[By Jemima Kiss]
BitTorrent (BitTorrent.com) - the home of illegal movie downloading - is going legal. President and co-founder Ashwin Navin told me that it was his childhood dream to work at Apple, which is pretty ironic considering he's now heading a company that is very likely to offer them some major competition. BitTorrent has already signed a deal to distribute legal, licenced Warner Brothers content on its imminent legal service. Navin said he's also in talks with music, phone and movie companies about more deals and expects those wrapped up by the end of the year when the legal product launches in the US. It expects to roll out to the UK, China and Japan next year. BitTorrent now employs 32 people and attracted $9 million in venture funding last year to prepare it for its transcendence to the world of legal distribution. In its current status, around 90 percent of the content on BitTorrent is illegal, although PBS and some other not-for-profit organisations rely on the downloads tool as a major - and very effective - distribution system. There will be plenty of changes to improve the user experience and the new service will no longer be open source.
– Surprisingly, given BitTorrent's current status as a totally free product, 33 percent of its users said they would be willing to pay for content. Had that figure been under ten percent, said Navin, the legal downloads project would not have gone ahead. As it is, the remaining 67 percent said they would be happy with an ad-supported service - if the ads are relevant and targeted. Consequently, BitTorrent is likely to combine a free, ad-supported basic service with a paid-for premium add-on based on unlimited use for a set subscription.
– He understands the frustration of MGM's COO Rick Sands, and as was evident in the earlier panel Navin really appears quite sympathetic. But then MGM would really benefit from working with BitTorrent, if the tanker is turned around enough for that yet. "MGM isn't getting any benefit from it, but then we're not getting any benefit from it. We've got to take the assets we've got and the assets he's got and make a business model out of that." Though I'm sure many executives are hostile to the BitTorrent brand, it does at least "always get us a meeting," said Navin. "But as long as we're all capitalists, there's a relationship we can forge there." And BitTorrent has bigger plans than introducing legitimate, licensed content to its own service: "We have ambitions to make this technology available to media companies themselves on their own properties. They can reach their own audience more efficiently and effectively - and that's where we think we'll make our money. That's an interesting dynamic as we couldn't get into the content delivery business out of the gate because of the polarizing nature of our brand." He said making peace with the MPAA and RIAA has created a big opportunity to turn BitTorrent's secret
source sauce into a real product.
– There's plenty to iron out, not least the complex rights issues of movies. While new media rights are becoming a staple for new content deals, archive content is fraught with complications. "It's the library that's difficult because the stakeholders are many, and in some cases there's no single owner. There might be contingent stakeholders, a guild, foreign distributors with a stake in foreign markets - it's very difficult to get a library cleared for a new distribution model. That's something the studios are working on now that we can't influence."
– And as for competing against Apple? BitTorrent's strength is that it can offer formats for all devices. He predicts a backlash against Apple's 'locked-in' ecosystem in the next three years. "Apple is a phenomenal company - we've hired engineers from Apple and know the calibre of the talent and creativity. Fundamentally Steve Jobs has challenged an entire value chain, whether it's publishers or the consumer electronics industry. But Apple is only as good as the weakest link because that's all forged and locked in together. If people stopped wanting iPods because a better piece of hardware came along, the whole thing would fall apart."
- "We think the second phase of iTunes and digital distribution is not about Apple, but about the best hardware, the best content and the best delivery system - and that's BitTorrent. We're not hamstrung by a hardware business. We care about delivery and we care about content, and as long as there is good content in the world - which is guaranteed - we'll be successful."
via OPENBUSINESS & via PAIDCONTENT