An Empirical Analysis of Network Externalities in Peer-to-Peer Music-Sharing Networks

Peer-to-peer (P2P) networks are becoming an important medium for the distribution of consumer information goods. However, there is little academic research into the behavior of these networks. We analyze the impact of positive and negative network externalities on the optimal size of P2P networks. Using data collected from the six most popular OpenNap P2P music-sharing networks between December 19, 2000, and April 22, 2001, we find that additional users contribute value in terms of additional network content at a diminishing rate, while they impose costs in terms of congestion on shared resources at an increasing rate. Using an analytic model, we explore technical solutions to the congestion problem, for example, by increasing network capacity. This model suggests that although increasing capacity will allow more users to participate on the network, there may be little incentive for network operators to do so. This is because diminishing positive network externalities imply decreasing content benefits to adding more users. Together these results suggest that the optimal size of a P2P network may be bounded in many common implementations. We conclude by discussing various options to improve network performance including network membership rules and usage- based pricing

Using Tuangou to reduce IP transit costs

A majority of ISPs (Internet Service Providers) support connectivity to the entire Internet by transiting their traffic via other providers. Although the transit prices per Mbps decline steadily, the overall transit costs of these ISPs remain high or even increase, due to the traffic growth. The discontent of the ISPs with the high transit costs has yielded notable innovations such as peering, content distribution networks, multicast, and peer-to-peer localization. While the above solutions tackle the problem by reducing the transit traffic, this paper explores a novel approach that reduces the transit costs without altering the traffic. In the proposed CIPT (Cooperative IP Transit), multiple ISPs cooperate to jointly purchase IP (Internet Protocol) transit in bulk. The aggregate transit costs decrease due to the economies-of-scale effect of typical subadditive pricing as well as burstable billing: not all ISPs transit their peak traffic during the same period. To distribute the aggregate savings among the CIPT partners, we propose Shapley-value sharing of the CIPT transit costs. Using public data about IP traffic of 264 ISPs and transit prices, we quantitatively evaluate CIPT and show that significant savings can be achieved, both in relative and absolute terms. We also discuss the organizational embodiment, relationship with transit providers, traffic confidentiality, and other aspects of CIPT

A Game Theoretic Analysis of Incentives in Content Production and Sharing over Peer-to-Peer Networks

User-generated content can be distributed at a low cost using peer-to-peer (P2P) networks, but the free-rider problem hinders the utilization of P2P networks. In order to achieve an efficient use of P2P networks, we investigate fundamental issues on incentives in content production and sharing using game theory. We build a basic model to analyze non-cooperative outcomes without an incentive scheme and then use different game formulations derived from the basic model to examine five incentive schemes: cooperative, payment, repeated interaction, intervention, and enforced full sharing. The results of this paper show that 1) cooperative peers share all produced content while non-cooperative peers do not share at all without an incentive scheme; 2) a cooperative scheme allows peers to consume more content than non-cooperative outcomes do; 3) a cooperative outcome can be achieved among non-cooperative peers by introducing an incentive scheme based on payment, repeated interaction, or intervention; and 4) enforced full sharing has ambiguous welfare effects on peers. In addition to describing the solutions of different formulations, we discuss enforcement and informational requirements to implement each solution, aiming to offer a guideline for protocol designers when designing incentive schemes for P2P networks.Comment: 31 pages, 3 figures, 1 tabl