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Why BitTorrent Inc. is no sure bet!

I’m going write about something near and dear to my heart: BitTorrent.

Many of you guys may have been reading about the company, recently, since they are rumored to be raising a huge venture capital round: BitTorrent Raises $25 million, Bram Cohen is History.

So first off, the technology and the adoption of the protocol are amazing. Just read the Wikipedia page for the staggering numbers. 55% of upstream traffic, 35% of all traffic on the Internet, etc. It’s all heady stuff. I’ve also chatted with Bram Cohen a couple times, and had dinner with him when he lived in Seattle, and he’s a smart guy and I wish him the best of luck. But since the positive rah-rah side of the equation is covered, let me explain some of the hurdles I see for the company, based on first-hand experience.

A quick history
My friends and I love BitTorrent. In fact, we loved it so much that as a side project in late 2004, Will Portnoy and I wrote a BitTorrent search engine called TowerSeek. We did a little research paper about it and released it to the world, under the name Monkey Methods Research Group. It was on Slashdot at some point, along with MIT Tech Review, G4 TV, a couple hundred blogs, etc., which totally crashed our servers – that was fun :) We thought that BitTorrent had already proven its value as a product, and ultimately, we could try to “bring it mainsteam” by building a search engine (which aggregated all the fragmented content), as well as creating a BitTorrent client in an Internet Explorer toolbar. That way, you could use this toolbar to search, download, and open files.

We learned a lot from this experience, which I’ll share below. Ultimately, we decided to focus on the creation of long-tail content, rather than facilitating mainstream stuff, which we saw as a difficult business model.

So after that, we started a media marketplace where people could go and publish stuff using BitTorrent. It was definitely an interesting experience, because after a couple months of tinkering and talking to filmmaker types, we released the site as one of the first BitTorrent-powered products targeting a non-techie audience. And it flopped. As we iterated on the product, YouTube came out, and it was game over :) We stopped working on BitTorrent-related services after that because we had learned our lesson(s), which I’ll recount below.

For consumers:

“I want it now!”
People care about instant gratification. At the end of the day, you’ll have more people watching a fast-loading movie in a small screen than you’ll have people who download the client, then wait an hour or two for the file to download. When we asked people how long they’d want to wait for a download, they’d say “5 minutes at most” even though they don’t understand the quality jump you’re talking about with BitTorrent

“This feels like spyware”
BitTorrent requires you to download a separate client, which is a tall order for non-techies in the world of spyware. It’s just too much work. Whenever we had usability tests that got to a download page, most of our participants would stop. It was too much of a barrier.

“Where are the files? Why isn’t my movie playing? etc.”
And of course, one huge killer in the BitTorrent world is the amount of fragmentation you’re talking about. I think it’s very smart of BitTorrent Inc. to start a destination site, because that’s what consumers want. They want to go to one place, not download the client at one site and find the content at 5 others. Nevermind the problem of codecs (DivX versus H.263 or MP3 versus AAC), which make it so that you can wait hours for a video and then have the frustration of not having the right codec – and don’t expect your average user to know about VLC. So it’s also smart BitTorrent, Inc. is standardizing around Windows Media codecs and DRM.

There are a couple other issues, but this is why Flash is such a great platform for video sharing. You probably already have it on your computer, and you can walk to YouTube and be guaranteed to instantly load and play any video of your choice. Instant gratification without a client download needed, and you just need a site like YouTube to solve the media fragmentation problem.

For content producers, you have your own set of concerns:

Mainstream media has big demands
If you’re working with a studio, of course they have some big demands. First of all, they have all the leverage since they are sitting on the content and you are just another “pipe” to them. So the deals won’t be in your favor, and will be experimental at best. DRM is a must, of course, as is playing nice by not disrupting them in all the ways you could be, which means you’ll end up in a more traditional model. I have to say that still, I’m very impressed with BitTorrent Inc’s ability to sign big studio deals, which I would have expected to take a longer time and more money. Obviously the guys over there are returning their calls quickly :)

That said, one could speculate that part of the reason why the studios would like for BitTorrent to have a LITTLE traction, but not give them full-rein, is that it makes the company much easier to control.

For mainstream media, you are a commodity bandwidth provider
As I mentioned above, mainstream media has big pockets. Obviously Apple just pays a bunch of money for iTunes to function through Akamai, and I’m sure it’s getting cheaper by GB/transferred every day. So ultimately, when it comes to distributing films for Warner Bros, BitTorrent ends up competing with Akamai and the other network infrastructure people, without the differentiation that one of those pure-plays can develop. It’s akin to developing compression software when hard drive capacities are getting cheaper every second, or developing CPU overclocking when you have Moore’s Law. It’s a cool thing to do, but ultimately, it’s a losing battle since bandwidth is a commodity that’s getting cheaper all the time. So the value proposition is much weaker.

Perhaps in BitTorrent Inc.’s case, they actually are able to position the “community” as a huge group that builds on the bandwidth value proposition. Even if that’s true, as many people have pointed out, it might be misleading since not that many people actually go to BitTorrent.com to download stuff.

Long-tail content is better, but they care about audience much more than quality
We talked to a lot of indie filmmaker types, and they all thought that our media marketplace idea was really cool – so we got good feedback there. Ultimately though, we realized they thought it was cool not because of BitTorrent, but because it gave them their first way to distribute film outside of film festivals. So they care more about eyeballs, not about the quality of the technology. Even though YouTube video quality sucks, they don’t care because they just want the audience, and if they could publish their content at higher quality, but have a smaller audience, that’s much less interesting. Getting them on board will be cost intensive, since they are very fragmented, but an easier pitch.

As an aside, I actually believe there’s an interesting market in the indie filmmaker community that is still ripe for the taking. YouTube is a good first step, but filmmakers have a ton of problems they need solved, from recruiting actors and staff, managing the projects, timelines, and media, as well as the publishing/evangelizing end. If someone’s able to make a consolidated set of tools for this group, it’s probably an important (and strategic) profession to unite. I’ll be waiting to see someone crack this market :)

Conclusion
So net/net, I still love the technology and use it constantly, but there are some major hurdles in trying to commercialize it for the mass market. All of the above lessons were pondered and learned over 9 painful months of tinkering and trying to make something work, and we ran into some problems. Perhaps some company will be able to overcome them.

That said, more than a year after we quit working on BitTorrent-related services, I’d still say that all the above problems still hold. Don’t believe me? Just grab a random smart, but not tech-savvy person, and watch them in silence as they try to get BitTorrent working. They will quit 4 or 5 times during the process because it’ll be too hard. Then set someone else loose on YouTube and you’ll see the difference.

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