'What Is the Real Value of Copyright?' Q&A With BitTorrent CEO Eric Klinker
"Users pay for things that are both valuable and scarce. Content is valuable, but not scarce on the Internet. This is Economics 101. For example, we can't sell our software; we give it away for free. The same is true for a game that's free to play. Content providers need to transition to business models that have different drivers, understanding scarcity and value."
11/12/10 5:00 AM PT
Once the pariah of the media world, peer-to-peer software has come a long way since the days of Napster and college kids with hard drives stuffed with pirated music. Now, current P2P software provider BitTorrent boasts 80 million users, which, as CEO Eric Klinker is quick to point out, is somewhere between four and five times the size of cable giant Comcast's customer base.
Recent skirmishes for P2P software makers have involved not only music labels and feature film makers, but also the Internet service providers through which such material is transmitted from one P2P user's computer to another. P2P traffic clogs the pipes, claim ISPs, in addition to allowing users to violate copyrights by transmitting multiple copies of content that otherwise would be distributed through charge-per-download services like iTunes or on DVDs.
BitTorrent recently made overtures to both sets of previous adversaries. It has developed technology to allow P2P streams to take a back seat to other traffic over ISP piplines, for example. In addition, it is now actively creating relationships with music and film creators through a Featured Artist pilot program, which accepts submissions of works directly through BitTorrent's web site.
What content and software providers are striving together to do, says Klinker, is develop new business models that both acknowledge and capitalize on the situations presented by a worldwide broadband network that is making transmission of video and audio easy, but control of its distribution difficult.
TechNewsWorld spoke with Klinker just before he delivered a talk at the Telco 2.0 Americas 10th Executive Brainstorm, which took new business models as its theme.
TechNewsWorld: What do you see as the most dynamic developments for your company and its industry segment?
Eric Klinker: For media that wants to reach consumers on the Internet, there's a digital divide. People are figuring out how to transition old business models to a world where there are certain facts of life around consumer expectations. This is a real opportunity and a real challenge.
TNW: You're speaking of the challenges for P2P client software?
Klinker: We see it as something bigger than that, although P2P is probably the most efficient technology for delivering mass media. It's more efficient than broadcast and more efficient than streaming solutions like Netflix or Hulu. It achieves a leveling of the playing field and lets any content creator reach millions of people at very low, practically no, cost. This gives us the opportunity to be more than a technology company; it allows us to be a media ecosystem, a media network.
TNW: How do you see your company's relationship to ISPs?
Klinker: The Comcast dispute really provided an opportunity for dialog that previously hadn't happened. Ironically, right now, at this telcom conference, BitTorrent is in the room with telecommunications companies, ISPs, and regulators.
ISPs now are looking at network usage on an agnostic level -- how much total usage for a user might subject that account to traffic management, not use of a single application. That's a good advancement on their side of the fence.
On our side, we've re-engineered our entire transport protocol to be incapable of inducing congestion. It senses congestion before other applications can feel it. And, because a P2P connection is between two people, millions of connections can exist concurrently.
TNW: What is your company doing to get content providers to see P2P technology as enabling rather than threatening?
Klinker: In a business model built the traditional way, you're geared to selling static content on a DVD or CD. Unfortunately, the Internet has rendered a static set of 1s and 0s anything but scarce. It's very difficult on the Internet to extract value. Users pay for things that are both valuable and scarce. Content is valuable, but not scarce on the Internet. This is Economics 101.
For example, we can't sell our software; we give it away for free. The same is true for a game that's free to play. Content providers need to transition to business models that have different drivers, understanding scarcity and value.
The law catches up to where technology goes first, and it's unclear where this will go. What is the real value of copyright? Is it fostering more creativity? The Internet has rendered copyright certainly challenged, but it has done nothing to diminish creativity.
We're not lawyers; we're technology providers. This is an interesting philosophical question, and it will shape a lot of how the Internet evolves.
TNW: How, then, do you view intellectual property innovations like Creative Commons licensing?
Klinker: We see ourselves as enablers. Frequently, artists who want to use BitTorrent as a distribution platform have embraced new licensing models. There's a strong overlap between our current set of content creators and those using Creative Commons licensing. The Venn diagrams overlap significantly, but we're not directly involved with Creative Commons.