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File Sharing - Monday, August 29, 2005

eDonkey aka Metamachine - Profile

HQ: New York, NY

Founded: 1999

Management: CEO Sam Yagan is a Harvard grad from the class of ‘99 who previously co-founded study guide company Sparknotes, now owned by Barnes & Noble. He calls himself an old-friend of software designer and eDonkey founder Jed McCaleb.

Investors: Bootstrapped. The company has legal risks that most VCs fear-to-tread.

Business Model: eDonkey is the 'it-girl' of P2P file sharing network - particularly for video downlooads. eDonkey has been downloaded by more than 50M people and is very popular in Europe and broadband-rich Korea. A recent study by Cachelogic found that eDonkey has outsripped BitTorrent as the biggest source for video P2P. eDonkey is faster because it downloads bits of files simultaneously, and then seamlessly puts them into one file after they reach your computer. eDonkey makes money by advertising - it loads up its application with adware - and it offers an ad-free version for $19.95 - although the vast majority of its users opt for adware. Unlike Kazaa, Grokster and other P2P firms, eDonkey users can choose whether to opt in for the ad programs.

Competitors: eDonkey is the only major P2P company that doesn't hide in places where lawyers can find them. Kazaa is incorporated on the isle of Vanuatu; Grokster is in Nevis, West Indies; and Earthstation 5 is run from the Jenin refugee camp in Palestine.

Dirt: eDonkey's rise comes after Hollywood legal campaigns against BitTorrent hubs, which have resulted in the disappearance of many of the most popular sites using that technology. But will eDonkey be next in Hollywood's cross hairs? eDonkey claims that it is just a small 5 person company. Hopefully they have been ammassing a war chest to fend off Hollywood.