A little more than a year ago, Michael Fiebach had a phone call with Randy Reed, the manager of the well-known electronic music artist Pretty Lights. The artist's music had just topped The Pirate Bay's "most downloaded" list, a superlative that usually signals a high level of music piracy, but Fiebach, the CEO of Fame House, a digital marketing firm that has worked with some of the biggest names in the electronic music world (including Eminem's record label Shady Records), viewed the listing without the slightest bit of umbrage. "Here we are celebrating hitting #1 on Pirate Bay," Reed told Fiebach, "while major labels would be kicking, cursing, and sending take-down notices."
That's because Fiebach is one of dozens within the entertainment industry who have partnered with BitTorrent, the company that manages the peer-to-peer file sharing protocol of the same name, to promote and distribute free audio, text, and video content within its network. For the past few years, BitTorrent, which first launched in 2001, has engaged in an experiment to determine whether its users would be able to drive real revenue toward content producers. In the process, BitTorrent hopes to transform industry players who have long viewed the company with disdain into its allies.
For Pretty Lights, BitTorrent and Fame House bundled four of his songs (including his latest single) along with a video of his 2011 performance at the Bonnaroo music festival into a single BitTorrent file. From there, the file-sharing company employed a number of methods to promote the item to its 130 million active users.
Within months, the file had surpassed 6 million downloads worldwide. Pretty Lights' E-mail list had increased by 60,000, his Facebook page by 30,000 likes, and his website traffic increased by more 700 percent.
"In terms of the value of 80,000 new fans," says Fiebach, "there's a sliding scale there in terms of different types of fans in different geographic areas. But I can tell you that [the experiment] significantly grew his E-mail list, and each person on that E-mail list is a potential purchaser of something. So if you're going to say the average click-through rate in an E-mail is 10 percent, that means you just got about 8,000 new people who are going to buy something at some point. The value of that in a year? That might be $80,000 a year, $100,000 a year. It might be much more than that."
Those who have followed and advocated for BitTorrent likely weren't surprised by such results. Copyright activists have long touted the benefits of such loss-leader promotions. In May 2012, many felt vindicated when North Carolina State University economist Robert Hammond released a study indicating that rampant BitTorrent piracy can boost music sales.
For his paper, titled "Profit Leak? Pre-Release File Sharing and the Music Industry," Hammond amassed a number of download statistics between May 2010 and January 2011 and devised a model to derive the connection between illegal downloads and music sales. While skeptics would simply point out that popular music titles would be the most likely to have a high number of piracy downloads, the economist claimed his model isolated a causal effect "by exploiting exogenous variation in how widely available the album was prior to its official release date."
Another study, this one conducted by researchers from the University of Minnesota and Wellesley College, found that box office movie sales were only negatively affected (by about 7 percent) when there was a significant time gulf between a U.S. and international release.
"We do not see evidence of elevated sales displacement in U.S. box office revenue following the adoption of BitTorrent, and we suggest that delayed legal availability of the content abroad may drive the losses to piracy," the authors concluded.
BitTorrent VP of marketing Matt Mason, who joined the company a little more than a year ago, has been directly involved in the partnerships and views these promotions as only the beginning of a long, fruitful relationship with the industry, one that can eventually be monetized at a mass scale.
"This is clearly a valuable audience to speak to," he says in a phone interview. "And these 170 million people worldwide are not simply pirates who won't pay for anything. All the myths we hear about BitTorrent users simply aren't true. They will reward content creators, and we've seen that with every single experiment we've run."
This is not to say he doesn't understand why his company has attracted the reputation it has. The original HTTP protocol was invented for the transfer of text, and as the Internet matured it became a venue for richer media like audio and video, the large files of which became a strain to transfer in large quantities online. The engineer Bram Cohen invented the BitTorrent protocol to spread the files across thousands of distributors, thereby reducing the strain (and download time) on any one network.
"The reason that BitTorrent became thought of as a tool for piracy was because most of the people on the Internet moving rich media saw BitTorrent for the potential for piracy and used it for that," says Mason. "And its name quickly became marred as far as the content industries were concerned." That, however, was never the company's intention.
So far, BitTorrent has formed content partnerships with between one to two artists a month, and it employs a number of methods to promote the files. Perhaps its most successful promotion occurs when a new user downloads the BitTorrent software; Mason says it receives between 600,000 and 800,000 downloads a day, and so BitTorrent simply offers the free file on what he calls the install path.
On most days, the promotion receives between a 40 to 50 percent conversion rate. In other words, nearly half of the 500,000 new users who sign up for the service each day will download the accompanying content file. To put that in perspective, the average display ad online gets a click-through rate of less than one percent. It's not difficult to surmise why the entertainment industry would find this kind of engagement appealing.
BitTorrent also began rolling out banner ads within its client last year, and though it was met with resistance from a "very vocal minority" of its users, the ads have gotten higher-than-average click-through rates and are now serving upward of 5 billion impressions a month. Recently, BitTorrent aggressively promoted best-selling author Tim Ferriss' new ebook, The 4-hour Chef.
"In the first week he had 200,000 people downloading the content bundle he did, and over 89,000 went and visited his Amazon page," Mason says. "We couldn't see how many people bought the book from his Amazon page, but what we did see is that Tim hit the New York Times, Wall Street Journal and USA Today best seller lists, and 89,000 people hitting your Amazon page in your first week, I can tell you that's a really crazy number."
This was likely a welcome number for Ferriss, whose book had been boycotted by more than 1,000 independent bookstores who felt betrayed he had abandoned his traditional book publisher in favor of Amazon's ebook services.
Sometimes, especially for lesser known content creators, this promotional outpouring can almost be overwhelming.
Josh Bernhard and Bracey Smith, two filmmakers based in New York City, got to experience BitTorrent's geyser of user interaction when they uploaded the pilot episode of their science fiction show Pioneer One onto the network. The two had used Kickstarter to raise a shoestring budget of $7,000 to create the pilot, and they didn't originally intend to make any additional episodes -- the pilot was meant to simply act as a "proof of concept."
But when the episode was featured on Vodo.net, a curator of BitTorrent content, they received $20,000 in PayPal donations in only two weeks.
"We sort of realized that we had the means to keep on making more and finish the season," says Bernhard. They eventually raised enough money to shoot six episodes with the help of about 4,000 individual donations, he says.
But the success was so sudden, and the demand so overwhelming, that the filmmakers didn't have time to plot out the season in a way they would have wanted.
"The problem was we were slowly picking up money and releasing the series over a year and a half," Bernhard says. "And that made people really frustrated, because even though they were longer episodes than your typical web series -- we were aiming for an hour long length, so each episode was between 33 and 45 minutes -- most people were used to regular schedules of five minute episodes, and we often had a two or three month delay between episodes."
But he also sees how this completely changes the dynamic for independent filmmakers.
"We got to a place where we knew whatever we did, we had an opportunity to get it seen by at least hundreds of thousands of eyeballs. And coming from the independent film world, that's kind of staggering. Because the problem used to be how do I get it seen, how do I find someone who has the reach and the means to get it out there and be seen by a lot of people?"
Given that BitTorrent has proven that it can catapult content in front of millions of paying customers, the question now is how it can scale that success. The financial ascendancy of companies like Google and Facebook stems not only from their ability to amass millions of users, but also their technological capacity for delivering millions of ads to micro-targeted communities within their networks. With BitTorrent moving more information a day than Facebook, Google, YouTube, and all other websites combined, it must devise an avenue for any artist or company, not just the few anointed by its partnership program, to reach potential customers. Mason says that this will be the main focus of the company in 2013, and whether the entertainment industry makes amends with BitTorrent hinges on it effectively converting its millions of users into paying customers -- either through the purchasing of content, merchandising, or concert tickets.
"I'm in no way pro piracy," says Fiebach of Fame House. "I'm pro music promotion and pro artist. I've done three campaigns [with BitTorrent], all of which I've seen benefit artists. If they can keep figuring out how to do that, and they can scale it, then I'm all for it. If they can't and people are using it for piracy, then I'm not."
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Corrected on 02/11/13: An earlier version of this article misidentified Matt Mason’s title and BitTorrent’s platform.