Economic Perspective

Hey everyone! This is an informal overall presentation of how I am going to present my arguments.

Apple’s Itunes distribute files from a central bank of computers. This can lead to lengthy waits for files when many users are trying to access the servers. In addition, Apple has to pay huge amounts for the bandwidth utilized. As a result, it is not only costly for Apple, but inefficient for consumers.

In top of this, “BitTorrent, Inc” has joined the legal movie download industry. BitTorrent was used by Web surfers to download illegal copies of movies and other content into their computers. However, in November 2005, BitTorrent agreed with the Motion Picture Association of America to help stem illegal copying by removing from its site links to pirated companies. In May last year Warner Bros. agreed to sell movies and TV shows using the BitTorrent software. Since then, BitTorrent Inc has established contracts with 20th Century Fox News Corp, Warner Bros. Home Entertainment, Lionsgate Entertainment Corp, Metro-Goldwyn-Mayer Inc, Paramount Pictures and MTV networks. BEN will offer a simple pricing structure of $3.99 per movie for new releases, $2.99 for older titles, and TV shows will be sold for $1.99. “Everything's copy-protected using Microsoft DRM and will only play in Windows Media Player 11; movie rentals will expire 30 days after you buy them or 24 hours after you start watching. There is no definitive on whether you'll be able to transfer video to other devices, but if so, it'll presumably only be to ones that support Microsoft DRM--for which read ‘almost everything but the iPod.’" [1]

BitTorrent Entertainment network has already a base of 135 million clients. The software’s popularity is due in large part to its velocity, a huge comparative advantage against apple’s Itunes. An article by Yahoo Finance states:

"Digital distribution represents a significant new revenue stream for the entertainment industry, but up until now, it has been hindered by the combination of long download times and the lack of good content for people to download," said Rob Enderle, Principal Analyst for the Enderle Group. "BitTorrent has aggressively addressed both problems; first with their unique technology, which moves content closer to the customer and dramatically lowers the amount of time it takes to acquire it, and second with their unusually strong content library. In addition, the fact that they start with 135 million existing clients is incredibly powerful and makes them, at launch, a real force to be reckoned with in this market." [2]

Evidently, BitTorrent could pose a huge threat to Apple’s future digital movie download industry. As a consumer, you are always looking for the fastest downloading software. If BitTorrent provides faster downloading rates than Apple, Apple may loose consumers. In order for Apple to successfully launch its digital movie download service, it should adopt BitTorrent software. By adopting BitTorrent software, Apple will provide faster download times and as a result compete against BitTorrent. In addition, Apple should concentrate on its establishment on the market. Unlike BitTorrent, Apple has already established an entire download service infrastructure. Consumers are already used to downloading songs using the Itunes software and its store. As a result, Apple should focus on its established services as a way to defend its products. Itunes is user-friendly and convenient. Another important factor that would lead to the success of Apple’s movie download industry is the ability to view the downloaded movies on TV. As a result, Apple should try to offer more features with its downloads.

[1] H. McCracken. “BitTorrent: Buy, Rent, or Steal?” PC World. http://blogs.pcworld.com/techlog/archives/003790.html. Feb. 25, 2007.

[2] G. Gentile. “BitTorrent to Launch Movie, TV Downloads”. AP Business Writer. http://biz.yahoo.com/ap/070226/downloading_movies.html?.v=2 Feb. 26, 2007.