UTORRENT: Once upon a time,
uTorrent was basically synonymous with torrents. It was the go to place to download movies, music,
games, or something a bit more mature. Fun fact, it was actually owned by Spotify in
the early days who bought the company to learn about their peer to peer distribution system.
Spotify would end up selling off uTorrent as they wanted to disassociate from the world of piracy
but this didn’t stop uTorrent from exploding in popularity anyway. Till just 3 years ago,
they held nearly 70% market share within the torrenting world with second place coming in
at just a tenth of the market share at 6.6%. The funny part is that 2nd place, BitTorrent,
is actually the creator of BitTorrents but they never held a candle against the
popularity of uTorrent which at their peak translated to over a 150 million users. But,
while uTorrent still controls a dominating share of the market, the overall pie has not just
shrunk but it has become a sliver. Take Google Trends for example. The search interest around
uTorrent has basically been non existent for the past 7 years with current interest standing at
just 3% of its former peak. uTorrent has very much trying to fight this trend. For instance,
they launched a web version of uTorrent a couple of years ago. And while that did reach a 1 million
daily active users, it’s nothing in comparison to the glory days. uTorrent is very much feeling the
pain and at this point, it seems like they’re just fighting for survival. They’ve stuffed in
ads into their UI and introduced paid tiers in hopes of keeping the effort worthwhile. But,
with interest in uTorrent continuing to dwindle, this seems like an increasingly uphill battle.
That’s why when uTorrent temporarily went down in early 2023, many speculated if that was the
end of uTorrent altogether. Fortunately for uTorrent and its remaining users,
this wasn’t the case but it did give a glimpse into the inevitable future. But, what happened?
How did everyone forget about a once ubiquitous service with over a hundred million users? Well,
join me as we take a look back at the monumental rise and fall of the king of torrents.
AN UNEXPECTED SUCCESS: uTorrent very much popularized the idea of
downloading files in a decentralized manner. And companies are currently popularizing the idea of
raising money in a decentralized manner with the help of bonds. If you’re not familiar with bonds,
it’s essentially way for governments and companies to raise money from the general public as well as
other companies and financial institutions. These companies and governments will then
turn around and use this money to fund expansion efforts, research and development, and growth. And
in return for helping them, they’ll pay you back with interest rates of currently 4-7%. Investors
like Warren Buffett are currently buying bonds hand over first and locking in historically high
interest rates for the long term. If you’d like to do the same thing with the safety of $500,000 in
SIPC insurance and $2.5 million in FDIC insurance, please consider checking out our bond investing
app, Silo, in the description below. But anyway, getting back to uTorrent, the story of uTorrent
takes us back to the early 2000s to a Swedish programmer named Ludvig Strigeus. Ludvig never
had any aspirations of creating something massive or being in the spotlight. He was
just a programmer who liked solving issues that he came across on a day to day basis,
and uTorrent was one of these creations. You see, Ludvig was involved within the torrenting space in
the early 2000s and he couldn’t stand that most bittorrents came along with a bunch of bloatware
and were resource hogs. So, in 2004, he started working on a no frills bittorrent in his free
time. This was very much an on and off thing. In fact, after working on it for just a month, Ludvig
would lose interest and sideline the project for nearly a year. But, he did eventually come back to
it in September of 2005 with a new vigor. In fact, he would finish off the program in just 3 days and
launch uTorrent on September 18, 2005. Speaking of the name, if you look closely at the logo,
you’ll see that the first letter isn’t exactly a u. Personally, when I was a kid, I always thought
that this was just a stylized cursive u but this is actually a greek letter called mu. In
the computing world, mu usually refers to micro, so you could pronounce uTorrent as muTorrent or
microTorrent and this is actually the case in many countries. If this is true your country,
comment down below where you’re from. But, for most users, including Ludvig himself,
the mu looked like a u and thus it became known as uTorrent. Within just a few months of launch,
hundreds of thousands of people would end up downloading the client, and Ludvig would continue
working on uTorrent. For example, uTorrent would become one of the first clients to implement DHT
support and BitTorrent encryption. But, while these were nice additions, the main factor that
sold uTorrent was its light weight design. This didn’t just catch the eye of pirates through,
it also caught the eye of Daniel Ek, the future CEO of Spotify. Back in 2005 though, Daniel was
just another Swedish programmer who was fascinated by the innerworkings of uTorrent and especially
Ludvig. You see, Daniel had already begun working on Spotify and they were figuring out the hard way
that pursuing a server client model for streaming music woud be extraordinarily expensive. So,
instead, they wanted to leverage a light weight peer to peer model and who better to help
them with this than Ludwig. With that, Spotify would purchase uTorrent for an undisclosed amount
which was likely less than a million dollars. This means that Spotify’s CEO was technically
also uTorrent’s CEO at one point in time but this didn’t last all that long. As Spotify’s CTO put
it, “we bought uTorrent, but what we really wanted was Ludvig.” As such, as soon as they were able to
convince Ludvig to stick around at Spotify, they would turn around and sell uTorrent to
BitTorrent behind closed doors. It wasn’t till years later that it would be revealed that the
sellers were actually Spotify. This was basically the end of Ludvig’s involvement with uTorrent and
looking back, this was a great decision as Ludvig would end up with a $100 million when
Spotify IPOed. But, while Ludvig had already moved on, uTorrent was just getting started.
REACHING THE MOON: While Ludvig was no longer involved,
the truth was that uTorrent had been turned over to someone even more capable: Bram Cohen.
If you’re not familiar with Bram, he is the father of torrenting as he created the world’s
first peer 2 peer BitTorrent based file sharing program. He aptly named the program BitTorrent but
while BitTorrent was the OG, Bram could see that uTorrent was OP. It was faster, more efficient,
and had a better UI, but most importantly, it was rapidly growing in popularity. So,
armed with VC funding, Bram would take the plunge with uTorrent but not everyone was happy. You see,
Bram didn’t exactly create torrents with piracy in mind. Obviously, he knew that it woud happen,
but his main goal with torrents wasn’t to enable piracy, it was to make torrents a mainstream way
to download pretty much anything. And as such, it was important that Bram was on the right side of
the law. So, in late 2005, he would go ahead and strike a deal with the MPAA or the Motion Picture
Association of America. This deal entailed that Bram would remove all copyrighted material from
the official BitTorrent search engine. This turned a lot of the torrenting community against Bram
as much of the torrenting community was also pro piracy. Moreover, much of the torrenting
community was in favor of a decentralized network. By purchasing uTorrent though, Bram was basically
monopolizing the torrenting space. So, the core torrenting community wasn’t happy with any of
this but as for the general public, well, they really didn’t care or even know about any of
this. As far as they were concerned, uTorrent was by far the best BitTorrent client and Bram
was simply making it more stable and accessible. Also, about Bram taking down copyrighted torrents,
well this simply made way for the Pirate Bay, Kick Ass Torrents, and a slew of other search
engines for torrents leading us into the glory days of uTorrent. By 2008, uTorrent boasted
over 25 million active users and it was basically synonymous with torrents but there was one major
problem: money. All of this was funded using investor capital meaning that sooner or later,
investors would want to see a return. This was very much a tricky line to walk as doing
anything over the top would simply push away users and make way for a new BitTorrent. So,
the company started off simple. They would start bundling in optional toolbars into their
installations. They would also add in a Google powered torrent search. These actually brought in
a pretty decent amount of revenue, an estimated $15 to $20 million per year. But with a 125
million users to support and the 2008 financial recession, it simply wasn’t enough. In fact,
BitTorrent would be forced to do layoffs and close parts of their business. But despite the losses,
BitTorrent was able to scrap by mostly thanks to just how stupidly popular uTorrent was. Investors
weren’t gonna just let a platform with over a hundred million active users go under just
because of a funding issue. So, they helped keep BitTorrent afloat but see, this only works as long
as uTorrent is growing at an unprecedented rate which we know wouldn’t last forever.
THE UNGRACEFUL FALL: The truth is that much
of uTorrent’s fall from grace wasn’t even their fault. The reality is that interest in torrents
has simply fallen substantially over the past decade thanks to more affordable legal options
entering the market. Ironically, one of these options is of course Spotify which has largely
made music piracy a thing of the past. So, by helping Spotify succeed, Ludvig actually ended
up killing his original invention which is quite poetic actually but Spotify was just one factor.
This same trend occurred in basically every copyrighted industry. You no longer had to be
$40 to $60 per month just to watch TV shows and with a bunch of ads. Instead, you could just pay
$10 per month to Netflix and get access to a far larger library whenever you want. The same
thing could be said about gaming as well. Many of the most popular games of the 2010s whether it’s
Clash of Clans or Fortnite were completely free to play. They made their money based on in game
purchases making it useless to pirate these games. Also, as for the games that were still paid,
well, a lot of these were dependent on online functionality which you couldn’t really get if
you pirated. And as for software, well most software just became free as they learned to
monetize our use as opposed to our purchase. Just as all of this was starting to unfold,
some of the biggest piracy sites would be taken down. This included Megaupload in 2012 and the
Pirate Bay in 2014. Of course, replacements would pop up to take their place but these
never reached the same scale because people simply didn’t feel the need for these services. I mean,
just take a look at this graph showcasing the interest around downloading free movies. And as
piracy began to lose steam, it was only natural that uTorrent followed suit making them more and
more desperate. First, they would add ads in late 2012. Then, they would add a pro tier for
$20 per year which kind of nerfed the free tier. These changes definitely made the free version of
uTorrent less appealing but these changes were understandable. At the end of the day uTorrent
was a business that needed to make money. But, a change that the community would not tolerate,
however, was deception. In early 2015, uTorrent would begin secretly installing a cryptocurrency
miner onto user’s computers in order to mine litecoin and generate more revenue. Not only
was this bloatware but it was rather shady given that uTorrent was very much trying to
do it under the radar. And with that, uTorrent had officially been around long enough to see
themselves become the villain and this pretty much sealed the fate for uTorrent. The core torrenting
community would move onto other services like qBitTorrent while the general public would
ditch torrenting altogether leading us into uTorrent’s current situation. For years now,
BitTorrent has been shutting down service after service after service, so uTorrent may very well
be on the chopping block next. The financials of uTorrent aren’t public, so it’s difficult to
judge the financial viability of uTorrent. Maybe uTorrent is breakeven or even slightly making a
profit, it’s not clear. But, what is clear is that the glory days of uTorrent are long behind
us and all we have left is a shell of their formerselves. Someone else that went through
a similar journey is the Pirate Bay. If you’d like to hear about their story, check out this video.