Beyond the Music: Peer-to-Peer File-Sharing Web Sites Grow 300 Percent, Driven by Swapping Movies, Games and More, Reports Websense Inc.

Business Editors & High-Tech Writers

SAN DIEGO--(BUSINESS WIRE)--Jan. 23, 2003

New Peer-to-Peer Capabilities Mean New Bandwidth and Security

Problems for Companies

In the wake of Napster, peer-to-peer (P2P) networks have moved beyond trading MP3s into swapping anything from the latest episode of the "Sopranos" to popular video games, reports Websense Inc. (NASDAQ:WBSN).

This diversity of content is not only driving the creation of new P2P Web sites and applications, but also creating bandwidth, legal and security issues for corporations worldwide. In fact, the number of P2P file sharing Web pages has increased more than 300 percent in the last 12 months, totaling more than 89,000 Web pages. In addition, there are more than 130 unique P2P applications, such as KaZaa, Grokster and others, according to Websense, the world's leading provider of employee Internet management (EIM) software.

"P2P networks have truly developed beyond the music to become a marketplace for users swapping videos, games and software packages," said Harold Kester, chief technology officer for Websense. "While this may be free to end users, it comes at a huge cost to corporations in the form of wasted bandwidth, gaping security holes and serious emerging legal issues."

While trading MP3s remains a popular activity among P2P users, other content is gaining and, in some cases, on par with music swapping. For example, more than 5 billion music files were downloaded from P2P networks last year, according to research firm The Yankee Group, yet more than 5 million video game downloads also occurred last year, according to game developer Trymedia. In addition, between 400,000 and 600,000 copies of movies are downloaded each day, according to consulting firm Viant, and approximately 3 million users download favorite TV shows, such as "Buffy the Vampire Slayer," from KaZaa every day.

Many employees use their office Internet connections to download P2P files, because less than 17 percent of Americans with Internet connections have high-speed access at home, according to Jupiter Media Metrix. For example, using a high-speed office connection, a full-length movie takes approximately one hour to download, which is considerably faster than the 23.5 hours that it would take to download the same file on a 56k dial-up Internet connection typically used at home. Yet, despite this problem, 64 percent of companies do not monitor music or video downloads, according to a recent CIO survey.

"Many corporate users may not be aware, or are completely ignorant, of the IT resource consumption associated with listening to online music or watching streaming media from their desktops," said Brian Burke, analyst for IDC. "In addition, applications acquired through insecure grid computing or P2P protocols often enter the corporate environment without being scanned for viruses or malicious code."

P2P applications carry security risks because they communicate directly with other users' computers and often bypass a company's firewall. Many P2P applications tunnel through port 80 and other open ports, effectively allowing employees to create their own VPNs. And because port 80 is typically left open for Web traffic, virus-infected files and other malicious code can slip past a company's traditional defenses.

Once stored on a corporate network, P2P files can create legal issues that are becoming more serious every day. According to IDC, "As most new computers ship with CD and DVD burners, companies may be crossing new legal boundaries as employees burn downloaded videos or music onto discs using company owned assets ... While it is true that in certain business situations, grid computing, commonly known as P2P, represents an innovative way of maximizing resources dynamically, today it is primarily used for swapping copyrighted material."

Recently, the Recording Industry of America (RIAA), Motion Picture Association of America, and other groups warned CEOs of the nation's 1,000 biggest companies that corporations could be liable for violating copyright laws if employees use company networks to download, store or distribute music or movies illegally. One early RIAA lawsuit -- against an Arizona-based company for storing illegal MP3s on company servers -- was already settled out of court for $1 million.

"Companies must be aware that they might be held responsible for employees who illegally swap materials -- including everything from movies to video games -- using company resources," said Jennifer Kearns, a labor and employment partner at Brobeck, Phleger & Harrison LLP., a global law firm with offices in the United States, London, Oxford and Munich. "Managing employee access to controversial technology and content -- such as file-sharing applications -- is one way to control legal risk."

Websense Enterprise currently enables companies to manage P2P file sharing by blocking employee access to P2P Web sites. The next-generation of Websense software v5, to be released in March 2003, will provide dynamic protocol management tools, enabling IT managers to manage or block employee access to P2P protocols. The protocols will be updated daily via automatic database downloads.

In addition, Websense Enterprise v5 will also offer an add-on module called Client Application Manager (CAM) that allows IT administrators to select and manage which applications can run on individual desktops, helping employers curb the launch of P2P applications on employee workstations.

About Websense Inc.

Websense Inc. is the worldwide leader of employee Internet management (EIM) solutions. Websense Enterprise software enables businesses to manage how their employees use the Internet, improving productivity, conserving network bandwidth and storage costs, and mitigating legal liability. Ranked the highest quality database in a recent test of EIM products, Websense delivers the most effective and comprehensive solution in the industry.

Founded in 1994, Websense serves more than 17,800 worldwide customers, ranging in size from 100-person firms to global corporations. These include more than half of the Fortune 500, approximately one-third of Japan's Nikkei 225 and half of the UK's FTSE 100, encompassing more than 13 million customer seats, pre-paid on a subscription basis. Websense has strategic technology relationships with Blue Coat Systems, Check Point, Cisco, Macrovision, Microsoft, NetScreen, Network Appliance, Nokia, SonicWALL, Tumbleweed and others. For more information, visit www.websense.com.

Except for the historical information contained herein, this press release contains forward-looking statements, including statements containing the words "planned," "expects," "believes," "strategy," "opportunity," "anticipates" and similar words. Such forward-looking statements are subject to known and unknown risks, uncertainties or other factors that may cause the company's actual results to be materially different from historical results or any results expressed or implied by such forward-looking statements. We assume no obligation to update any forward-looking statements to reflect events or circumstances arising after the date hereof. The potential risks and uncertainties which could cause actual growth and results to differ materially include but are not limited to, customer acceptance of the company's services, products and fee structures, the success of the company's brand development efforts, the volatile and competitive nature of the Internet industry, changes in domestic and international market conditions, and foreign exchange rates. Further information on the factors and risks that could affect Websense's business, financial condition and results of operations are included under the headings "Risk Factors," "Risks and Uncertainties" or "Factors Affecting our Operating Results" contained in Websense's public filings with the Securities and Exchange Commission, available at (http://www.sec.gov).