Is the ‘bundle’ the new record store? by Melissa Locker @FortuneMagazine 3:25 PM EDT E-mail Tweet Facebook Google Plus Linkedin Share icons Last Friday, Radiohead fans almost broke the Internet. The band’s lead singer, Thom Yorke, announced that his surprise solo album, Tomorrow’s Modern Boxes, was available via BitTorrent. “The network not only carries the traffic, it also hosts the file. The file is in the network,” said Yorke in a statement. For $6, fans could download a digital “bundle” of the eight-track album and the “A Brain In A Bottle” video directly to their computers, no iTunes required. Fans quickly started downloading the album bundle, pushing the site’s counter to over 600,000 since Friday. While those aren’t all sales, as the counter also includes free downloads — and neither the artist nor BitTorrent will release actual sales figures for the album—it’s an astonishing figure. According to Billboard, Barbra Streisand, Kenny Chesney or Lady Gaga and Tony Bennett were on track to sell only 125,000 albums this week, and Yorke’s bundle sales far outstrip that. But one question: What exactly is a bundle? BitTorrent is an Internet protocol that accounts for an astonishing amount of internet traffic. “It moves between 20 and 40% of the world’s Internet traffic at any given time during the day,” said Matt Mason, BitTorrent’s Chief Content Officer. “Facebook uses the protocol to update Facebook, Twitter uses the protocol to update Twitter. Wikipedia, Etsy, Blizzard uses it for World of Warcraft. It’s used for the Human Genome Project and on Wall Street to distribute algorithms.” In short, BitTorrent’s protocol is everywhere online. Bram Cohen, who founded the company in 2004, three years after he created the technology wanted “to find cool things to do with it,” according to Mason. Hence, bundles. In BitTorrent parlance, “a bundle can be anything as long as it’s ones and zeroes” said Mason. “A bundle is a file that can travel across the BitTorrent protocol to anywhere that torrent files can be shared on the web.” That includes a movie, a high-resolution photograph, an e-book or as in Thom Yorke’s case, an album. While content has been distributed over the web and BitTorrent for years, Mason joined BitTorrent three years ago to curate relationships between the company and content creators. While the web already has distributive technology in sites like Netflix NFLX and Spotify, BitTorrent wanted to work directly to connect artists with their fans. “Our mission is to get out of the way between content creators and fans,” said Mason. Madonna, Public Enemy, De La Soul and rapper G-Eazy have all used BitTorrent to distribute content to fans around the world, but their work was distributed for free or in exchange for an email address. Yorke’s album is the first time that fans have had to pay for an album with cold hard cash via a built-in paygate that is downloaded along with the content. “The genius idea behind the bundles is that instead of putting them in a store, or a central place where people have to buy things, we decided to put the store inside the bundle itself,” said Mason. “Anywhere that the bundle travels, there’s a gate in there, and to open that gate you might have to pay or give your email address or some sort of social transaction to actually get the content behind the gate.” That means you could put an entire season of a television show inside a bundle and have people pay to watch each episode or in the case of Yorke, pony up your $6 and download the album. Tomorrow’s Modern Boxes was the first test of this built-in paygate model and much to BitTorrent’s relief, it worked smoothly despite the overwhelming number of fans downloading the album. Not that BitTorrent was worried the system would crash, because it actually can’t crash. “Essentially the way BitTorrent works is that it gets faster the more people are using it. There’s no central server or central point of failure that’s going to bring the whole thing crashing down,” said Mason. It was a server crash that brought iconic hip hop artists De La Soul to work with BitTorrent. The group had attempted to distribute its past catalogue to fans via DropBox for free. High demand caused the entire system to crash, leaving the band as frustrated as their fans. BitTorrent saw DropBox’s crash as an opportunity. “By the end of the day, we were on the phone with De La Soul’s manager asking him, ‘What can we do?’” said Mason. “DropBox is fantastic, but it’s not designed to distribute content to millions of people like that, but the bundle really is.” The very public experiment with Yorke’s album, proved that. Working with Yorke was a dream come true for BitTorrent, even though working with such a well-known and well-respected artist made for some high stakes beta testing. “They were the best to launch with, but also could have been the worst, because Radiohead fans are rabid,” laughed Mason. “Normally when you’re testing out a new product, you don’t go out with a huge rock star and do some global thing that hundreds of millions of people are going to jump on. Usually you do small testing.” However, Radiohead and Yorke have a reputation for paving new paths for music distribution—seven years ago, they let fans name their own price— even pay nothing— for their album, In Rainbows. Having established themselves as outside-the-iTunes thinkers when it came to music distribution, BitTorrent thought Radiohead and Yorke would be an excellent test case. “For us, there was nobody better to do this with,” said Mason. The feeling was apparently mutual. “We had a series of conversations with Nigel [Godrich] and Thom [Yorke] and the result of those conversations was them saying, ‘We have to do a bundle, because this is the thing we want on the internet,” said Mason. “We worked with Thom and Nigel for most of this year,” said Mason. “They were really hands-on, really involved and, I don’t think they’ll mind me saying, really demanding, holding our feet to the flame saying that this process has to be the simplest thing possible and it has to be flawless.” To ensure that the paygate process went smoothly, BitTorrent tested the process over and over and over again, before Yorke’s publicists were able to send out the email announcing the album’s release. Much to BitTorrent’s relief, “nothing broke!” While fans around the globe download Tomorrow’s Modern Boxes, the counter on the BitTorrent widget creeps ever upwards (as of Tuesday afternoon, it’s at 623.4K). While Mason clarifies that the number represents people who have downloaded both the free and paid bundles, it’s an incredible number. “We can’t share sales figures at this time,” said Mason. “But we are really happy with the number of people of that 400,000 who did choose to pay.” If even half the figure is sales, Yorke has a Billboard chart with his name on it. However, currently there are no definitive plans to report those statistics with SoundScan, which is where Billboard gets its figures. “In the future we want bundles to count towards Billboard and Soundscan,” said Mason. “We want movies to count towards box office counts and books to find lists, too.” What BitTorrent did with Yorke, though, had different objectives both for the company and the artists. “Obviously Thom and Nigel wanted to sell albums,” said Mason, “But they also wanted to build a long-term, sustainable solution for all content creators. That’s why they got involved with this.” In a statement, Mr. Yorke described their project with BitTorrent as test of a new way for artists to release their work online. “If it works well it could be an effective way of handing some control of Internet commerce back to the people who are creating the work,” Yorke wrote in a statement that was also signed by Godrich, his longtime producer and collaborator. That’s exactly what BitTorrent hopes to accomplish, as well. “We want to put power back in the hands of publishers,” said Mason. “We wanted to build a set of tools to help independent artists, and that’s when we came up with bundles.” For BitTorrent, proving that paygates can work is good for their bottom line as they figure out how to add revenue streams and monetize their protocol. “There’s no business model for digital content these days,” said Mason. “There’s a different model for every piece of content created and everybody—including us—are just trying to figure this out.” So far, so good.