P2P Vendors Struggling, CDNs Not Interested In Adopting

About six months ago, I was really convinced that P2P might start to get some traction in the new year and that we would see some content owners commit to the technology. But aside from the Pando Networks and NBC deal, as we enter Q2 not much has transpired from the end of last year. P2P networks are still talking up a storm in every interview I read about how much cheaper their pricing is as compared to CDNs and leading with price as the major value proposition. Most P2P companies are still missing the point that cost is not the only thing customers care about and if it was, then P2P networks would have a ton of business by now, which they don't.

Some are going to say that the announcements we have seen between P2P providers and the likes of Comcast and Verizon are a big deal, but those announcements are more for press than anything else. They are not creating any revenue for the P2P providers in the market, customers are testing the waters with P2P but not committing and most P2P providers are still all using the same marketing message and not distinguishing themselves from one provider to another.

Last year, I thought the biggest push that P2P might get would be from the content delivery networks. As much as some P2P providers think they compete with them, the fact is that P2P providers can't survive on their own. Around Q3 of last year, many of the major CDNs were investigating the purchase of P2P networks, white labeling a P2P based service, or re-selling one of the many existing P2P solutions on the market. Since that time however, the major CDNs have changed their minds and have done almost nothing with P2P. Limelight, Level 3, and Akamai all have no real interest in delivering a P2P based offering to the market at this time. They don't need the product today, the market opportunity is not big enough and even for a company like Akamai who acquired a P2P based company, you wont see a P2P based product from them anytime soon. Internap announced a deal to integrate Pando Networks P2P solution into their CDN, which was the first non-hybrid CDN to do such a deal, but since that announcement five months ago we have not heard of any customer deployments.

From what I can tell in the market, P2P is not as big of a story as it was at the end of last year. The topic has cooled off a bit except when its being discussed as it pertains to carriers blocking or filtering of P2P based traffic on their networks. Aside from that, customers are not asking me about P2P and 55.2% of those we surveyed about their content delivery needs said they did not plan to even look at P2P as a delivery solution for 2008. I hate to see how hard it is for P2P vendors in the market as I believe that the technology really does provide value to certain customers and with certain kinds of content. But until the CDNs start to offer P2P as just another one of the many ways they can deliver content, I don't see P2P getting any real traction anytime soon.

Comments

[Luke]

Hi Dan, The challenges of using P2P as a legitimate file distribution method have been well exposed in the UK market over the last several months. Two major online on-demand TV services (BBC iplayer and 4OD) use P2P for file sharing, which has proved neither too popular with end-users nor ISPs. The P2P software has been likened to malware - eating up bandwidth even when the application is closed and taking users over their ISP data transfer limits. For ISPs without layer 3 equipment in the exchanges, they are incurring hefty 3rd party costs for this so-called "free" P2P bandwidth as this still counts for traffic across their BT wholesale backbone network. Since CDNs seek to optimise their interconnectivity and relationships with ISPs, one might forgive them for waiting to see how ISPs rise to the challenges of carrying more P2P traffic, before piling in.
Regards, Luke

[adi]

At this moment, no p2p network is delivering an interesting product. The price is too high for this "free" bandwidth, higher than buying normal transit. The quality of the product is questionable. And requires a player, that isn't standard. Every cdn built their own player and system. For p2p cdn to take off, we need a standard protocol, used by all. Without that, there's no business.

[damien wetzel]

For me P2P is undoubtely the future of CDN but not for now. Additional good reasons I would add are insufficient uplink for end users and security issues since the end user machine acts like a server. Just wait till everybody get a 100 Mbps symetrical fiber internet connection. It will be the real start of p2p as adsl speed was the starting point of video over the net.

[Drew Robertson]

I never figured out how a CDN could pitch P2P services. To be ISP-friendly, P2P services have to limit bitrate to the market's average upload capacity. That produces a picture that's too small for the video buffs that run most content networks. CDNs can give them what they think their customers demand..a nice picture. More importantly as CDNs are basically cost-plus businesses, they aren't going to rush to switch their customers from high-cost multicast to low- or no-cost P2P.

A story from the 1930s. A CDN was proudly showing off his new yacht to some friends. One impertinent fellow asked "Well Mr. Akamai you certainly have an impressive yacht, but where are your customers' yachts". Are CDNs' customers (for video at least) buying yachts?

[mark cuban]

Actually the reason is pretty simple. P2P would be PERFECT for smaller companies looking to distribute video as cheaply as possible if it werent for the fact that Youtube./Google Video./Veoh and every other video host will do it for them for free in exchange for letting them logo the video.

Why pay P2P anything if Youtube will do it for free ?

And for large companies, who use a marginal amount of video, the bandwidth costs have fallen far enough, that its not worth the risk of guild by association in some manner that is unforseen.

And the biggest companies can afford to pay the bandwidth bill in order to retain control and again, not risk being accused of bad things. Seems to me, the last time I looked, companies like Comcast and every other cable/telco provider pay content companies a whole lot of money for their linear channels. Why risk it beyond anything more than a trial/.

then you have bittorrent.com, who thought they would sell so much content because it would be faster and easier.

guess not.

and of course, my 2 cents is that P2P is just stealing food from the buffet line and selling it for just above what it cost you..what big company wants to be associated with that ?

m

[Laird Popkin]

Dan,

I appreciate your analysis of the P2P space, but I'd like to make two points:

First, from working with content partners, we know that there is a strong business case for P2P delivery, which is that content is moving towards an ad supported model, where traditional CDN delivery costs are prohibitive. Thus, P2P enables new business models, which are extremely compelling. As I am sure that you are aware, new business models take time to develop and deploy, but that's an issue of timing, not of value proposition.

Second, from working with ISP's we appreciate the concerns that they have with the impact of traditional P2P delivery on their infrastructure, and we believe that ISP's need to be a part of the content delivery value chain. For this reason, Pando and Verizon co-founded the P4P Working Group (link to http://www.dcia.info/activities#p4p), which has more than 50 participants, including all of the major P2P companies, ISP's with millions of deployed cable, DSL, fiber and wireless customers, and researchers around the globe, working together to figure out how best to work together. The results of field testing (link to http://www.pandoblog.com/?p=259) are extremely positive, showing that network aware data delivery can not only benefit content publishers and consumers, but costs ISP's significantly less to deliver than traditional P2P or CDN-sourced data delivery.

We believe that if P2P data delivery benefits content producers, CDN's, ISP's and users, with the appropriate business relationships in place, the incentives will be properly aligned for commercial content delivery to accelerate. We are already seeing mainstream media adoption of P2P delivery, such as NBC adopting P2P in the US, and internationally the BBC, Sky, Channel 4, and the CBC delivering programming using P2P.

- Laird Popkin, CTO, Pando Networks and Co-Chair, P4P Working Group

[todd]

For someone that I think has a good understanding of the CDN space, you are so missing the big picture when it comes to P2P and live steaming. Every CDN provider including Akamai are trying to figure out ways to incorporate a P2P platform. They may and probably do not want this to be headlines as it goes against there current business model but it is being talked about at high levels. I would bet by next year at this time we will be seeing many of the startup P2P vendors either closing large Fortune 500 customers or being acquired by the CDN players or both. Its not a matter of if, its when. Watch.

[Dan Rayburn]

Hi Todd, for the past two years I have been hearing that CDNs are going to adopt P2P and start offering it as a service. I even predicted (wrongly) last year that by the end of 2007, multiple CDNs would offer a P2P product. Yet here we are in Q2 of 2008 and the CDNs I talk to, Level 3, Limelight, Akamai etc... all have no plans to adopt P2P anytime soon, if even at all this year. You say "every CDN provider including Akamai are trying to figure out ways to incorporate a P2P platform" but they aren't. I talk to many of the CDNs, at an executive level and they are very clear with me about their plans for P2P. None of them are rushing to get a P2P based product out the door or are putting a lot of internal resources into developing a solution anytime soon, unless they do a re-seller deal.

And you mention "live streaming" but have you asked the P2P providers directly about live P2P streaming? Almost all of them will tell you that their platforms or technology don't support live. A few do, the majority of them don't. So even less of a reason for CDNs to adopt it when it can only deliver content on demand.

You're saying that this time next year we will see P2P traction and we may. But weren't we saying in 2007 that we would see traction in 2008? Now we're saying in 2008 we will see traction in 2009? It just keeps getting pushed back.

[David Ng]

Hi Dan,

In china, Chinacache does have support for P2P type delivery, however its not something we typically offer on its own. Of all our customers its only deployed on a limited basis to augment traditional CDN delivery and I wouldn't say there is a big demand there now.

It is something though that's on people radars, particular with more media rich video sites and portals.

China also has numerous P2P consumer facing video/tv sites so its not hard to imagine vendors such as ourselves or competitors using the same technology to support the content owners, since many consumers are satisfied with the quality-most important for many is that its free or very cheap-micro payments.

-David

[Eric]

While I think you are right on one hand to measure the market by customer adoption, I'm not sure CDN adoption is as meaningful a measure at this point. It seems the traditional CDN sector is in a bit of turmoil at the moment, and I suspect these companies are rightly focused on their core value propositions rather than branching out into new technology areas. With the exception of Akamai, the two major players (Limelight and Level3) have faced recent challenges of one sort or another, from patent decisions to integration and execution challenges. And all of the smaller players face the same litigation threats should they prove successful enough. So I suspect P2P is not high on the list of executive mindshare among the tCDNs, even though the technology has unmistakeable advantages in the long run.

[Christopher Levy]

Mark,

Well sure if people ONLY wanted to have to go to the Internet everytime they wanted to view a video, the service you name [Youtube, Google, Veoh] are all great.

Even more so if you want low quality video that looks like it's being served through a dish towel.

If you want your users to get high quality video that they can watch anytime without 3rd party branding, downloads are the way to go.

[Steve Lerner]

I've always felt that the greatest strength in P2P technology was in the download management side... clearly when the source of the bandwidth is an end-user's computer, its hard to have a service level commitment. But if the client software is very powerful at assembling the file from anywhere, then there is great potential for its use.