As far back as 2009 the world’s leading BitTorrent trackers reported that Xunlei users accounted for more than 104 million unique users. Currently the client has an estimated 142 million users.

Considering the software’s reach the news today that client owner Shenzhen Xunlei Networking Technologies has done an anti-piracy deal with the MPAA is received with some interest, not least since Xunlei is the 12th largest Internet company in China.

The anti-piracy agreement

The Content Protection Agreement (CPA) will see Shenzhen Xunlei actively protect MPAA content including movies and TV shows. Among other measures, the landmark deal will see Xunlei implement a video recognition system to ensure that all MPAA content being made available via Xunlei is properly licensed.

The Chinese company, which is in part backed by Google, has also agreed to educate its users on the effects of online piracy and where to obtain officially licensed copies of MPAA works.

Xunlei operates a number of online ventures, including a streaming service with 136 million monthly users, so it seems logical that the deal will encompass its entire portfolio. Clearly an agreement without ‘teeth’ across all products wouldn’t be good for either Xunlei or the MPAA. The big question now, however, is what pushed the companies together. The answer, as always, is money.

MPAA hindered Xunlei’s IPO

Early 2011 Xunlei announced plans to go public with a listing on NASDAQ, the largest U.S stock market. But by November the whole thing had been canceled, with a poor economic climate held to blame. However, in the background the issue of copyright infringement was burning away.

According to reports in Chinese media, in April 2013 the MPAA demanded that Xunlei install a software plug-in to block its copyrighted content from appearing online. However, Xunlei was only prepared to install it into a video player, not their other software. Talks collapsed, legal action loomed, and the IPO dream was shattered. Clearly the company would need to regroup and consider its options.

Improving its image for a second run

In March 2014 Xunlei hosted the Chinese Internet Copyright Protection Action Plan conference. A former employee of the company who spoke on condition of anonymity said Xunlei did this to improve its image and put its infringement issues behind it.

“You must make a clean break with the pirates,” he told local media.

Just under two weeks ago came the clearest signs yet that Xunlei was ready to move towards that goal.

On May 23rd Xunlei Ltd filed a registration with the U.S. Securities and Exchange Commission for an IPO of its U.S. dollar shares. The offering price was proposed at a maximum of $100 million under the symbol ‘XNET’.

But while doing a deal with the MPAA might stop Hollywood hindering Xunlei’s IPO again, the company’s filing makes worrying reading for potential investors.

Risky business

“Even if we comply with all of our obligations under the content protection agreement, the implementation of content protection measures may affect our users’ experience or otherwise make our services and products less competitive than those of our competitors, which could in turn materially and adversely affect our business, financial condition and results of operations,” the company writes.

“In the event that the content protection agreement is terminated or we are otherwise deemed not to be fully compliant with its material terms, the content providers may initiate a lawsuit or other proceeding against us, including for any past claims that they might otherwise have made prior to entering into the agreement. In addition, other third party content providers may still initiate lawsuits or other proceedings against us.”

A lack of compliance with the most basic of U.S. copyright protections raises yet another red flag.

“We do not currently satisfy all of the statutory requirements of any DMCA safe harbor. If we are ever held to be subject to United States copyright law, that could increase our risk of direct or indirect copyright liability for our resource discovery, acceleration or other services,” Xunlei explains.

Despite the concerns, others are prepared to put up big money. Last month Chinese smartphone manufacturer Xiaomi pumped $310 million into Xunlei boosting its share of the company to around 27%.

With a fresh tagline of “more than just downloads,” Xunlei will be hoping for an exciting future in the United States – without the MPAA on its back.

Source: TorrentFreak, for the latest info on copyright, file-sharing and anonymous VPN services.

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.

Source: TorrentFreak, for the latest info on copyright, file-sharing and anonymous VPN services.

What is new to many is that contrary to most other parts of the world, people from China also prefer to use a local BitTorrent client to manage their downloads. This new insight comes from data collected from three of the largest BitTorrent trackers adding up to a sample of 357 million unique peer IDs.

With the help of other tracker operators, EZTV’s NovaKing has gathered statistics from the OpenBitTorrent, PublicBitTorrent and Denis Stalker trackers. Spanning over a week, the overall statistics show that it’s not uTorrent but actually the Chinese BitTorrent client Thunder (also known as Xunlei) that has the largest market share.

We have to admit that this data came as a complete surprise to us and that we initially doubted its validity, but TorrentFreak is assured that these statistics are indeed correct. Previously we have reported on the market share of the various BitTorrent clients, but Thunder never made it into the list of most used clients. In this list below, however, Thunder/Xunlei actually beats uTorrent.

The logical explanation for this surprising result is that the previous statistics were gathered from a sample of torrents that did not include many Chinese downloaders. Apparently the Chinese prefer to use a local client (and local content) that’s available in Chinese, instead of uTorrent or Vuze which have a dominant market share in the rest of the world.

When we go through the rest of the stats we see that uTorrent has a small lead over Vuze (formerly Azureus). However, the difference is much smaller than our previous market share reports have suggested. This is another indication that the sample used for our previous reports was not as representative as it should have been, despite the large sample size.

Transmission and BitComet have a market share of 3.3 and 4 percent respectively, which is in line with previous reports. In ninth place we find another Chinese client, Tuotu, which is listed as Unknown in the list above.

The new data sheds a new light on the market share of BitTorrent clients. More than anything it reveals that there are quite a few regional differences when it comes to BitTorrent habits. By itself this is nothing new, but that a BitTorrent client used by tens of millions of people can fly under the radar for so long outside China has certainly surprised us.

Source: TorrentFreak, for the latest info on copyright, file-sharing and anonymous VPN services.