Online Peer-to-peer Communities: An Empirical Investigation of a Music Sharing Network as a Dynamic Two-sided Network

Online peer-to-peer communities and online social networks have become increasingly popular. In particular, the recent boost of online peer-to-peer communities leads to exponential growth in sharing of user-contributed content which have brought profound changes to business and economic practices. Understanding the formation and sustainability of such peer-to-peer communities has important implications for businesses. We develop a dynamic two-sided network model that relates growth of communities to interactions between contribution and consumption of resources in online sharing activities. Using online music sharing data collected from a popular IRC music sharing service over five years, we empirically apply the model to identify dynamics in the music sharing community. We find that the music sharing community demonstrates distinctive characteristics of a two-sided network. Contribution in the community leads to more consumption and consumption leads to more contribution, creating positive network effects in the community. Moreover, we find significant negative externalities among consumption activities and among contribution activities. The combination of the positive and negative externalities drives the underlying dynamics and growth of online sharing communities. Using the dynamic model, we quantify equilibrium growth rate of the community. We find that the equilibrium growth rate changes over time, possibly as a result of legal actions taken by the music industry. Our study provides a first glimpse into the mechanism through which peer-to-peer communities sustain and thrive in a constantly changing environment

Online Peer-to-peer Communities: An Empirical Investigation of a Music Sharing Network as a Dynamic Two-sided Network

Online peer-to-peer communities and online social networks have become increasingly popular. In particular, the recent boost of online peer-to-peer communities leads to exponential growth in sharing of user-contributed content which have brought profound changes to business and economic practices. Understanding the formation and sustainability of such peer-to-peer communities has important implications for businesses. We develop a dynamic two-sided network model that relates growth of communities to interactions between contribution and consumption of resources in online sharing activities. Using online music sharing data collected from a popular IRC music sharing service over five years, we empirically apply the model to identify dynamics in the music sharing community. We find that the music sharing community demonstrates distinctive characteristics of a two-sided network. Contribution in the community leads to more consumption and consumption leads to more contribution, creating positive network effects in the community. Moreover, we find significant negative externalities among consumption activities and among contribution activities. The combination of the positive and negative externalities drives the underlying dynamics and growth of online sharing communities. Using the dynamic model, we quantify equilibrium growth rate of the community. We find that the equilibrium growth rate changes over time, possibly as a result of legal actions taken by the music industry. Our study provides a first glimpse into the mechanism through which peer-to-peer communities sustain and thrive in a constantly changing environment

File Sharing, Copyright, and the Optimal Production of Music

Much economic, political, judicial and legal attention has been showered on the significant changes currently taking place within the music production and distribution business forced by the use of the Internet for both file sharing (of unauthorized copyrighted material) and more recent online (legal) music distribution. The strong demand for music, coupled with the low cost of distributing illegal copies via peer-to-peer (P2P) systems, is unraveling the business model by which music has traditionally been created, developed, and distributed. Application of traditional copyright law has been ineffective in stopping the loss of business in the traditional channels. Producers have implemented forms of Digital Rights Management ( DRM ) in an attempt to protect their property via technologically self-enforcing contracts. Past DRM efforts have alienated customers, resulted in defective products, and, in some cases, been laughably easy to defeat by hackers. Producers assert that if the problem isn\u27t solved, music production will be sharply curtailed. The cost of free music via P2P is less music produced and fewer choices, an outcome that all seem to agree is bad. In this Article, I attempt to answer the question whether or not a reduction in music choice is, in fact, bad. I model the music industry as a Hotelling-Salop differentiated products market and, using results from Bhaskar and To, I show that significant overproduction of music may occur. The worst hypothesized loss from file sharing tends to reduce this overproduction, but does not eliminate it. Applying effective DRM simply returns the market to overproduction. Taking account of potential externalities (using rough preliminary estimates) of creative material suggests that overproduction of music is still the most likely outcome. Further empirical research is needed, but, on the basis of this model, the most likely outcome is that the displacement of CD sales by P2P file sharing actually increases welfare by constraining the overproduction of music that results from its unique market structure. The very tentative policy conclusion is that legitimizing file sharing under the doctrine of fair use is likely to be welfare enhancing

Unbundling the supply chain for the international music industry

This thesis analyses the international music industry supply chain. The descriptive background presented entails publishing rights, the vertical integration of the historical music industry, the historical position of the artist, and follows the evolution of the digital technology, distributive production, and peer-to-peer file sharing networks in order to build a prescriptive model which addresses the following three research questions. Given the revolution in technology in the music industry where do the Majors fit? What is the positioning of the artist in the new digital technology? And given the change of position of the Majors and the positioning of the artist what are the descriptive and prescriptive possibilities should the Majors disappear and be replaced by alternative elements in the music industry supply chain? The present study considers the Music Industry as the trade of prerecorded music in any format and assumes responsibility regarding the results presented up to July 2009. This thesis considers the four Majors as being part of the Music Industry rather than an absolute representation of the industry itself. Also this dissertation’s primary concern is the bundling and unbundling of the music industry’s supply chain and not the bundling of products within that supply chain. (Author abstract)Renard, S. (2010). Unbundling the supply chain for the international music industry. Retrieved from http://academicarchive.snhu.eduDoctor of Business Administration (D.B.A.)International BusinessSchool of Busines

Can filesharers be triggered by economic incentives? Results of an experiment

Illegal filesharing on the internet leads to considerable financial losses for artists and copyright owners as well as producers and sellers of music. Thus far, measures to contain this phenomenon have been rather restrictive. However, there are still a considerable number of illegal systems, and users are able to decide quite freely between legal and illegal downloads because the latter are still difficult to sanction. Recent economic approaches account for the improved bargaining position of users. They are based on the idea of revenue-splitting between professional sellers and peers. In order to test such an innovative business model, the study reported in this article carried out an experiment with 100 undergraduate students, forming five small peer-to-peer networks.The networks were confronted with different economic conditions.The results indicate that even experienced filesharers hold favourable attitudes towards revenue-splitting.They seem to be willing to adjust their behaviour to different economic conditions

Digital Piracy of MP3s: Consumer and Ethical Predispositions

Purpose – Illegal downloading of music has become an inexorable and rampant activity particularly among college students who have been little deterred by industry legal actions. The purpose of this research is to examine the present state of downloading and how ethical orientation and attitudes towards MP3 piracy impact such activities. The paper also aims to use ethical scenarios as a way of understanding the ethical reasoning in illegal downloading. Design/methodology/approach – Key research questions are proposed that are related to illegal downloading. A sample of 364 university students was used to examine each research question. Statistical results are reported. Findings – The results clearly show that downloading continues at a high rate today driven by a strong belief that it is not ethically wrong. Ethical orientation was found to be positively associated with awareness of the social cost of downloading, consequences of downloading, and ethical belief in downloading. Ethical scenarios show that ethical orientation is also associated with downloading activities and with stealing. Other results indicate that respondents believe that their peers are more prone to stealing music and downloading MP3s illegally. Fear of consequences does seem to have an impact on the propensity to download illegally. Practical implications – The paper contributes to inform industry representatives that appeals to ethics or guilt are not likely to deter illegal downloading measurably. The use of punishment for downloaders may have a short-term effect but other (more positive) measures are required. Originality/value – No research has examined downloading of MP3s in the manner developed in this paper. The paper contributes to a better understanding of consumer behavior among those who download. The results provide insight into a serious problem in the recording industry that is likely to persist in the distant future unless sound measures are developed

Entertainment Law: Redefining the Role of Transactional Attorneys

This thesis will examine how the role of transactional lawyers and their relationships with artists in the music industry first developed and then have adapted to changes in the industry to stay relevant. This evolution is due to a number of reasons: the diminishing power of the record industry; the failure of anti-file sharing laws; and the progress of technology to make music more accessible than it has ever been around the world. Therefore, the role of what a transactional entertainment lawyer needs to do to be successful has shifted. This research is significant because while there has been extensive research on how record labels have consolidated and artists have gained more independence, there is little research offering analysis of the transformation of the legal, transactional side of the industry

Hail to the thief: a tribute to Kazaa

THIS PAPER CONSIDERS THE ONGOING LITIGATION against the peer-to-peer network KaZaA. Record companies and Hollywood studios have faced jurisdictional and legal problems in suing this network for copyright infringement. As Wired Magazine observes: “The servers are in Denmark. The software is in Estonia. The domain is registered Down Under, the corporation on a tiny island in the South Pacific. The users—60 million of them—are everywhere around the world.” In frustration, copyright owners have launched copyright actions against intermediaries—like against Internet Service Providers such as Verizon. They have also embarked on filing suits against individual users of file-sharing programs. In addition, copyright owners have called for domestic- and international-law reform with respect to digital copyright. The Senate Committee on Government Affairs of the United States Congress has reviewed the controversial use of subpoenas in suits against users of file-sharing peer-to-peer networks. The United States has encouraged other countries to adopt provisions of the Digital Millennium Copyright Act 1998 in bilateral and regional free-trade agreements

Television: Peer-To-Peer’s Next Challenger

The entertainment industry has obsessed over the threat of peer-to-peer file sharing since the introduction of Napster in 1999. The sharing of television content may present a compelling case for fair use under the long-standing Betamax decision. Some argue that television sharing is fundamentally different than the distribution of music or movies since television is often distributed for free over public airwaves. However, a determination of fair use is unlikely because of the fundamental differences between recording a program and downloading it, recent regulation to suppress unauthorized content distribution and shifts in the television market brought on by new technology