Is There Any Money In Peer-to-Peer?

September 13, 2006

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YouTube pays nearly $1 million per month in bandwidth fees, a 7 figure deterrent to some interested in the business. A digital movie seller may only break even, as per-download bandwidth scrapes away at profit margins. There is a growing camp, though, that believes peer-to-peer (p2p) technology can address these barriers.

Murdok publisher Rich Ord sends word from VON 2006 in Boston after sitting in on a panel discussion labeled, “Is Video Peer to Peer a Money Making Proposition?”

Sitting on the panel was Patrick Norton, executive producer for Ziff Davis Media; Michael Weiss, CEO of StreamCast Networks; Roger Zimmerman, research assistant professor at the University of Southern California; and Bram Cohen, CEO and co-founder of BitTorrent.

Michael Weiss The panel agreed that with video on the Net, bandwidth was the key issue, especially in regard to high definition video. Utilization of p2p may be a solution, but there still remains the question of how to monetize it.

Weiss mentioned YouTube’s colossal bandwidth bills before, like someone with new windows brags about their heating bill, noted that p2p dropped the costs of bandwidth at StreamCast to just $7,000 per month.

“For a $15 movie, the cost of downloading is only a buck or two,” added Cohen. “However, for the retailer that is pretty much your profit being blown away. For lower cost content like TV shows that sell for a lower price, it is only possible to deliver via peer to peer from a cost standpoint.”

Great, p2p is much cheaper. Now, how do we monetize it?

“Pay per download is not the key question,” noted Ted Dunning, an audience member. “The key question is: can advertising support video?”

Bram Cohen “There are quite a few companies making money off of advertising,” replied Cohen, later. “One you may have heard of is Google, and there are others.”

Yes, in fact they seem to be springing up all over. Last month, a new company called Skyrider, headed up by some guys with an impressive background, announced acquiring funding to start up their p2p platform. Skyrider will focus on search marketing as users search for video content.

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