BitTorrent Doesn’t Need More Funding, It Needs A Business Model

By now, many sites have all reported that BitTorrent has raised another round of funding, this time totaling $17 million and putting their total raised to date close to $50 million. You really have to wonder what these VCs are thinking, putting more money into a company that has no clear business model or product offering. For all the talk of how many players BitTorrent has installed or the "platform" they have, peple still don’t seem to realize it’s not about how many players you have in the market and they are incorrect to think of BitTorrent as a "platform".

BitTorent is simply a protocol and is a method for downloading content. You don’t make money with BitTorrent just like you don’t make money with HTTP or FTP. It’s simply a protocol. BitTorrent is a means of distributing software, games or video and it’s that content that is being sold as the way to make money. You are making money from the content, not from BitTorrent. Or you’re using it for promotion purposes to get trailers and demos in the hands of consumers.

I get the sense that people are missing the point that you can’t make money with a client. If you have an entire platform that allows you to create, ingest, manage, store, deliver and track your content, that’s different. But that’s not what BitTorrent has. Simply having an open source client is not a means of generating revenue.

And for all the talk of how many players BitTorrent or any other company has installed, the number of installed players is not the metric to measure success or market opportunity by. RealNetworks has a lot more players installed than BitTorrent, but what has that gotten them in the video world? The size of your player installs is not as important as many in the industry make it out to be. Most users will download a new client if they want the content bad enough, so the idea that you have to have a lot of players already out in the market before you can deliver your content in that format is just not accurate. Look how many major broadcast studios started distributing their content using Move Networks when Move was just starting out and had very few players installed.

The bottom line is that BitTorrent does not know what it wants to be, does not have a clear product offering and right now, is not delivering any message to content owners on what they can offer. I speak to many large content owners all the time, see tons of RFPs and I have yet to see BitTorrent included in any of those RFPs. Content owners who want to deliver video specifically are not considering BitTorrent.

If BitTorrent made their offering into more of an Amazon type service, explained what it offers, how it works and published pricing for the service right on their website, they could generate some interest. Maybe not enough interest to translate into sizable revenue, but it would be a very clear offering in the market, and would give them a starting point.