File-sharing sites may conjure images of Napster's (Nasdaq: NAPS) heyday of rampant piracy, but Time Warner's (NYSE: TWX) Warner Bros. has given one well-known peer-to-peer site a shot at legitimacy. The movie studio is teaming up with the BitTorrent service to provide video on a fee basis. Think of it as Warner Bros.' attempt to abandon all-out war in favor of winning its former enemy over from the inside.
BitTorrent is currently one of the Internet's best-known file-sharing services. As the open-source BitTorrent program finishes downloading a file, it begins to upload the same file to other users, essentially passing a file from user to user instead of sending it out from a single central source.
Warner Bros.' deal with BitTorrent will allow Internet users to buy or rent high-quality digital movies and TV shows via the BitTorrent.com website. BitTorrent's "file-swarming" technology is an added benefit; since users can download different portions of the same file from multiple other users, files can sometimes download more quickly. It's estimated that movies will be available for the same price as DVDs, including the right to burn backup copies that will play on PCs. TV shows will be available for about a buck a pop. The latter seems reasonable, but given current trends for downloadable content, most people will likely consider DVD prices for digital content too steep.
Piracy remains a major issue, but through services like Apple's (Nasdaq: AAPL) iTunes, consumers have proved increasingly willing to legally pay for reasonably priced content. Google (Nasdaq: GOOG) has gotten into the act, and many of us are waiting to see what Amazon.com (Nasdaq: AMZN) will have to offer. TV networks and movie studios are also dipping their toes in; the major movie studios are already geared up to offer movie downloads via the Movielink service (though the price isn't exactly right yet).
Of course, for many people, the "right price" is free. Video site YouTube, which streams free video clips from its servers to users, has helped to launch several videos into widespread popularity, but it's running into its own problems. Several months ago, General Electric (NYSE: GE) and VivendiUniversal's (NYSE: V) NBC demanded it pull the Saturday Night Live skit "Lazy Sunday," which had become a viral phenomenon. This week, C-SPAN demanded that YouTube pull popular footage of Stephen Colbert at the White House Press Correspondents' Dinner. (C-SPAN's streaming the footage on its own site; in addition, users can buy it on DVD, and C-SPAN agreed to let Google Video distribute it.)
Warner Bros. will consider it a victory if it can convert even a small percentage of BitTorrent users into paying customers. I agree. In my opinion, media companies' more heavy-handed antipiracy tactics often alienate potential customers by treating them like criminals, even when they follow the rules. Offering paid video options with better quality than pirated content gives users an incentive to pay up -- but of course, the price has to be right.
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Alyce Lomax does not own shares of any of the companies mentioned.
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