BitTorrent’s software currently sits on 80 million computers, and Internet service providers say that file trading on the service – most of it illegal – now accounts for 40 percent of all online traffic”,

reports Brad Stone in the New York Times on November 29, 2006, noting that fat video files that might take an hour to download on iTunes can take just minutes over BitTorrent if other, nearby users have the file on their hard drives.

Rather than resisting that huge flow of traffic, media companies by the dozen such as 20th Century Fox, Kadokawa, Lionsgate, Palm, Paramount, Starz Media, MTV, Warner Bros. Home Entertainment, Egami Media, Hart Sharp, Koch Entertainment and The Orchard (according to BitTorrent’s press release) are increasingly attracted to the large online ‘audiences’ of technologies like BitTorrent. And rather than suing, are attracted to the idea of a co-operation deal, where the technology provider agrees to filter the network by removing infringing content from search indexes on the network thereby enabling the content provider to upload (seed) legal copies to the network with content management encryption keys that work within everyday browsers so that, other than the digital content itself, all that’s really being distributed is user id’s and passwords that can be purchased in bricks and mortar stores or online depending on how the content provider wishes to market the release.

I juxtapose this with the LimeWire case, which I discussed in an earlier post, where LimeWire was unable to find many allies in the music industry. A few years back, the major labels thought they should control the means of online distribution by rolling out successive, proprietary platforms modeled, it seemed, after old-time record clubs, resulting in fragmentation of supply and dysfunction. Both sides largely failed in their efforts, with the end-game now playing itself in that case, where infringement claims are pitted against claims that the major labels have conspired to destroy innovation.

Denied a veto in the U.S. over technological innovation, to use the terminology of the Electronic Frontier Foundation in its detailed analysis of industry briefs filed in the U.S. Supreme Court, and humbled likely by the sheer distributive force of BitTorrent-type open source file sharing, the major movie studios and other major content providers are now anointing BitTorrent with their approval in order to transform its platform from illegal to legal.