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File sharing
24 June 20081 Overview
The term ‘‘file sharing’’ describes the swapping of digital files between computers. The Internet was initially developed in order to do just this. File sharing quickly become known as P2P when in 2000, a new software programme called Napster emerged. Using a peer-to-peer (P2P) architecture, this free, downloadable programme made it easy for people to share and swap MP3 music files with thousands of others around the world. Napster quickly built a critical mass of users, and became the first of a new generation of P2P file sharing programs, which have led to millions of users now sharing music and video files without paying any royalties.
This has led to file sharing, or P2P, being saddled with a negative reputation as these programs incurred the wrath of content companies, some artists and the authorities, who now increasingly label such distribution as immoral. The British Phonographic Industry (BPI) in the UK and the Recording Industry Association of America (RIAA) in the US blame P2P for declining record sales. The BPI blames file sharing for ‘‘more than £650 million [US$1130 million] in lost sales in the last two years alone’’.
The power and might of the RIAA has shifted the way in which these free, ‘‘illegal’’ services are perceived. Napster was one of the first to be forced to bow to the law. Many file sharing services have also been in the process of becoming legitimate over the past two years. The turning point came in 2005, when the US Supreme Court ruled against two P2P companies, Grokster and Streamcost, in favour of a consortium of 28 of the largest entertainment companies in the world. The court decided that the P2P players could be sued for inducing copyright infringement while marketing their file sharing software. In July 2006, Sharman networks (owner and operator of Kazaa, which was at one point the biggest file sharing service globally) agreed to pay $100 million in reparations to the recording industry.
By 2007, P2P companies such as BitTorrent had positioned themselves more as legal content distribution channels. For example, BitTorrent specialises in distributing very large video files like full-length films and TV episodes at a high quality. This aspect of P2P networks – their ability to effectively distribute this kind of content – will increasingly be leveraged by file sharing companies. But legal sites also have a large amount of free content; perhaps indicating that some kind of middle ground is being reached via compromises between the entertainment industry and P2P players.
In spite of vigorous activity by the industry and lawmakers, however, illegal file sharing still counts for a significant proportion of internet traffic. But the tide could be turning as countries like the US head towards mandating ISPs to curb particularly heavy users of illegal services. Many ISPs continue to claim they shouldn’t be responsible for taking action against persistent file-sharers or inspecting what users download
Current issues
There continues to be debate as to how much P2P file sharing is responsible for troubled music sales. A recent report estimated P2P was responsible for US record companies losing $3.7 billion in sales globally. However, free downloads are increasingly seen as a key tool in building up a fan base and enabling a new band to break into the mainstream on a limited budget. There are more and more bands that use free, legally available songs to boost publicity and awareness.
The use of P2P networks for lifting confidential and personal data from user PCs without their knowledge. This kind of activity continues to be a serious issue, particularly in the light of growing P2P usage globally.
The legal onslaught against file-sharing continues. A number of governments and the content industry are pushing for more action against both heavy users of file-sharing and file-sharing networks that infringe copyright. The Anti-Counterfeiting Trade Agreement (ACTA) due to be formalized in July 2008 and signed by a number of countries could see further laws reducing illegal file-sharing.
Increasing video content will place additional pressure on bandwidth. Although much of the increase in bandwidth consumption by video is coming from legal sites such as YouTube, there is a corresponding increase in video files distributed via P2P networks. A number of suppliers (for example Cachelogic and Allot Communications) now estimate that around 50 to 60% of P2P traffic is video.
Damage caused by distribution of malware via P2P networks remains a real threat. Despite efforts by P2P providers to clean up their networks, they remain a major source of virus transmission to user PCs.
New profile content
This profile has been updated. Section 2 has recent news on leading examples of file-sharing companies/networks. Section 2.2 and 2.3 contains information from the latest Point Topic Consumer Survey on consumer usage of file-sharing. Section 2.5 contains updates on the leading file-sharing examples. Section 3.1 provides a market update. Section 3.2 contains a new section on recent developments in copyright and regulation and 3.4 and 3.5 provide new information on pricing, promotional techniques and performance issues. Section 5.4 has a revised section on future development scenarios for P2P, while 6.1 gives an updated list of P2P sites and their operational status.
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