BitTorrent, whose file-sharing technology is the platform of choice for software, music, and movie pirates, has spent the last two years trying to go legit. Their newest proposal to big media companies: Let us deliver your movies, albums, software, and TV episodes on our peer-to-peer network and we’ll save you big money over content delivery networks (CDNs) like Akamai Technologies (AKAM) and Limelight Networks (LLNW).
Sounds great! But companies have tried to sell peer-to-peer video delivery for years, with little success. The biggest problems:
- Reliability: Because peer-to-peer networks rely on individuals’ Internet connections, there’s no guarantee of service quality. Even Brightcove, which is working with BitTorrent on a much-hyped “broadcast-quality” Internet TV site, will pull most of its data from managed servers and CDNs like Limelight. It will use BitTorrent’s network of individuals’ PCs as bonus bandwidth.
- Ease of use: Peer-to-peer CDNs require users to install a special software app on their computers — they don’t stream directly to Web browsers like traditional CDNs.
- Features: Peer-to-peer CDNs lag behind their peers when it comes to support for different types of delivery, like live streaming or Flash streaming.
We have no doubt that someone will eventually solve these problems. But for now, peer-to-peer CDNs will have to deliver their data awfully cheap to make up for their shortcomings. BitTorrent won’t put a price on their service, but boasts that customers can save 50% compared to traditional CDN pricing. Analyst Dan Rayburn estimates that high-volume clients (like big media companies) spend between 12 cents and 50 cents per gigabyte for streaming media delivery. To achieve 50% savings, BitTorrent would have to charge between 6 cents and 25 cents per gigabyte for streaming transfers.
(Disclosure: SAI Chairman Kevin Ryan is an investor and CEO of Panther Express, a NY-based CDN.)