Hablo P2P: The Impact of Pando on CDNs

Sometimes things just happen by accident. You give your company a name that sounds cool, only to find out later that it actually means something in Spanish. Luckily, in the case of the personal P2P start-up Pando the meaning wasn’t too bad, and the company has been bulging with users from Spain and Latin America ever since.

pando1.jpgPando’s story has been somewhat symptomatic for quite a few P2P ventures. Potential lawsuit and a tough market for paid downloads have forced more and more companies to look for alternative revenue models. At the same time, almost overnight, online video grew a huge appetite for content delivery services. Soon people started asking: Does anyone speak P2P around here?

Pando started off as a personal P2P client that offered an easy way to swap files with friends and coworkers. It’s been very successful in that market, partially because of its Latino-friendly name. Seventy-five percent of Pando’s 8.5 million users are located outside of the U.S., and Spanish magazines list them as a must-have app right up there with Firefox and AIM.

Some folks even started setting up dedicated websites for swapping Spanish-language movies and TV shows with Pando. That wasn’t really the purpose of the app, but it definitely got the Pando team thinking — and they realized that their popularity could help them to enter the CDN market. Pando co-founder and CTO Laird Popkin tells me that the install base definitely helped to forge relationships with the content industry: “We have very different kind of conversations with content owners now.”

Part of that might be due to the fact that Pando also has a somewhat different proposition to make. Content owners can use Pando on top of whatever they have in place for delivering their content. The system works with a small podcaster’s web server as well as a full-fledged CDN, as long as your users have the company’s client installed. Pando’s P2P power kicks in once a file becomes popular, making it possible to master usage peaks with less resources. And this works for streams as well as downloads.

Speaking of podcasters: The company also offers to help video makers with the monetization of their content. The Pando client can dynamically insert ads into the downloaded or streamed content.

Pando’s pricing is somewhat unorthodox, as Liz reported earlier: One million file transmissions will set you back 5,000 bucks. “Once you got P2P in the picture, we don’t really care how big those files are anymore,” says Popkin.

That obviously sounds like a smack in the face of the traditional CDN industry that has been making lots of money with metered bandwidth for years. But bandwidth is becoming cheaper, and you can only compete on price that much. In fact, there are indicators that the industry is starting to emphasize other things beside the price of the crude Gigabyte. Laird Popkin thinks that P2P can help facilitate these changes. The cost savings of P2P are only part of the puzzle for him. “P2P is an enabling technology”, he says.

Pando seems to be onto something there — if only for the fact that Akamai’s Red Swoosh team is working on some remarkably similar things. CDNs seem to be slowly moving away from simple number crunching to full-service companies that help to monetize the bits they deliver and open up for the long tail of smaller content publishers. Says Popkin: “P2P grows the market.”