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Data Transport Key To Pirate Bay’s Business Model

STOCKHOLM, Sweden (VIP-NEWS) – Global Gaming Factory X (GGF), which purchased The Pirate Bay for $7.7 million, says it plans to turn the site into a legitimate, profitable source of downloadable media through data transport. The company, wrote BusinessWeek’s Mark Scott, wants to bundle the Internet traffic of Pirate Bay’s users, re-sell it to ISPs and split the revenues with the users – all while paying an undetermined amount to content owners.

GGF is not short on ambition. The company says it expects to gross $56 million per month — $672 million per year – in ad revenue from The Pirate Bay. “The technology will use the community of file-sharers to cut costs of data traffic for ISPs by more than a half,” said the company’s CEO. The plan assumes traffic will not subside. As other illegal-to-legit P2P services can attest, that’s wishful thinking. It also assumes licensing deals can be worked out with content owners in way that will not decrease traffic. Unlimited, free downloads of any item – the building blocks of The Pirates Bay’s success – imply the existence of DRM or, at the very least, so many hoops through which the user must jump that the product is irreparably harmed.

Those are lofty revenue goals for a company that grossed 4.9 million Swedish Kroner (SEK) ($630,000) and had net loss of 4.2 million SEK (-$539,000) on assets of 51.6 million SEK ($6.6 million) in 2008.

Such a plan would mean GGF would need to juggle the demands of content owners, promises to prospective ISP partners and the demands of advertisers. Media companies are justified to be skeptical of the plan and are not likely to jump headfirst into such a plan without a serious commitment from GFF. That will require huge advances, which could prove difficult for a company with so few assets, as well as commitments from ISPs and a lack of thorny legal issues. –According to Billboard