Remember P2P? That nasty legacy of the days when record labels—stunned like deer in the headlights of the Internet explosion—refused to give the people what they wanted and saw an underground peer-to-peer market develop out of their control. Those were scary days, and video content owners vowed to avoid the same fate by plastering their content all over the Web (to the dismay of some traditional TV distributors who wonder why they’re paying those license fees, but we digress). The main point is that P2P still exists but strikes less fear in the hearts of content owners than before. But according to a report out today by Multimedia Intelligence, P2P traffic will grow nearly 400% over the next 5 years, with many P2P applications entering an era of legitimacy and—dare we say—perhaps an era in which synergies with traditional media are finally possible.

The growth of P2P even despite all of the authorized avenues to obtain Internet content (Hulu, Joost, iTunes, etc) is quite striking. Right now, Multimedia Intelligence estimates that some 1.6 petabytes of P2P Internet traffic per month rolled through cyberspace in 2007; and it predicts that will grow to almost 8 petabytes per month by 2012. What’s a petabyte? Just know that it’s a lot of bits. A lot. According to the report, P2P data represents 44% of all consumer Internet traffic and 33.6% in North America. Think about that. Are you starting to understand why cable MSOs have toyed with the idea of metering bits or, in some cases, have directly slowed P2P traffic down in an attempt to ensure other users don’t get caught up in the resultant bottleneck?

For content owners, though, this is a question of legitimacy. DOCSIS 3.0 is coming on fast, and it will soon be possible to easily (and quickly) trade or even stream HD-quality video around the Web—whether it’s authorized by the content owner or not. The good news, according to this report, is that the base of “legitimate” P2P traffic is expected to grow 10 times faster than illicit P2P traffic (The volume of legitimate P2P is far smaller, of course… but that could change in the coming years). Content owners are increasingly wondering whether P2P will become the most cost-effective way to distribute online digital content.That’s an interesting thought. And gee… wouldn’t it be ironic if the same technology that nearly brought down the music industry actually turns out to help online video thrive? We’ll see. Still much to play out here. But no one should forget that P2P remains a force in cyberspace. Whether it remains underground or rises into the sunlight may depend largely on the decisions content owners make in the coming months and years.

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