Friday, March 2, 2007

Business/Economic Checkpoint 2 (Mike Fischer)

BitTorrent has just recently gone public with it’s legal movie and TV show downloads. BitTorrent’s legal downloads will allow people to either purchase or rent the movie or TV files using their unique P2P technology. Files downloaded through BitTorrent would be limited to one PC, protected by DRM, and currently has no ability to be played on TVs. Aside from quality downloading speed, BitTorrent also offers “softcore” pornography. Though the definition of “softcore” pornography may mean different things to different people, BitTorrent is grabbing a different community of online downloaders that iTunes does not appeal to.

Apple is currently discussing whether or not they are going to introduce a new operating system, Leopard, which will empower iTunes users with the BitTorrent technology. The users would be able to not only download media files from the server, but from other people who have already purchased the file. Assuming Apple goes forward with Leopard, all of their files will expectedly have much more strict DRM protection to prevent piracy. Given stricter enforcement of the media files from DRM protection, Apple is faced with a tough question of whether BitTorrent users will begin buying movies through iTunes or if they will continue to download movies for free illegally. Though BitTorrent representatives said that 34% of their users would be willing to switch to a legal option, many people are concerned about the DRM protection that would be incorporated on the Apple files. DRM protection would prevent the buyers from feeling like they actually owned the product. For example, if someone is going to buy a movie, they want the ability to play it on whatever computer they want, which the DRM protection would prevent.

As a result, Apple is face with a serious business decision as to whether investing in the BitTorrent technology would be beneficial to their company. Many seem to think that Apple will not go through with the BitTorrent technology because of their relationship with Hollywood. Many of the Hollywood movie producing companies want to be able to sell their movies over iTunes, but do not want to be subject to all of Apple’s rules. The big issue is whether Apple will restrict the number of devices a buyer can use to play a film purchased from iTunes. Many of the Hollywood companies are concerned that by allowing iTunes to have distribution rights of their movies, illegal piracy may result. Introducing the BitTorrent technology to iTunes could be seen as a significant aid to Internet piracy of media files.

If Apple decides to adopt the BitTorrent technology, the DRM restrictions would have to be so intense that some buyers would feel like they do not even really own the own media files. Also, many other companies are going to be introducing competing download cites similar to iTunes that are inevitably going to be competing with Apple for rights to movies from the major movie distributing companies. Microsoft, among others, is going to be introducing a competitor to iTunes that also will consider using the BitTorrent technology. All of these companies are going to be forced to make a decision about whether the increased download speed that BitTorrent provides is worth the risk of crossing the movie companies.

Personally, I think Apple should adopt the BitTorrent technology even though some movie companies might feel threatened at the beginning. Computer technology is evolving so fast that if Apple does not maintain the fastest download option for Internet music and movie buyers, some other company will, and could become a serious threat to their online market. Though the costs could prove to be significant to acquire this new technology, I think the investment is worth it to leave Apple as the head of the Internet downloading market.

References:
Cheng, Jacqui. “BitTorrent to Apple: We’ve got porn! Sort of”.
http://pollux.arstechnica.com/journals/microsoft.ars/2007/2/26/7227. 2/27/07.

Faravar, Chris. “Apple, Hollywood go toe-to-toe on Movie Downloads”.
http://www.engadget.com/2006/11/30/apple-hollywood-go-toe-to-toe-on-movie-downloads/. 2/26/07.
Winer, Dave. “Next Steps for BitTorrent”.
http://scripting.wordpress.com/2006/04/24/editorial-up-bittorrent/. 2/26/07.

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