CenterSpan's Aim: Take Fear From Peer-to-Peer

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Convincing the Internet world that file-sharing technology can be used to safely and legally deliver digital content at a lower cost is not exactly an easy post-Napster Inc. sell.

But like a handful of competitors in the content-delivery space, CenterSpan Communications Corp. is trying to take the fear out of peer-to-peer. And now it has a technology partner to help it hunt entertainment content clients.

Hillsboro, Ore.-based CenterSpan picked up a key technology partner in CinemaNow Inc., a provider of Internet-protocol video-on-demand management systems.

Under a marketing and technology integration deal recently forged between the two companies, CenterSpan's C-StarOne peer network will use CinemaNow's PatchBay content management, syndication and reporting software.

Together, the two hope to attract media and entertainment companies looking for a safe way to deliver, track and collect revenue from their digital assets.

Up until now, CenterSpan offered customers standard XML templates to manage content, and it was up to the customer to create or buy the tools to write the actual management system. CinemaNow's PatchBay provides off-the-shelf content-management software, allowing customers to change offers or prices and run specials. It sets up the electronic-commerce systems, including those for credit-card purchases and transactions.

"It's the first system we've found that has sufficient coverage of features so that it can act manage the distribution features that CStar offers," said CenterSpan chief technology officer Michael Hudson.

CenterSpan offers a carrier-grade distribution network for content on either a file-transfer or streaming basis.

While it uses much of the same peering technology, Hudson said the company doesn't really regard its service as a peer-to-peer, because the network is closed and provides secure delivery only to authorized recipients. That's a far cry from the Napster Inc. and Gnutella models, in which content is fired off to anyone who requests it.

SERVERS STREAM

CenterSpan's technology breaks content into small segments and sends it out onto the network, to caches attached to streaming servers. When an authorized user requests that content, these servers pull in the segments to the cache and the streaming server reassembles them in proper order. Then it shoots the content out in popular streaming-media formats, with digital rights-management safeguards attached to the end user.

"The players don't know that the streaming server is happening on their system," Hudson said. "They just see it as a streaming server. We try to make sure we look exactly like what they are used to seeing."

For video-content owners, the distributed delivery makes the network more efficient and therefore cuts down on the bandwidth expense.

"Basically the problem the movie business is having with doing movies over TCP/IP is that to deliver full TV-quality film, it is about $3.50 with the hosting and the streaming," Hudson said. "Through use, we are demonstrating to them that we can match or beat the quality for under $1."

Unlike some other peer-to-peer technology providers, including Kontiki Inc., CenterSpan sees more opportunity these days from entertainment outlets that cater to consumers.

"It's a perverse turnabout on what the press would say, which is that enterprise is where the money is," Hudson noted. "But unfortunately, IT folks right now have all retracted their tentacles, so there isn't a lot of enterprise adoption of new services right now."

CenterSpan has already landed Sony Music for a distribution deal, and it is talking with the other music labels, Hudson said.

The Sony deal also has kicked open Hollywood's doors, and CenterSpan has recently been involved in trials to distribute studio content.

The latter is significant because CenterSpan designed its network to deliver TV-quality video. Studio interest in peer distribution is picking up rapidly, Hudson noted.

"I think that the studios have just decided they are doing this," he said. "So consequently I'm getting meetings at the biggest studios with people that before had been willing to talk but wary."

CenterSpan is now in five trials, including three with major media companies, one with an enterprise interest and one with a technology partner.

The trials may be encouraging, but the general economy is still proving a challenge. Frank Hausmann, CenterSpan's CEO, said the company expects to reach cash-flow neutral status by the third quarter of next year, but another round of funding will be needed.

Funding aside, the dismal Internet product market may actually works in CenterSpan's favor, Hausmann argued.

"If anything the recession acts to our favor, because enterprises — whether it is in the media entertainment sector or whether it is behind a firewall — everyone is looking for ways to save money," he said. "We are booking customers right now, and we will continue to book customers. Things are at this point ramping, as I expect."

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