TorrentFreak

• Ernesto
• October 17, 2011
• 31
• google,
  Xunlei
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With more than 2 billion page views a month and nearly 300 million active users of its BitTorrent-powered download client, Xunlei is without doubt the largest player in the file-sharing space. In an attempt to capitalize on this position the Chinese company, which is partly owned by Google, set its sights on a NASDAQ listing. However, due to copyright concerns and economic headwinds, this plan has now been canceled.

To the Western public the name Xunlei might not ring any immediate bells, but in China its software is used by hundreds of millions of people every month.

Xunlei offers a searchable index of 3.7 billion media files which users can download with the proprietary Xunlei software. The company is partly owned by Google and in recent years has evolved into the leading player in the online file-sharing space.

According to in-house reports, the Xunlei client had 291 million active users in February 2011, which makes it the most-used BitTorrent client by far. And with an estimated 2.5 billion page views a month, Xunlei also takes the lead as the most visited file-sharing site on the Internet.

Earlier this year Xunlei announced that it would capitalize on its popularity and go public. Supported by prominent underwriters such as J.P. Morgan and Deutsche Bank, the company aimed for a listing on NASDAQ, the largest U.S stock market. The prospectus reveals that Xunlei aimed to raise $100 million from shareholders to further grow its business.

Xunlei’s plans were ambitious, especially for a company in the file-sharing space. As it turns out, they may have been a little bit too ambitious. This summer the IPO was put on hold, allegedly due to the poor economic climate, and last week the plans to go public were canceled completely.

Among the reasons cited for the pullback are concerns over copyright. In common with other file-sharing services, Xunlei indexes millions of copyrighted files, and is often portrayed as a “pirate haven” by the entertainment industries. These concerns were also raised in the prospectus, where the protection of third-party copyrights was listed as one of the main challenges.

Last year alone 126 copyright-related lawsuits were filed against Xunlei in China, and the company also reported that the U.S. based MPAA have raised their concerns.

“A law firm in the U.S. who claimed to represent the Motion Picture Association of America, or the MPAA, has recently notified us by phone that certain members of the MPAA may make claims of copyright infringement against us, and requested us to enter into a content protection agreement with these members,” the prospectus reads.

“We have engaged in discussions with the MPAA to understand their request. However, we may not be able to reach a content protection agreement with the MPAA on mutually satisfactory terms and the MPAA or its members may initiate a lawsuit or other proceedings against us, whether or not we enter into a content protection agreement with any of them,” it adds.

Another signal that the U.S. might not be the best market to turn to was given by Google earlier this year. Despite partly owning the file-sharing company, Google banned the term “Xunlei” from appearing in automatic search suggestions because it is heavily linked to piracy.

“While there is no silver bullet for infringement online, this measure is one of several that we have implemented to curb copyright infringement online,” Google spokesman Mistique Cano previously told TorrentFreak.

Considering the above, and the continued pressure from pro-copyright groups on U.S. lawmakers to adopt more stringent anti-piracy laws, the climate might not be ideal for a file-sharing company on NASDAQ. Whether Xunlei will come back later or try their luck elsewhere is unknown at this point.

To the Western public the name Xunlei might not ring any immediate bells, but in China its software is used by hundreds of millions of people every month. Xunlei offers...