I was drawn to Boxee over XBMC because of the legitimate media sources it worked well with (YouTube, BBC iPlayer, etc). Granted I could do the same with XBMC (in fact I do do the same with XBMC), but Boxee just worked nicer out of the box.

Plus most of the local storage stuff I had was CD and vinyl rips.

Boxee organised it's content by metatags, so I'd imagine it would be slightly annoying for pirates (which, more often than not, are labelled wrong) than other similar solutions which place a higher precedence on organisation via directory hierarchy (Boxee could do this too - but it was much more awkward to get to than in XBMC et al)

They built a platform for pirates, tried to pivot to be a legit business, was met with resistance from companies they had previously been empowering pirates against, and so tried to pivot again to something no one, pirate or non-pirate, really wanted (cloud dvr).

The same can be said about the iPod.