This document is a case study essay about BitTorrent and its Bundle service. It discusses how BitTorrent revolutionized peer-to-peer file sharing but also became associated with piracy. It recommends that for BitTorrent Bundle to succeed, it needs to offer a single subscription for accessing a wide range of legal media content from multiple providers. Starting with independent creators could help establish the service before partnering with major media companies. Overcoming BitTorrent's brand image associated with piracy is also identified as a key challenge.

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33361996
Innovation Case Studies
Case Study Essay:
BitTorrent and BitTorrent Bundle
Due date: 10.11.2014
Goldsmiths, University of London
Student ID: 33361996
Word Count: 1542

2. Student
ID:
33361996
Introduction
This essay will first give a short introduction to how the BitTorrent protocol changed
P2P sharing and a quick look at what made BitTorrent a disruptive innovation. Then it
will present some of the opportunities and challenges BitTorrent Inc. and how to
handle them in the best way. This will all lead to a conclusion summarising findings
and recommendations.
BitTorrent is a user-to-user, or more correct a Peer-to-Peer (P2P), sharing protocol
designed by BitTorrent, Inc. founder Bram Cohen in April 2001 (Xu, 2013).
Downloading programs at this time was limited because all the data was downloaded
from one peer. The difference between BitTorrent and other P2P-program of that time
was that a file would be downloaded from one peer and that made the speed achieved
depend on that one peers upload speed (Johsen, Karlsen, & Birkeland, 2005).
BitTorrent took the same file (seed), but now fragmented into 256kb files called
pieces, and downloaded them from multiple peers giving a higher speed as it
prioritize faster peers (Qiu & Srikant, 2004).
BitTorrent as a disruptive innovation
In 2004 Cohen founded BitTorrent Inc. with co-founder Ashwin Navin, and by that
initiated a huge change in the world of media sharing. Store bought CD’s and DVD’s
now lost market shares to downloaded content (McKenzie, 2009). With few good
legal providers, the simplicity and efficiency of illegally downloading free files
through BitTorrent gave them a large market share of distributing media content.
Illegal downloads were taking over the Internet and in 2004 sources like Reuters
reported that 35 per cent of all internet traffic was connected to BitTorrent (Ernesto,
2006). This forced companies like “Motion Picture Association of America” (MPAA)
and “Recording Industry Association of America” (RIAA) to take legal actions
against BitTorrent and their partners to protect their clients’ rights. BitTorrent Inc.
had with its new sharing protocol awakened a demand for easy and quick access to a
large amount of media content online. This fits the definition of disruptive innovation,
which is: “The process of developing new products or services to replace existing
technologies and gain a competitive advantage” (Businessdictionary.com, 2014).

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Fast-forward to 2011; MPAA and RIAA lawsuits had changed their focus to
BitTorrent’s users. This resulted in 200.000 BitTorrent users being sued by MPAA
and RIAA for downloading and sharing pirated content (Kiss, 2011). The bad
reputation with their product being associated with piracy and their users being
targeted with lawsuits is probably one of the main reason BitTorrent continuously
from 2008 tried to setup a economically viable and legal business, in which they
succeeded in 2012 with the released of BitTorrent Bundle. But was it too late?
In the gap between the launch of the BitTorrent client in 2004, and BitTorrent Bundle
in 2012 companies like Spotify (Music), iTunes (Music), Amazon (Music and home-
delivered movies), Netflix (movies and series) and Steam (games and software)
entered the online media market that BitTorrent opened up for. This resulting in that
Entertainment Retailers Association in 2013 saw a growth in the media market in the
UK for the first time since 2008 (Redmond & Butler, 2013). These companies used
neither P2P-technology nor the BitTorrent protocol. The increase in Internet speed
during the late 00’s in the western world made the fragmented download provided by
the BitTorrent protocol less superior compared to server downloads, and new
technology made HD-streaming possible.
The speed, availability and simplicity previously only found in BitTorrent and illegal
torrent downloads, were now made available in a legal way by these companies for a
reasonable price. They had exploited the new digital market BitTorrent’s disruptive
innovation had opened up for, but didn’t manage to take advantage of.
The future of BitTorrent – Challenges and Opportunities
BitTorrent have taken a step in the right direction with Bundle and it’s 100 million
legal downloads (Dredge, 2014), and with BitTorrent Labs which uses crowdsourcing
to get ideas for products and services to be connected with BitTorrent(McGarry,
2013). This has resulted in the launch BitTorrent Live, a live streaming client for
smartphones, and BitTorrent Sync (McGarry, 2013). Sync is a cloudless personal
sharing client, making it safer, quicker, and easier to use than cloud based services
(Guidingtech, 2014). This is a good start, having BitTorrent Labs providing new open
source technologies that can be implemented in future business strategies. But it’s not
enough on its own.

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33361996
BitTorrent will have to go back to what made them big in the first place, and offer a
service that can change the way people buy and consume digital media. Trying to
once again be a disruptive force in the market and change the game will be hard, but a
more sustainable approach could be considered. Services like Spotify and Netflix uses
streaming technology to give their customers’ their content, while iTunes and Steam
sells you a digital copy of the material that you get to keep. Amazon went the middle
road, and offers a combination of streaming and downloadable content. Amazon gives
you one subscription for streaming movies and series and home delivery DVDs, and
one service where you pay-per-song/album/artist.
“All effective innovations are breathtakingly simple”
(Drucker, 1993, p. 274)
The quote from Drucker (1993) is the leading star for BitTorrent’s innovative
opportunities. The problem with the digital media content distributors already in the
market place like Netflix, Spotify, iTunes, Steam, and Amazon is that they are
individual services, providing individual content. It’s just not simple and efficient
enough.
BitTorrent needs to take this opportunity, to create a one-login service that offers a
wide range of media. Giving users the opportunity to chose from a wide range of
subscription combinations at different price levels. Deals like music and movies,
Movies and Games, Music and Software, or simply pay to get it all gives the users the
flexibility to tailor their service to match exactly what they want and need. This would
mean that the users would only give their credit card and personal information to one
provider, keeping debit card transcripts easy and predictable. In other words, doing
what they do now, only it’s legal.
This is where their biggest innovation challenge comes into play. BitTorrent have a
major problem with their brand image towards the media industry, as confirmed by
BitTorrent`s marketing vice president Matt Mason in an interview with
TechHive.com (McGarry, 2013). Their brand is heavily associated with Piracy and
has been so for the last 10 years.

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33361996
BitTorrent Inc. have to keep on proving and arguing that BitTorrent’s sole purpose is
to download illegal content, and they should take more active measures so they have
something to show for. It’s crucial in order to gain the trust from the media industry to
take distance from piracy and try to implement measures to prevent their client from
being used for illegal activities.
“Effective innovations start small”
(Drucker, 1993, p. 274)
It will probably be a slow start with few of the big players wanting to join the bundle
network due to BitTorrent’s bad reputation. The service will anyhow need good
content to lure customers to Bundle. A good market to introduce to the service in the
beginning is the independent media creators. Let independent filmmakers, artist,
musicians, software programmers and game developers use BitTorrent Bundle as a
portal to distribute their work. This will go parallel to the entry of the more
commercially heavy contributors.
Combing Bundle with BitTorrent Sync could undermine Spotify and Netflix’s unique
selling point of content being available on any device at any time. If BitTorrent keeps
on distancing themselves from piracy and keeps on pushing for the legal alternative of
BitTorrent Bundle, they should at one point become a market player that the
distributors of copyrighted media just cannot afford to not cooperate with.
Conclusion
As shown in this case study essay, making Bundle a multimedia platform would be a
way for BitTorrent Inc. to transform their business model into a legal and economical
viable one. Bundle will be kickstarted by inviting Independent artist and programmers
to use BitTorrent as a platform to sell or freely distribute their creations. The
independent productions and products will have to carry the service in the beginning
and Bundle should always be a place where people can show their work to the world.
The Independent production will create a buzz, and should generate a steady flow of
users to Bundle. The usability of Bundle combined with programs like Sync and Live
disarm the USP of content on all devices from services like Netflix and Spotify. Their

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biggest challenge in making Bundle successful is their brand image and an increased
focus on preventing and stopping piracy must be implemented in the marketing
strategy and have to be communicated out to the public and to the media industry.
This to gain the trust and credibility from the industry and in the long run get them to
provide with content from some major music, film and game and software studios.
This is not a disruptive innovation like BitTorrent was when it was launched in the
first half of the 00’s, but a sustainable innovation created to take advantage of an
unexploited position in the marked. With the unique selling point and slogan “One
subscription, endless possibilities” BitTorrent Inc. should have a promising,
economically viable and, most of all, legal future.

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ID:
33361996
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downloads-streams-public-enemy
Drucker, P. F. (1993). Innovation and entrepreneurship. HarperCollins e-Books.
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