos to consumers even faster, over high-speed Internet connections. In the past several weeks Kozmo has quietly struck strategic investment deals with Warner Home Video, Sony’s Columbia TriStar and Liberty Digital, the technology and Net-investment arm of Liberty Media, the nation’s third biggest cable company, to position itself for broad-band entertainment delivery, Kozmo insiders say. These sources also say the company will soon close digital-music-distribution deals with Sony Music Entertainment and Universal Music Group. And more agreements are in the works.

Initially, Kozmo will most likely offer its traditional delivery services to interactive-TV customers through a deal with Liberty. Customers will be able to order “From Dusk Till Dawn 3” and a bag of chips right from their TVs. Kozmo will then move into selling digital-music singles via dial-up and high-speed Internet connections. Ultimately, the company will deliver movies to customers over broad-band connections. IPO-bound Kozmo execs declined to comment on the reported plan, citing Securities and Exchange Commission regulations.

On the face of it, the announced deals do little more than bolster Kozmo’s access to videotapes, DVDs and CDs. Instead of relying solely on distributors, Kozmo is going directly to the source. Warner purchased 1.3 million shares, worth $10 million, in the company, and will supply videotapes and DVDs directly to Kozmo. Liberty Digital snapped up a $10 million stake. Columbia TriStar did not reveal details of its deal.

Kozmo’s moves come as nearly every traditional entertainment player is trying to figure out how to make money on the Internet. At the same time, numerous dot-com entertainment firms have launched with little success. So why would Kozmo leap off the broadband-entertainment plank, and why does the company think it has a chance to succeed where other companies have not?

The answer is simple. It has to, for two compelling reasons. First, Kozmo’s video- and CD-delivery business has a limited life span; those media will eventually migrate to broadband. So Kozmo has to hedge its bets. Second, the company has to reduce operating costs. The recent market gyrations are leading investors to scrutinize money-losing dot-coms. The company has lost more than $26 million to generate revenues of only $3.5 million.

While Kozmo’s plans are grand, they’re far from complete. The company has no infrastructure to deliver digital media, nor does it have the money to build it. At least not yet. The company, sources say, will most likely acquire an existing tech firm to achieve its goal.

The Industry StandardPrepared by staff of The Industry Standard, the news magazine of the Internet economy