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The Notional Value of Bit Torrent
Robert X. Cringely
No wonder Hollywood is so scared.

Notional Value is a term used in financial securities markets to describe market size.  If you are buying stock option contracts, for example, those contracts will give you control of a lot more shares than you could control by buying shares outright.  So the Notional Value is the value of what you control rather than the value of what you own.  What I am trying to do here is bring this concept of Notional Value to play on the BitTorrent market.

The Amsterdam Internet Exchange (AMS-IX) is the second-largest Internet peering point after the mac daddy of all peering points in Seoul, South Korea.  AMS-IX peaks at 238 gigabits-per-second flowing between its 257 member organizations (ISPs and backbone providers, mainly) and as I am writing this the traffic is currently 225.8 gigabits-per-second, which shows the IX is running pretty close to capacity.  For those who continue to think of the Internet as a U.S. operation, there is no American peering point that comes even close to these numbers.

My point in writing this is that the folks at AMS-IX have long believed that BitTorrent traffic represents about half of this burden but had no real way of proving it.  Then in June of last year Swedish authorities raided piratebay.org, the world’s largest BitTorrent tracker, shutting it down for a few days.  This shutdown instantly dropped AMS-IX traffic by a third or close to 80 gigabits-per-second.  While thepiratebay.org is the largest tracker in Europe, it is far from the only one, so the idea that 50 percent of traffic is torrent-related makes sense.

But what’s that worth?  Adding the traffic of all the Internet exchange points and the private peers that are known to exist puts the total Internet size right now at about two terabits-per-second with half apparently related to Torrent activity.  Now add together the sales of every backbone ISP and exchange and you’ll come up with $60-80 billion, though this number is difficult to break out given network incest and a mixed bag of data types and protocols.  This would suggest that the notional value of BitTorrent is $30-40 billion except that understates torrent activity that takes place solely within a single ISP.  For large ISPs like Comcast, for example, up to a third of all seeds are within the ISP’s local network and never traverse an exchange.  But just for the sake of argument, let’s place the total value at $40 billion.

How big is that?  It’s bigger than any pair of backbone providers and bigger than all movie and TV producers put together.  No wonder the movie studios and their trade organizations are so threatened by BitTorrent and its ilk. 

Without spending a dime, p2p media distribution is already bigger than Hollywood.



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» Cringely, AMS-IX and Bit Torrent from Renesys Blog
Cringely is at it again. As I have written previously, sometimes Robert X. Cringely seems to write well beyond his knowledge-base. Unfortunately, it seems to be getting more common. The recent bizarre googanoia column is like that. And in... [Read More]

Comments

1. Posted by: tomo on January 25, 2007 2:34 PM:

p2p is the future of peering. the local transport guys better figure this out before they get made obsolete by alternatvie transport mediums. if they figure it out now it will cement their spot for years to come, if they don't figure it out they will be history in years.




2. Posted by: Graeme Thickins on January 25, 2007 3:57 PM:

That is a mind-blowing figure! Thanks, Bob. And to think it all started here in Minneapolis back in '98 or '99 with a developer named Justin Chapweske. Soonafter, he sold his technology to OpenCola, but later bought it back. Now, at Swarmcast, he's applied the technology to a new cause -- specifically, full-screen high-def Internet television -- and raised some serious VC money to take it to market via some major partners.




3. Posted by: JZP on January 26, 2007 1:09 PM:

All interesting, and yes BT is important. Unfortunately You are very much in error on factual points. Who did you contact at AMS-IX? You might want to take the time to read http://www.renesys.com/blog/2007/01/cringley_amsix_and_bit_torrent.shtml




4. Posted by: Cariann on January 26, 2007 3:30 PM:

Well, JZP.. .not to criticize, but maybe if YOU had read all of Cringely's post and followed the links that he provided to you, you would have seen that he got his info about AMS-IX from AMS-IX themselves. Here: http://www.ams-ix.net/technical/stats/ Just a thought.




5. Posted by: JZP on January 26, 2007 8:32 PM:

Cariann: a trivial graph does not say what "the folks at AMS-IX have long believed". There are assertions about the people and practices at AMS-IX in this posting, and these assertions are provably false. There is no 'criticism' in the comparison of facts; there are facts and the lack of them. The lack is here, the facts are here.




6. Posted by: Bob Cringely on January 26, 2007 8:45 PM:

At AMS-IX I spoke with Henk Steenman, the Chief Techical Officer. He should be a reliable source, right?




7. Posted by: JZP on January 26, 2007 9:11 PM:

Interesting. There are actually quoted statements from Henk regarding your peak and piratebay traffic-drop comments, but they are here. I see no quotes on your site.




8. Posted by: todd underwood on January 27, 2007 7:42 AM:

Fascinating. I asked Cara Mascini, the Chief Marketing Officer, at AMS-IX and after checking she confirmed that no one at AMS-IX had spoken with Cringely. And then I asked if Henk would be available for a quote commenting on the article. He obliged, answering several of my questions about the AMS-IX capacity issues, and their perspective on the Pirate Bay event. It's very, very curious that those quotes, which are contained in my response to this article would so badly contradict Cringely's piece here. Perhaps Cringely would be willing to review my response to the many errors in this article and help clarify which of them I got wrong, and which direct quotes from Henk Steenman he has that contradict the quotes I got from him. It is sad that so many fundamental errors (peak != capacity, the drop from Pirate Bay wasn't anywhere near the size Cringely claims, etc.) interfere with our ability to poke holes in the substantive analysis, which is also wrong. It's a shame we can't even get to that part of the conversation. :-)




9. Posted by: Bob Cringely on January 27, 2007 6:25 PM:

Here is where things get a little tricky because I have sources to protect. What I CAN say is that a friend of mine for the past 15 years who has held high technical positions at companies including MCI and Verizon made these points to me about AMS-IX as part of a completely different conversation. When I asked for more info he cut-and-pasted e-mail from Henk. Sometimes in trying to simplify concepts I make them worse and maybe that's the case here, I don't know. Yet simplification is important because otherwise the broader audience is left completely in the dark. Maybe you think that would be better, I don't.

Let's not forget here that the topic was the notional value of Bit Torrent. If Henk now says traffic dropped by a 10 GBPS when Pirate Bay was brought down, he told my friend that it dropped by "a third." Frankly, I don't care. My sole point was to look for some verification that Bit Torrent actually is as big as traffic hog as people think it is. And if it DOES use all that bandwidth, what does that imply in terms of cost or economic activity? A lot.

Finally, if you expect that a marketing person at any tech company anywhere has a total handle on who in their company has said anything on a topic, then that's one remarkable marketing person -- probably unique.




10. Posted by: Ed on January 28, 2007 9:05 AM:

> At AMS-IX I spoke with Henk Steenman, the Chief Techical Officer. He should be a reliable source, right?

> a friend of mine [...] cut-and-pasted e-mail from Henk.

Bob, I understand simplifying your story for your audience. But don't lie when people question you on the details. (And don't get snotty either.)

To be clear, "read cut & paste forward" != "spoke with". Not by a mile.

Not only that, but apparently you have spun an article and a conclusion ("p2p media distribution is already bigger than Hollywood") out of a 2nd hand snippet.

I can't quote your conclusion to any of my friends. You came to it on shaky grounds, I'm going to have to wait for a better survey. You certainly could be right, but if you are it's an accident.




11. Posted by: Ivan Beveridge on January 29, 2007 11:46 AM:

I initially read this article and thought it wasn't worth commenting on. Whilst the article is certainly topical, the facts (by your own admission) were extrapolated from a cut-n-pasted section of a second-hand email.

You have stated AMS-IX as the source of information, yet it appears you have not actually spoken to anyone there to corroborate that information. This is a pretty terrible shortfall for a journalist - especially as people at AMS-IX are fairly easy to contact (as others, including todd, have found).

The part that makes this worse is that it is such a high-profile issue, especially with the MPAA, RIAA and similar threatening and suing organisations, parents and children almost indescrimiately and painting them as thieves. I'm sure they have added this article to their arsenal, to apply polotical pressure to governments against consumers.

You are a highly-regarded journalist amongst the "technically-interested" and, as you say, simplification *is* important for the general audience.

There is no doubt that P2P traffic is an important percentage of traffic on the Internet - it is used for distribution of software (eg numerous Linux distributions), and as a transport for "legitimate" commercial provision of downloadable videos (including by some movie studios).

I urge people to look at todd's response, and look forward to a follow-up from you with more accurate facts and less "scare-mongering".

One final comment. Please do not disrespect someone (or people) that you do not know. I know several marketing people, both clued-up and not clued-up, and Cara@AMS-IX is most definitely one of the former.




12. Posted by: mliving on January 30, 2007 10:14 AM:

Cringley just flat out makes shit up. Period.

Get it right and be honest Bob or just shut the hell up.

Cringley:Technology's Bill O'Reilly. LOL!




13. Posted by: Bob Cringely on January 30, 2007 11:47 AM:

I have re-read my original post and can't find any scare-mongering in it. None.

Scare-mongering, as I understand it, involves two components: 1) a statement that something is threatening, and; 2) a call to action in opposition to the supposed threat. Please take a look at what I have written and show me either of these components.

I've just made an effort to roughly quanify the impact of p2p on the Internet. I haven't called it bad. I haven't suggested it should stop or be stopped in any way. All I have attempted to do is move beyond "BT has great impact" to some sense of how much that impact is. That's all. It's a modest goal and the negative response I see here seems not only out of proportion, it seems to have little to do with my actual words.

I'm not especially taking a position here, just attempting to frame the discussion. What's wrong with that?




14. Posted by: Ivan Beveridge on January 30, 2007 3:50 PM:

Perhaps "scare mongering" was a strong phrase, but starting out with:
"no wonder Hollywood is so scared", quoting figures (that are now known to be incorrect/exaggerated), extrapolating the figures to a monetary value, and clearly implying that it is all (or mostly?) TV/movie related, and then rounding off with "No wonder the movie studios and their trade organizations are so threatened by BitTorrent and its ilk"?

Seriously, I'm not trying to be negative, but there isn't really any other way I can see to read it.

I'm just requesting a more thoroughly-investigated article, involving people from the industry.

Personally, I hate organisations/people blaming a technology for things that people do (eg blaming BT for piracy). It's like trying to make pencils illegal because you can poke someone in the eye and kill them with one. You haven't done this, per se - just played into the hands of people who would.




15. Posted by: Dutch Usenet User on January 31, 2007 4:41 AM:

Btw Bob,

The drops of >10Gbit traffic, which can be seen on the traffic stats have nothing to do with Bittorent.

They occured at the same time the largest dutch Usenet provider had network failures...




16. Posted by: Richard Spink on March 17, 2007 11:39 AM:

I'd steer clear of the bittorrent site if I were you and I'd certainly not create an account there thinking you can download movies. I foolishly did this and find now that (a) I cannot cancel my account; (b) I cannot delete my CC info. from their site; and, to make matters worse, you need windows to run any of their stuff. I DONT RUN WINDOWS!

So, Bit-torrent is grat technology, but the commercial service itself sucks; it's all bait and switch.

richard s.
rspink@yahoo.com




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