Andy Havens, Marketing Management Consultant and co-founder of Sanestorm Marketing. Questions, comments, and criticism welcome. Contact Andy at 1.877.SSTORM1 or firstname.lastname@example.org.
The Napster of Video
If you're not familiar with BitTorrent, there's a good, basic description at Brian's BitTorrent FAQ and Guide. Here's the real short description, though. It's a peer-to-peer file sharing transfer system where the central server --called a tracker--simply monitors the action of all the peers. The tracker has no "knowledge" of the contents of the file, it just monitors the "chunks" that are being uploaded and downloaded by all the users' systems. Because this tracking information requires minimal bandwidth, the central server is incredibly efficient.
And because BitTorrent works better when more people are working on the same file, the more popular a file becomes, the more parts it can be broken down into at any given time, and the faster it can be uploaded, downloaded and reassembled.
Did you catch that? It's incredibly important. The more popular a file becomes, the faster and easier it is to get. BitTorrent scales with popularity. If 10 people are interested in a file, each can upload or download only 1/10 of the file at one time to new users. But once 100 people have done so, the file can be streamed in 1/100ths, taking up only a tiny slice of each user's individual bandwidth.
In short, BitTorrent has been called "The Napster of video."
NetFlix and the Long Tail
In October 2004 Chris Anderson wrote a great article in Wired Magazine called "The Long Tail." It's basically about how the Internet is enabling the creators of movies, music and books to make money on titles that could not have found a profitable audience in the past.
The "long tail" refers to all the media -- about 80% -- that doesn't make lots of money; the non-blockbusters and non-best-sellers. But Anderson's point is that there is at least as much money in the long tail as there is on the best-seller rack.
For example, NetFlix has managed to make money from DVDs of movies that would have lost money in theaters or in video rental stores; there just wasn't enough of an audience to justify the distribution network requirements of either of those media.
But NetFlix doesn't have the overhead expenses of a chain of theaters or video stores. They have warehouses and cardboard mailing sleeves. Much cheaper. And so they've made good money on movies with much smaller audiences. For example, Bollywood movies are hard to find in US theaters or video rental stores. Indian Americans are too spread out to make their showing lucrative. But NetFlix rents tens of thousands of these films and makes good money at it. Their distribution method does not require a concentration of customers.
And neither does BitTorrent. But unlike NetFlix, BitTorrent doesn't even require a warehouse. Or mailing envelopes. Or postage. Or a DVD. Just a computer and a fast Internet connection.
It ain't just for pirates
BitTorrent is a technology, not a company. The inventor, Bram Cohen, has been very careful to make sure that he is not involved in any activities that involve copyright infringement. Of course others are not so circumspect.
But unlike Napster, which sent the music recording industry into a three-year, frantic search for an Internet response that is only now just seeing results, BitTorrent has the potential to change much more than the bottom line for movie industry production companies.
Currently, the fact that movies, films, TV shows, video games and other software titles have large distribution requirements is one of the major barriers to production. If you have to guarantee a certain number of buyers in order to justify distribution costs, you've got one more major hurdle between you and your finished product.
But what if distribution cost -- literally -- nothing. What if all your capital could be put into production and marketing? What if you didn't need all those stores and tapes and disks and plastic and cardboard and clerks and trucks and parking lots and security and... are you getting the picture? This is a lot of people and a lot of jobs and a lot of money that goes... *poof*
Not, "DVDs cost 56-cents to press in quantities of 1,000 or more vs. VCR tapes, which cost $1.22 in quantities of 1,000 or more, so DVDs will eventually be cheaper to rent than VCR tapes, even though, at first, due to scarcity they'll be a little more expensive until they catch up with..." Stop. No. Not that kind of change.
This is *poof* and it wasn't supposed to happen for another 10-15 years. We were supposed to have to invest in all kinds of new, high-speed super-digital-Internet-to-cable-TV hoo-hah that would give the cable companies and the phone companies a chance to figure out how to jimmy the FCC into working up a way to make it easier to stop the pirates and keep making similar quantities of money per unit and transfer their oligarchies smoothly into a...
Nope. Bram wrote a program, and *poof* goes the industry. 10 years ahead of schedule.
What does this have to do with legal marketing?
Glad you asked. Seth does make a nice point in his blog post today asking if companies will be ready with videos that take advantage of BitTorrent's capabilities. Just so we're clear on what he's talking about, the capabilities of BitTorrent will allow anyone -- not just companies of the size he's talking about -- to post a video on the Web and have it downloadable to the entire planet.
For those of you who ain't techies, this wasn't possible before. Just because you post something on your website, doesn't mean everyone can download it at once. Most site hosts have bandwidth limitations; i.e., limits the amount of "stuff" that can be transferred per day (or at any given moment) from your site visitors' computers. BitTorrent makes that concept just about obsolete. As long as you can fit your file on your server and connect it to a central tracker, you're good to go. BitTorrent does "reward" users that upload as well as download, but that's a restriction on the individual users, not the company or entity posting the media.
Again... so what? you ask. So:
- Your firm, rather than posting photos of its lawyers, could post interviews with them in which they discuss their practice, industries for which they've worked and cases (in general terms of course) that have been important to them.
- You can post interactive recruitment videos that showcase all the great aspects of working at your firm, including interviews with alumni of specific schools you want to target.
- You can videotape entire court proceedings and use BitTorrent to securely distribute the content to various offices and client locations around the country; remember the central tracker doesn't even "know" what the content is, making it a secure method of distribution.
- You can post the videotapes of your seminars/webinars after-the-fact for clients and colleagues who could not otherwise attend.
And that's only the first-wave, really basic stuff. You should also be thinking about ways in which this technology is going to affect your clients from a legal perspective.
- Do they use video technology in their business?
- Will they be likely victims of video piracy and illegal distribution? What can your firm do to help inform and protect them?
- Are they going to be losing workers and/or business when digital distribution of content really kicks-in over the next couple years? How will that effect their revenue, their industry and your potential billings?
It's happening again, people. Get your partners together and try to get them informed ahead of the curve on this one. The firms that begin to grasp the implications of BitTorrent and readily available, worldwide, peer-to-peer digital video fileswapping are the ones who will reap significant rewards.