• San Jose Mercury News, Wednesday, November 29, 2006 11 AM

It's odd that BitTorrent, the peer-to-peer file distribution protocol that became nearly synonymous with TV and movie piracy, is having such an easy time transforming into a legitimate operation when other file- sharing companies have failed. Today, the company will announce deals with Viacom's Paramount Studios, MTV Networks, News Corp.'s 20th Century Fox and several other smaller studios. These deals follow the one it struck with Warner Bros. earlier in the year.

Big changes are underway at BitTorrent. According to GigaOm, the company is set to receive a fresh infusion of Series B funding, rumored at $25 million. CEO Bram Cohen, who designed and created the protocol, also looks to be on his way out.

About a year ago, Cohen tried to curry favor with Hollywood by announcing that the file-sharing protocol would remove links to copyrighted material on its Web site. File-sharing networks like Napster and then Grokster have taken this road and failed in the past, partly because they were unable to shake the stigma of piracy. So why is BitTorrent receiving Hollywood's blessing in its effort to change? Answer: its 70 million-strong worldwide user base.

The massive user base means the company will already have millions of users when it re-launches as a media store in February. With so many users, it can guarantee fast downloads and cheap prices. It now remains to be seen how the transformation will play with users.

Read the whole story at San Jose Mercury News »