Skype co-founders Janus Friis and Niklas Zennstrom are preparing to unveil their latest venture to the public—a video Web site that combines professionally produced TV and video with the interactive tools of the Web. The Venice Project, as the startup is now known, launched a Web site (www.theveniceproject.com) over the summer and began testing its software on a very limited basis. Only about 100 people are on the system, Friis said in an interview with BusinessWeek.com.

The so-called beta test will be expanded dramatically by the middle of November, he said. “By the end of the year, everyone will be able to download it. Hopefully, it’s viral and it gains traction,” Friis said.

The current code name will be replaced with a new brand, though Friis declined to say what the official name will be. The Venice Project is currently trying to convince a range of small, medium, and large media and TV companies to place their full-length, professionally produced content on the network, although anyone will be able to post video on the network. It’s also talking to advertisers and marketers that could place video ads on the network. “People love to watch TV. They love professional storytelling by people who know what they are doing. And people love the Internet, because of the choice and the social qualities. We are trying to bring the best of both worlds together,” Friis said.

This can become really big, as we all know how vital and popular Bittorent is today. P2P application delivers huge amounts of data across the internet everyday and very little bandwidth costs to the users whom utilize the service.

According to Jimmy gardner,if this application is stable and works, it would be a great step forward for delivering “near HD content” to our computers. The founders are working the licensing deals and by deferring the huge bandwidth costs through bittorrent could stand to make quite a profit. All the YouTube talk has revolved around if they can be profitable in the face of their huge bandwidth charges, this new project could really mount a challenge to the YouTube perch, especially if they somehow incorporated user uploads as a part of the service in addition to provider content.

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