Trouble in P2P-Land

How’s this for an understatement: P2P has always been problematic for network providers and content providers. Now, companies trying to put a more legitimate face on the technology are facing troubles too.

BitTorrent — the company, not the protocol — apparently laid off half its staff and saw its CEO walk away.  Fellow BitTorrent-focused company Vuze apparently is shrinking as well. Both companies are pursuing the concept of using BitTorrent to deliver licensed, legitimate content. The idea: users like the convenience of downloading P2P content while distributing the bandwidth demands among a user base also distributes bandwidth and storage costs, boosting profitability for the distributor. Web video leader YouTube, which today announced plans to distribute movies from MGM, struggles mightily with the cost-side of this equation.

BitTorrent had cut distribution deals with Warner Brothers, Paramount Pictures, MGM and 20th Century Fox. Vuze has focused on ad-supported HD content distribution with partners including Showtime and Star.

At the end of the day, the lesson here is that users will accept inconvenience (ie, downloading a client, dealing with a slightly difficult to understand protocol) in exchange for absolutely free and unfettered (albeit technically illegal) content. Do away with free (by charging or adding advertisements) and the incentive goes away — as apparently does the business.

Doing a better job of balancing this equation is Hulu, which lets visitors view videos in an instant via a slick Web client. Hulu interupts its programming with ads, but the experience is so simple and seamless, users don’t seem to mind (read: Ad-Supported Movies: Back to the Future).

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