Can Pirate Bay's new cloud business model succeed?
An interesting new business model being discussed by Pirate Bay acquirer Global Gaming Factory introduces the first commercial attempt at a P2P-based storage cloud. But can it work?
Wayne Rosso, formerly CEO of Grokster, founder of Maxxbox, and outspoken critic of the Recording Industry Association of America, recently joined Global Gaming Factory, the soon-to-be owner of file-sharing legend The Pirate Bay.
In an interview with CNET's Digital Media blog, Rosso outlined what turns out to be an extremely innovative cloud-computing business model.
The only question is, will it work?
In the interview, Rosso outlines a plan in which The Pirate Bay customers could pay a monthly fee for music service, but could reduce that cost by contributing storage capacity to a commercially available Storage-as-a-Service offering:
For example, a person may dedicate a gig of (storage) space to the network and the fee may go from $9 to $5. (Rosso declined to discuss pricing yet so the numbers are made up just for the example).
"The more of your computer resources you contribute to the network, the less you pay down to zero," Rosso said. "The user is in control."
In other words, The Pirate Bay aims to be the first commercial peer-to-peer storage cloud that separates how capacity is acquired from how it is sold. This is extremely interesting, because it means it can sell one service to a consumer audience (music and video), and another entirely different service to business (storage services).
The implications of this approach are profound. For example, while the model described for The Pirate Bay is a simple one, I can see real opportunity to expand it into a liquid marketplace for storage capacity. Here is how I would do it:
In addition to allowing any music/video customer to reduce their costs by adding their storage capacity to the Pirate Bay cloud, require them to provide critical meta-data (or calculate it), such as location, device type and speed, and so on.
Instead of selling a fixed-price storage offering, auction off specific customer storage units based on that meta-data. Thus, a 7200rpm SAS drive in Kansas would go for much less than, say, a solid-state drive with encryption in the Principality of Sealand. The reasons for the discrepancy would have to do with the speed, security, and regulatory overhead of each storage unit.
Also allow other entrepreneurs and businesses to add specific storage to the network without the music/video subscription, and pay them a cut of the total revenue generated from their storage.
Now build a set of general services, such as replication, deduplication, disaster recovery, etc. into the service as a whole, and sell those as additional subscriptions.
Pretty cool, huh? The problem is, there's a catch.
One of the guiding principals of cloud computing for consumers and the small/medium business market is that the customer will never need to own large amounts of storage again. Thus, there may not be any storage for the average music customer to donate to the Pirate Bay cloud.
I see three possible outcomes for this service as The Pirate Bay defines it today (as opposed to the extended vision I just outlined above):
The Pirate Bay negotiates inclusion of its software into the consumer media server systems being sold in the next year or two. This is the one device where I think most households will own significant storage of their own. If it becomes "point and click" to donate some of that storage in exchange for free or cheap music, The Pirate Bay might find a market.
The Pirate Bay evolves its business plan to take on some or all of the elements I suggested above. This would allow them to acquire capacity through commercial interests wishing to make money from The Pirate Bay's peer-to-peer service.
The Pirate Bay sees an initial interest in its service based on "old school" computer users, but sees a steady decline in customers exchanging storage for music. In the end, the music business succeeds or fails in a highly competitive subscription music market, but the cloud-storage business either collapses or changes its business model to survive.
(I also wonder if the model Rosso describes creates a playground for cybercriminals, both in terms of giving them very anonymous storage options and allowing them potential access to consumer systems through exploits of The Pirate Bay's software.)
Regardless of whether or not The Pirate Bay succeeds in delivering the service Rosso outlined, the concept itself is intriguing and innovative. I certainly can see an auction marketplace for Infrastructure as a Service capabilities appearing from a peer-to-peer model in time. If it does, that will change the face of the cloud market in truly fundamental ways.
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