December 2012, Week 3


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Sat, 15 Dec 2012 01:42:54 -0500
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Can BitTorrent Go Legit With the Entertainment

by Mark Glaser, 
December 13, 2012

What's the first thing you think of when you hear the
word "BitTorrent"? Probably visions of teenage boys in
basements swapping pirated music and movie files.
That's long been the public perception of the
technology protocol BitTorrent, but there's also an
entity known as BitTorrent, Inc., and it would very
much like for you to forget that perception and think
of it as a friend to the entertainment world.

BitTorrent, Inc. likes to point out that it's been
experimenting with helping musicians by putting up free
content that will lead to better engagement and sales
of music, concert tickets and other revenue in the
future. The BitTorrent blog is full of such stories.

And recently, BitTorrent partnered with author Tim
Ferris (whose Amazon-published book was shunned by big
retailers), and helped get him 210,000 downloads of his
book sample within seven days, with 85,000
clickthroughs to his book page on Amazon. After 11 more
days, the numbers climbed to 600,000+ downloads, with
241,000+ clickthroughs to the Amazon page.

Still, there was no word on how many of those views
converted to payments, despite claims that this is the
first BitTorrent bestseller.

Payments for content are not front of mind for
BItTorrent -- not yet. I visited BitTorrent's
headquarters in San Francisco recently and spoke with
its executive director of marketing, Matt Mason, about
the changing business model for content online and what
BitTorrent might do to help shift that. Mason was quick
to point out that 30 percent of daily Internet traffic
came from BitTorrent the protocol and that they had 160
million users, with 40 million active on a daily basis.
But BitTorrent the company had become profitable not by
charging for music downloads but by charging for a
premium version of its software -- without ads and
including a much-needed anti-virus for downloads.

Its only mission at the moment deals with helping
artists use the power of the BitTorrent network to gain
fans and work out what it would sell them later.

"The email address is the most valuable thing you can
get from a consumer. It's probably worth more than a
direct sale through iTunes," according to Mason, who
says the artist can then use that email to sell the fan
multiple albums, concert tickets, merchandise and more
down the line.

The following is an edited version of our discussion,
including some video clips of key parts of the chat.


MEDIASHIFT: This is probably the question you get the
most. BitTorrent has had an image as being the home of
piracy for so long. How do you combat that?

Matt Mason: It's tough, because there are two parts to
BitTorrent: BitTorrent the protocol and BitTorrent the
company. BitTorrent the protocol was invented by our
founder, Bram Cohen, back in 2001. It was invented to
move large files across the Internet, which was then
and is now a big problem for the Internet. The Internet
is an asymmetric network with lots of many-to-many
connections. The BitTorrent protocol moves 30 percent
of the daily Internet traffic on a daily basis. So
that's the protocol. It's open source -- it exists. If
we shut down the company tomorrow, it will still exist
and people would use it for all kinds of things.

With BitTorrent, unfortunately, the name has become
synonymous with illegal file-sharing or piracy the way
that MP3 used to mean piracy. With MP3, over a period
of time, people realized it was a technology, and now
it's used as such and today it doesn't mean piracy.
Now, people are starting to think of BitTorrent as a
technology, too. We're absolutely challenged, and it's
going to take people a long time to realize that
BitTorrent doesn't mean piracy; it's just a way to move
large files. That's started to take hold as we start to
work with more content creators to help them get stuff
in the hands of fans using the BitTorrent protocol.

MEDIASHIFT: When it comes to entertainment companies,
they have an in-grown fear of piracy. Is it hard to
change their minds so you can work with them?

Mason: Yes, absolutely, and it's difficult to convince
people, and convince everybody at a company that it's a
good idea [to work with us]. We might convince a band,
their manager and the CEO of the label, but the
[general manager] of the label might say, 'You can't
work with BitTorrent ever, ever, ever. It means
piracy.' And we don't ever get to talk to that person.
It's difficult, but we are seeing the tide turn. Over
the last year, we've done a lot of cool stuff with
content. And when we go out and talk at media events,
we tend to get a different reception; people are
interested in the experiments we've been running.

Moving into 2013, our mission is: How do we create as
many great tools for publishers to access the
BitTorrent ecosystem as there are for consumers?

MEDIASHIFT: What plans do you have to make a viable
business layer in BitTorrent?

Mason: Right now anyone can create a Torrent file and
put it out through the BitTorrent ecosystem. We think
there's a layer that we can create, that will let
people publish files in a slightly different way, and
in a way that makes sense for publishers and less savvy
Internet users as well. We're not sure what that looks
like yet; it's something we're just starting to think

We need to do deep research first. The experiments
we've done so far with the likes of Counting Crows, DJ
Shadow have been about trying to figure that out. We've
seen some great things, some great campaigns with
excellent conversion rates that we've concluded that
there's a meaningful, sustainable place for content
creation in the BitTorrent ecosystem. It's not the only
solution for the dilemma for how you make money from
digital content. We certainly think it's a massive part
of it. BitTorrent is a massive part of the Internet.

We did a campaign with the author Tim Ferris on his new
book "The 4-Hour Chef." In the first seven days of that
campaign, we saw 210,000 downloads of the sample of the
book. That's awesome, but what's even more awesome is
that of those people, 85,000 of them then visited Tim's
Amazon page for the book. That's a sick conversion
rate. That's off the charts.

MEDIASHIFT: Do you know how many people then bought the

Mason: That's what we're trying to figure out ...
Something's happening here. There are 160 million
people using BitTorrent, and this isn't teenagers in
basements pirating films. It's a massive cross-section
of the global population. BitTorrent is a business;
we're a profitable company with 110 people working

MEDIASHIFT: How are you profitable? Are you trying a
freemium model with downloads, where people get free
samples and then you can sell them something else?

Mason: No, to date we haven't tried to monetize any of
the content experiments that we've done. We've really
focused on making money for the artist. If that works,
then we will figure out if that's [a future source of
revenue]. We have three main revenue streams. We sell
premium versions of our software product, BitTorrent
and uTorrent. There's a free version with ads, and
there's a premium version without ads and has anti-
virus and will play more codecs.

We've also launched an ad network within the ecosystem.
We've seen really encouraging signs there in the last
six months. We got some flack for serving ads to our
network, but we didn't launch them without testing it
deeply with our users first.

MEDIASHIFT: Have you tried getting people to pay for

Mason: We've experimented with having people pay right
off the bat, or at least allow people to donate. Last
year we did a really interesting experiment with a TV
show called "Pioneer One." Two filmmakers from New York
made a pilot. The pilot got a lot of attention and won
an award at Tribeca. They were interested in a new way
to distribute it, and even a new way to fund the

Funding TV is kind of crazy if you do something with
one of the big networks or cable channels. You might
get $4 million to make your pilot, and it could be
great, and it could get great feedback in focus groups.
But if there's a scheduling conflict with "Desperate
Housewives," that pilot could be shelved and no one
will ever see it. That's a reality for a lot of TV

These guys were interested in creating a show and
finding out if people were actually interested in
seeing it. We put up the pilot through BitTorrent for
free, and we gave people the opportunity to donate to
make Episode 2. They had between 4 million and 6
million downloads of Episode 1 and got enough donations
to make Episode 2. Then they had enough donations to
make Episode 3, and then 4, and so on. They got enough
donations to make an entire season of "Pioneer One"
that ran over an entire year. That was a successful
experiment, which was funded directly by the BitTorrent

That's one thing we did, but we've done many more. Our
take is that there isn't any one way to distribute
content in the digital world. There's actually a
different business model for every piece of content.

MEDIASHIFT: You say there's a different business model
for every piece of content. Isn't that intimidating for
content creators? How can they figure it out?

Mason: The ways that you can actually hack growth with
certain audiences -- those are things you can learn and
just do. If your content is good, they will just work.
That's not how the content industries worked [in the
past]. That's a very rational way of doing things. The
content industries have never before been rational.
Data is the new hustle for musicians. Hustle used to be
literally "how am I going to get this guy to play my
record?" You can find all kinds of nefarious stories
about how people did that before. How Hollywood works
is a mystery even to people in Hollywood.

With the Internet the way you get things to fans is
very transparent by comparison. There's lots of ways
you can look at things and understand how they work.
You look at someone like Justin Bieber or whoever the
latest Internet sensation is, you can see very clearly
how they did what they did. So now every time there's a
big hit, you can see how it was done, but every time
it's slightly different. All of these things are
interesting, but there's clearly not one way to do it.
You can check how they're doing it -- go check their
Alexa rank, go check their bit.ly links, you can see
what's happening. And there's no way you could see what
was happening at a Hollywood studio, or a label, or
radio station. No way.

I think we're entering a golden age of data-driven
content creation, which sounds super-nerdy and
intimidating, but it's actually really good news.

MEDIASHIFT: Tell me about the live-streaming test that
you're doing.

Mason: Live-streaming is something we've been
developing for some time. We've actually created an
entirely new protocol called BitTorrent Live, that's
based on the BitTorrent protocol. With BitTorrent,
every time there are people sharing a piece of content
they are part of a swarm. The more people who are
sharing it, the easier it is to get that piece of
content. The big problem with live-streaming is that if
too many people are watching a live-stream, it tends to
slow down and eventually break. If there are too many
people trying to watch the Super Bowl, then the Super
Bowl will break.

That's because you have all these people trying to get
content from one source. The way BitTorrent live works
is very different -- it's peer-to-peer live-streaming.
So what that means is that everybody in your audience
is part of the processing power, so you offset the
power of broadcasting the stream. The more people who
watch a BitTorrent Live stream, the more resilient it
gets. Plus, the good news is that the cost of
broadcasting it is zero.

This is one of the most fundamentally new technologies
that will hit the Internet.

MEDIASHIFT: So would you work with whoever has rights
to the Super Bowl to see about live-streaming it for

Mason: Right now, you could broadcast the Super Bowl
with this technology, but how can you keep someone from
hijacking that feed and broadcasting it themselves with
their own ads? We're working on that right now.

The other part of that is: What if you're at a town
square in Egypt and the police are beating people up?
It would be great if you could flip out your phone and
broadcast that to 20 million people and nobody could
stop you. So there are huge commercial benefits to
BitTorrent Live, and there are these huge social
benefits too. The question is, how do we navigate this
so it works for everybody?

Mark Glaser is executive editor of MediaShift and Idea
Lab. He also writes the bi-weekly OPA Intelligence
Report email newsletter for the Online Publishers
Association. He lives in San Francisco with his son
Julian and fiancee Renee. You can follow him on Twitter
@mediatwit. and Circle him on Google+


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