Business Checkpoint 2

The iTunes store will clearly benefit with the integration of a BitTorrent-like client.

According to MacRumors, “Apple has to pay for bandwidth as well as disk space, web servers, and other infrastructure.” These costs will add up quickly as additional server space needs to be added continuously as demand for large files, especially HD files, increases. Right now, the average movie file on downloadable from the iTunes Store is approximately 1-2GB; iTunes Store movie downloads are near DVD-quality 640-by-480 resolution.
According to a posting on Gizmodo, the size of HD movie files can be as much as 19GB—averaging out at approximately 10GB. This will greatly strain the iTunes Store’s servers.

To reduce the cost of extra storage space, the BitTorrent client will allow users to download purchased files from each other. Users earn points for the amount of megabytes uploaded to other users, which can then be converted into credits toward future purchases made at the iTunes store. There will be limits on the number of points available to earn in a specified period of time. The money saved by reducing the strain on iTunes’ central servers will outweigh the profits lost as a result of point payments.

Marketing efforts will include banners up on main iTunes site at no significant cost to Apple. The new iTorrent system will also rely on word of mouth. Our competition includes CinemaNow and MovieLink, among others. We plan to outdo our competitors through our speed, reliability, and popularity.

Overall, the new iTorrent system will eventually reduce use of illegal methods to obtain movie files.

Business References:

“iTunes Offers First Feature-Length Movie.” Washington Post. http://www.washingtonpost.com/wpdyn/content/article/2006/03/15/AR2006031501843.html

MacRumors: Forums. http://forums.macrumors.com/showthread.php?t=138433&page=5
http://forums.macrumors.com/showthread.php?t=122682&page=4

“First pirated HD DVD movie weighs in at 19GB” Gizmodo http://gizmodo.com/gadgets/home-entertainment/first-pirated-hd-dvd-movie-weighs-in-at-19gb-229031.php

iTunes Store http://www.apple.com/itunes/store/

“Apple Corps, Ltd. and Apple Computer, Inc.” FindLaw http://news.findlaw.com/hdocs/docs/apple/aclac50806opn.html

“BitTorrent battles over bandwidth” BBC News http://news.bbc.co.uk/2/hi/programmes/click_online/4905660.stm

BitTorrent http://www.bittorrent.com/

CinemaNow http://www.cinemanow.com/
MovieLink http://www.movielink.com/