Apple's Leopard to Use Bandwidth as Currency?

| About: Apple Inc. (AAPL)

By Carl Howe

Harvard University's School of Engineering and Applied Sciences is trying to crack the code on one of the social questions of peer to peer file sharing: "How do you get people to upload as well as download?" Their approach incorporated in new Tribbler BitTorrent client: treat bandwidth like currency. Uploads gain you cash, downloads spend it. It's a nice and easy model to understand.

I wrote last year that Apple (NASDAQ:AAPL) may incorporate such a technology into Leopard to support peer-to-peer movie distribution. In the Apple model, though, the technology would be security built into its next OS Leopard, and the virtual currency that Harvard is using would turn into real currency spendable at the iTunes store such as free downloads of other titles or tracks. While this sounds far out, paying Leopard users to redistribute iTunes Store content would:

  • Decrease Apple's bandwidth costs. Bandwidth is one of the biggest costs of running the iTunes Store, and that will get only worse once Apple announces high-definition video and movie downloads. Adding consumer-level distribution would both decrease download times for many consumers while reducing Apple's bandwidth costs at the same time.
  • Increase Apple loyalty. By doing a small amount of revenue sharing with its customers, Apple would bind those customers even more tightly to its brand. Further, because the technology will most likely be built only into a secure software layer of Leopard to prevent fraud, it would drive Leopard upgrades, further boosting Apple's sales.
  • Provide copyright accounting for peer-to-peer networks. Because Apple would be tracking currency for peer-to-peer redistribution, it would also have the ability to account for that redistribution to record labels, TV networks, and movie studios. Those stakeholders would have a good business reason to support peer-to-peer distribution -- but only if they continue to work with Apple.
  • Will it happen? Honestly, I have no idea, but my bet is that Apple has it on the list for a not-too-distant release if not in Leopard. After all, the Internet was originally designed to be a peer-to-peer network; it's only been carriers demanding network control who have turned it into the asymmetric client/server network of today. With Japan and Korea already boasting of 100 Mbps symmetric broadband connections and organizations like BitTorrent and Harvard University fielding the technology today, someone is going to make billions by solving the content redistribution problem. My bet's on Apple to make it real.

    Full disclosure: the author owns Apple stock.