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.

Comments

[alan patrick]

Great article, I post-scripted it to one I wrote yesterday on PC based TV over on broadstuff here:

http://broadstuff.com/categories/2-MyPCTV

By the way, are you aware of TIOTI and what it is trying to do with BitTorrent?

[Carl Howe]

Great article. I too love BitTorrent as a return to the Internet's original peer-to-peer roots. But you hit on one of the solutions to the problem in your analysis of it: package a peer-to-peer capability in software you already have. And that's exactly what I believe Apple is up to. You can read more here:

http://www.blackfriarsinc.com/blog/2006/05/apples-torrent-technology-could-dodge.html

Carl

[Andrew Chen]

RE: Carl

You're right that you can avoid these problems by:

- Bundling BitTorrent into existing software, like a browser or an OS
- Integrate VLC with codec updates

... but even then, you have problems with instant gratification and all the issues regarding studios versus long tail folks.

Obviously we were trying to do a browser toolbar integration, but in reality, to make this a snap, someone who owns an underlying platform like Apple or Microsoft has to push BitTorrent technology, and we all know it won't be MSFT :)

Plus, would you really hang your startup on having a huge company do something that you couldn't control?

[Vivek Puri]

"...managing the projects, timelines, and media....."

You should try out mediasilo.com for managing and sharing production videos and media files in a team environment. Site is in private beta right now.

-Vivek

[Dmitry Shapiro]

For full disclosure, I am the CEO of Veoh Networks.

Veoh is solving the problem of Bit Torrent complexity and abstraction of the transport from Internet Television consumption.

Veoh has a proprietary P2P network, similar to Bit Torrent, but better at penetrating firewalls and centrally controlled. We abstract all of this with a TiVo-like (including remote controlled) client application that downloads high bitrate video files that are published to the Veoh Network, automatically maintains disk cleanup (deleting watched videos unless you have chose to save them), and manages your bandwidth as not to eat up your Internet connection when you are using your computer for other networked activities. Publishing is as simple as YouTube... just upload a file, give it some metadata, and you're done. We take care of transcoding to all major formats (including iPod compatible), and offer the file in a Flash progressive download off our web site (or yours) (just like YouTube but with no length restrictions), and offer the original file for automatic download. There are RSS feeds, intelligent recommendations to help you find things you may like, a social network, etc.

We are about to launch our monetization capabilities allowing broadcasters to charge for their content or share in ad revenues on free content, and a slew of other features that make it easier than ever to publish Internet Television rather than Web Video.

Dmitry

[Janko]

Andrew, interesting read. Just out of curiosity: What are your thoughts about something like the Democracy Player in this context?

It seems like this is answering many of your questions - they are offering a destination, integrating Bittorrent into another tool, even making VLC usable for the mainstream ...

[Andrew Chen]

Re: Janko

I think products like Democracy Player are definitely a step in the right direction, but they only solve part of the problem.

Ideally, people still want instant gratification - both on lower-quality video previews as well as not needing to download a client. And for content producers, you still run into the same incentive issues I wrote about.

And finally, the question is, what kind of content ends up on these media networks? If you have long-tail content without the hit stuff, does that still work? I think all that YouTube and P2P networks have proven is that piracy of hits drives a lot of traffic :)

[nordsieck]

You are wrong about the bandwidth thing.

Sure, it is possible for someone like Youtube to exist at all nowadays, which is amazing (well, exist in that their site is still there, even though they were bought). That doesn't mean that it isn't insanely expensive to run, however.

Using some sort of peer-to-peer distribution mechanism should be able to decrease the cost to distribute by an order of magnitude - a not insignificant sum.

The thing is, this will only work _BETTER_ the cheaper bandwidth gets.

The problem right now is that most peoples' connections are too anemic to mean much, even when banded together.

If network speeds everywhere increased by 10x, peer-to-peer would be in much better shape to compete with centralized distribution.

[None]

Well, from what I hear, it's going to be built into routers and devices, so files will download quickly, sort of like using RIP to get to the destination faster.

[Douglas Richardson]

Since I don't have the faculties to use your software; how can I get back the amount of money that I paid for this software?