Finally, there is a start-up that just may become the next gigantictech IPO. I mean, on the scale of
in the 1990s or, more recently,
Don't laugh: It's
Yes, I know. There are plenty of obstacles between BitTorrent, themaker of lightning-fast file-sharing software, and the public markets.The software is seen as the tool of choice for those pesky music andmovie pirates, its not as intuitive to use as other peer-to-peerprograms, and, like
( NAPS) before it, it risks being sued intooblivion.
But BitTorrent has been quietly working during the past year to become more palatable to the mainstream. Above all, it's been working with major content companies to show its technology can help replenish their profits, rather than deplete them.
And with YouTube taken out of the running by Google and socialnetworking sites like Facebook starting to lose the youthful allure theyhad even a few months ago, there aren't a lot of strong candidates left.BitTorrent may be a dark horse, but if it can overcome the hurdles beforeit, it's a horse that could deliver remarkable returns in short order.
On Wednesday, according to tech news blogs GigaOm and TechCrunch, BitTorrentreceived $25 million in funding in a private investment round led byAccel Partners (which has backed companies such as
in the past). Neither the company nor its reported investors have made a formal announcement.
But BitTorrent did announce that it had reached licensing deals formovies and television shows from the likes of
20th Century Fox,
Lions Gate Entertainment
propertiessuch as Paramount Pictures and its Comedy Central, Nickelodeon and MTVcable networks.
That news follows earlier licensing deals with
Warner Bros. Home Entertainment and several smaller studios.
It's easy to read about those licensing deals and be skeptical.After all, the same studios have inked agreements with othercompanies, notably Amazon and its undead Unbox offering, with littleimpact. And Napster tried to negotiate with the big media companiesbefore it was shut down.
But much of BitTorrent's popularity is due to its ability to breakthe download bottleneck. Rather than load a file from a single server toany and all PCs that want it, BitTorrent's software divides up a fileso that users essentially download it from each other. Not only isBitTorrent faster and less taxing on bandwidth resources, it's alsocheaper than conventional downloading.
So, if Internet users have taken to the grainy 10-minute videos onYouTube, imagine how they'd feel about downloading high-quality,full-length movies.
The other obstacle preventing widespread adoption of videodownloading is the restrictions placed on using them -- many can't beplayed on a DVD player and some, unlike a standard DVD, expire after afew viewings. It seems like BitTorrent may start off with similarrestrictions, but if consumers give in to common sense and object, thiswill probably end soon enough.
As for the Napster analogy, I'd argue that BitTorrent is in someways the opposite of Napster. When Napster fell, the supposed lesson wasthat its technology, in helping to spawn the free downloading ofcopyrighted music, doomed its financial prospects.
But in retrospect, that was the smaller part of a bigger story. Thereal reason Napster failed was that the record labels chose to stamp outa technology that could have helped them drive up profits. They found agift horse, and smothered it.
Movie studios have had every chance to take BitTorrent to court, butthey haven't tried. Instead, they've taken on sites offering piratedcontent and signed deals with BitTorrent. Maybe that's because, thistime around, they realize that blaming BitTorrent for piracy is likeblaming DVD disk manufacturers for pirated copies of Hollywood filmsthat are commonplace abroad.
The bigger obstacles facing BitTorrent aren't potential lawsuits,but that many potential users still harbor misperceptions of whatBitTorrent can really do. Many in particular are tentative of allowingothers to use their Internet connections to upload movies onto their PCs.
Another barrier is that BitTorrent could be bought out bya larger company first. It's always hard to read the mind of Google'smanagement, but they must be at least considering a BitTorrent buyout,if for no other reason than it would completely sew up for them theemerging market of online video.
But if BitTorrent can work out the kinks and make it public, itcould make current broadcasting even less relevant than it is now, andbe a boon for Internet service providers, online advertisers and storagecompanies. It just might be that big.