Peer to Peer File Sharing

Peer- to- peer file sharing, also known as P2P or in colloquial terms “torrenting”, is something that allows users to download media files ranging from movies to music and to games. This is done by using a P2P software client that has the capability to search for other computers that are connected as well. These connected computers are known as “peers”, which are computer systems that are associated with one another via the Internet. The requirements that a computer needs to join this peer- to –peer set of connections are P2P software and an Internet connection.

The history of the P2P software dates back to the first generation software in 1999, called Napster. Although Napster was eventually shut down, the purpose of it was to be a file sharing program and central server that linked people with files to other people who requested those certain files. The central index server was meant to index all of the current users and search their computers for those particular files. How this worked was when one person searched for a specific file, the server would search for all of the available copies of that file and present them to the user. After this, the files would be transferred between the two users. The main drawback of this was that the files being shared were limited to only music. Since this process occurred on a central server is, Napster was held responsible for copyright infringement and was officially shut down in July of 2001. Then second generation of the P2P software is Gnutella and Kazaa, both user- based models that tried to replicate Napster in creating new ways of sharing files, but not infringe copyright laws. The difference between these services and Napster was that they connected users remotely to each other and allowed users to download files that were only limited to music, but also movies and games. Finally, the third generation that emerged when Napster shut down was BitTorrent. BitTorrent allowed users to connect with more than one other user and download individual bits from these users. Also, BitTorent users voluntarily uploaded their files. The main different between BitTorrent and Napster, Gnutella, and Kazaa was that BitTorrent generated a new network for each and every set of files, instead of creating one large, complex network of files using such things as SuperNodes, servers, or web caches.

As peer- to- peer file sharing has evolved, there are a great number of factors that have played a huge role to the widespread adoption and facilitation of this system. This includes everything from the extensive digitalization of physical media files to the increase in Internet bandwidth and to the increase in capabilities of home PCs to better suit the playing and storing of digitized audio and video files. Now, users are able to reassign either one or more files from one computer to another by the Internet through an assortment of file transfers and file- sharing networks.

Since this is obviously a very controversial issue, there is also a discussion about the economic impact that P2P file- sharing has. Some argue that there have been comparatively few studies although it has been growing lately, but the overall studies of this are small. There are more arguments that because of data and econometric issues, studies so far have produced dissimilar estimates of the file sharing’s impact on album, movie, and game shares. There is a certain study that found that there has been a twenty percent reduction in compact disc sales due to file sharing, but in the large scheme of things, that micro- level data supports a much smaller negative impact of eight percent on sales. By using another econometric process, this same study estimates that file sharing reduces the probability and chances of buying music by thirty percent.

It is unclear and controversial on how the rise of peer- to- peer file sharing has impacted the music industry economically. However, on a global scale, the data shows that music sales dropped from 38 billion to 32 billion from 1999 to 2003. Controversy looms over these figures, while the rise of peer-to-peer file sharing has increased the number of illegally downloaded songs and movies. Studies have shown that people involved in file sharing actually represent better than the average customer. The BI Norwegian School of Management found that people who downloaded music illegally were ten times as likely to pay for songs then those who don’t. KTH researchers argued that the decline in music sales was due to the fact that the music industry was slow to meet the new demand. The decline of music sales can be traced back to when the MP3 file format was introduced, and at the time no legal sites were covering this kind of demand. The study that the KTH researchers did also concluded that the decrease in music sales occurred when the format of MP3 emerged, and there was not any legal attractive website to cover this type of emerging demand. This study also concluded that during the last years in the United States, there has been an increase of Internet access that has correlated to an increase in file sharing, and also an increase of sold music units that count both digital and physical units.

It has been complicated to disentangle the cause and effect relationships among a great amount of different trends, including the increase in legal online purchases of music, illegal file- sharing, drops in the prices of CDs, and the disappearance of many independent music stores. Many studies have found that file sharing economically hurts sales, although not always to the precise degree, this is what the record industry would like the public to accept as true. On the other hand, Another study that analyzed the logs of download on file sharing networks concluded that file sharing had no negative effect on the sale of CDs, and was actually slightly improving the sales of top hit albums. This was then challenged by another study in which it criticized that the other study made multiple assumptions about the music industry that was not correct.

As for the economic impact on the film industry, the MPAA reported that because of Internet piracy American studios lost $2.3 billion in 2005, which represents approximately one third of the total cost of film piracy in the United States. Many commented that this estimate was doubted by commentators due to the fact that it was based on the assumption that one download was equal to one lost sale, and that downloaders would definitely not purchase the movie if illegal downloading was not an alternative. Because of this uncertainty and the private nature of the study, these figures can not be publicly checked for validity, but when the MPAA was lobbying for a bill that would compel universities to be more strict on piracy, it was admitted that MPAA’s figures on piracy in colleges were inflated up to 300%.

In another study headed by the International Chamber of Commerce and conducted by independent Paris- based economics firm TERA, it was estimated that illegal downloading of music, film, and software cost Europe’s creative industries several billion dollars in revenue each year. Additionally, the TERA study forecasted losses due to piracy reaching as much as 1.2 million jobs and 240 billion Euros in retail revenue by 2015 if this trend persisted. Furthermore, researchers applied a ten percent substitution rate to the volume of copyright infringements each year. This rate corresponded to the number of units that could potentially be rated if illegal file share was abolished and did not occur. It is common in countries and regions such as the United States and Europe that piracy rates of one- quarter or more for popular software and operating systems is true.

In the year of 2004 it was estimated that approximately 70 million people actively participated in online file sharing. According to a poll, basically 70 percent of 18 to 29 year olds thought that file sharing was acceptable in some circumstances and 58 percent of all Americans who followed the file sharing issue thought it was acceptable, in at least some cases. In 2006 it was noted that 32 million Americans over the age of 12 had downloaded at least one feature length movie from the Internet. 80 percent of these had done so completely and exclusively over P2P. Out of these sampled, 40 percent felt that it was a very serious misdemeanor to download copyrighted movies off the Internet, by 78 percent thought that it was a serious offense to take a DVD from a store without paying for it. As for more statistics, in 2009, 20 percent of Europeans used file-sharing networks in order to acquire music, while only 10 percent used services such as iTunes,

Of course there are many risks to this in which researchers have examined potential security issues including the availability of personal and private information, bundled spyware, and viruses that can be downloaded from the Internet. The government of the United States has tried to make users more aware of the potential risks that can be involved with P2P file sharing programs. They have done so through the legislation such as H.R. 1319, the Informed P2P User Act. This act states that it is compulsory for individuals to be at least aware of the risks related to peer- to- peer file sharing before purchasing software with informed consent of the user required prior to use of such program. Additionally, the act would let users block and remove P2P file sharing softwares whenever they wanted on their computer, with the Federal Trade Commission enforcing regulations.