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We focus on the problem of enabling video-on-demand services on the Internet. We propose a cost-effective solution called caching agent, an overlay architecture consisting of caching servers placed across the Internet. Unlike conventional proxies, these caching servers act as application-layer routers and cleverly cache data passing by. When a client's request encounters a cache miss at the local agent, this request may be satisfied by another nearby agent without consuming any server bandwidth. This strategy significantly alleviates the bottleneck at the server Furthermore, since the full content is usually obtained from some agent instead of from the server which is usually overloaded, caching agent results in a better service delay in comparison with conventional proxy schemes designed for video on demand.