BitTorrent Goes Legit With Online Store

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In the last month, about 30 million people have used BitTorrent’s peer-to-peer software. And some unknown number of them were using the application to slurp down pirated TV shows or movies.

Now, BitTorrent has reinvented itself with an online storefront intended to sell those same Internet users versions of the stuff they may have been stealing a few weeks before — and some of which is still floating around on illicit BitTorrent-based cyberspace hangouts.

Launched in late February, BitTorrent’s consumer site will sell or rent encrypted video and music content, downloaded over its peer-to-peer networking software, from 35 content partners, which include major studios and TV programmers like MTV Networks and Fox.

The San Francisco-based startup, incorporated in 2004, incurred the wrath of entertainment companies because its software allows anyone with an Internet connection to download full-length, pirated movies or TV shows.

But in the past year, the firm has reached a détente with at least some entertainment companies, striking distribution deals in the past year with MTVN, 20th Century-Fox, Lionsgate, Paramount Pictures, Warner Bros. Home Entertainment and Metro-Goldwyn-Mayer Studios, among others.

BitTorrent “was never intended to be a piracy tool,” said Eric Patterson, vice president and general manager of BitTorrent’s consumer services. “But because it was an open-source piece of software, that’s the direction it took.”

Patterson said BitTorrent uses automated filtering tools, developed in conjunction with the Motion Picture Association of America, to find illegally copied material and remove it from the company’s site. “We put together a business plan and extended an olive branch to the industry,” Patterson said.

For Comedy Central, the opportunity to reach a new online audience — and develop a new sales channel — outweighed any concerns that users of BitTorrent’s software may continue to steal its content via unauthorized, third-party sites.

“We want to get our content to consumers when they want, where they want it,” said Comedy senior vice president of strategy and business development Caleb Weinstein. “You also want to show the audience the right direction and empower that legal alternative.”

BitTorrent “had the aptitude to say they would filter and work with us to get legal strategy,” he added.

BOOTLEGS ABOUND

But BitTorrent isn’t just competing against the iTunes and YouTubes of the online world. It’s also vying for business amid a backdrop of dozens of Web sites — made possible with BitTorrent’s own software — that offer “torrent” directories of illegal content that is copied and shared among individual users.

These include the shamelessly named ThePirateBay.org, hosted by a group of self-described “anticopyright” Swedes. In an “about us” section, the site’s stewards claim that because it only provides links and hosts no files on its own servers, “it is therefore not possible to hold the people behind The Pirate Bay responsible for the material that is being spread using the tracker.”

The Swedish pirates add a nose-thumbing parting shot: “Any complaints from copyright and/or lobby organizations will be ridiculed and published at the site.”

Using BitTorrent’s software, Multichannel News successfully initiated downloads through ThePirateBay.org of many movies and shows that BitTorrent is now promoting prominently on its own site and charging for, including Borat, Superman Returns, Jackass Number Two, Saw III and recent episodes of South Park, although the software indicated that each of those downloads would have taken more than 15 hours to complete.

BitTorrent director of communications Lily Lin noted that sites such as ThePirateBay.org have no connection at all to BitTorrent and that the company is able to police only its own Web site.

Patterson, meanwhile, compared the BitTorrent software to a Web browser, which similarly can let someone access illegally posted material as well as legitimate content.

“If we’re doing our jobs, we will be converting people who were looking for pirated content,” Patterson said. “Will that happen overnight? No, but we have enough feedback from our current user base that we know it will happen.”

He said that according to BitTorrent surveys, 34% of the software’s users said they would pay for content if it were possible.

LOCKED DOWN

Initially, BitTorrent is offering about 3,200 programs for sale or rent, about one-third of the 10,000 to which the company has lined up online distribution rights. “We felt we had to get the production and [digital rights management] done to get a critical mass of content to get out the door,” Patterson said.

Files are protected with Microsoft’s digital rights management software, embedded into the Windows Media Player software. The videos may only be played on a single physical computer, and require subscribers to have Windows XP or Vista PCs. And they won’t be playable on portable video devices, like an Apple iPod.

The service will rent movies, with new releases such as Superman Returns running $3.99 and catalog titles, such as A Clockwork Orange and The Blair Witch Project, at $2.99. Movie rentals are viewable within 30 days and expire 24 hours after someone starts watching them.

TV shows and music videos will be sold as “download-to-own” files for $1.99 each, which has become the standard price for television programs sold online. BitTorrent’s offerings will include episodes of Comedy Central’s South Park, MTV’s Jackass and Fox’s 24.

The early results of BitTorrent’s online sales confirmed that the research it did was “dead on” in terms of the type of content sought by predominantly male, 16-to-34-year-old users, according to Patterson. He said popular new releases are doing well, including the films Little Miss Sunshine and Superman Returns, as well as TV episodes of Beavis and Butt-head and 24.

Most of the content is available only to subscribers in the United States. Patterson said BitTorrent has worldwide distribution rights to about 20% of the titles under contract and will enable access to non-U.S. customers in the next few weeks.

Besides the for-pay content, BitTorrent is nurturing a community of 3,000 producers — amateurs and professionals alike — who use the peer-to-peer software to distribute content. Adam Sandler’s production company, for example, developed a pilot for Comedy Central called Gay Robot, which wasn’t picked up but is now one of the top downloads from BitTorrent.com.

On the other hand, he conceded that BitTorrent’s service could be easier to use. He said the company is developing a version of the BitTorrent client software that will be available as a Web-browser plug-in, rather than as a standalone application. The company is hoping to release the browser plug-in in June.

That’s what will really determine how successful BitTorrent will be as a business, said Gartner analyst Mike McGuire. “The long-term challenge for BitTorrent is making the service compelling and useful to people,” he said.

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