P2P NETWORKS ROCK,

Music Industry Rolls.

Agenda
P2P Definition Evolution of P2P Case Study Question and Answer

Agenda
P2P Definition
Evolution of P2P Case Study Question and Answer

History of file sharing

Single Server
Upload file to server Server overload and limitation of Bandwidth Whole file only Separate not work

Multiple Server

History of file sharing

P2P
File Directly send from client to client Less load on Server No bottleneck

Agenda
P2P Definition
Evolution of P2P
Napster KaZaa Bittorrent

Case Study Question and Answer

Napster

The first world champion of free music downloads

History
Founded in 1999 by Shawn Fanning at age of 19 !!! Specialized exclusively in music in the form of MP3 files Presented a friendly userinterface

Sean Parker

History
In February 2001 the program hit global use by 26.4 million users

How the old Napster worked?

Friendly user-interface and easy to use just
Opened Napster Utilities Search for the song you wanted Napster Index Server provided the list of the Napster client which had that song Click Download

How the old Napster worked?

Legal Challenges
New songs leaked in Napster network before they were released Filing a lawsuit by
Metallica Dr. Dre Madonna Etc

A&M Records and others sued Napster in 2000

Legal Challenges
Napster lost the case Could continue its business with noninfringing uses Shutdown its service in July 2001 Bankrupt in 2002

Here and Now

Acquired at bankruptcy auction by Roxio, Inc. Purchased by Best Buy, Inc. at $121 million Business Model Changed
Get Free Stream songs up to 3 times each After that (if you like that song) you have to
Purchase the track

Or
Subscribe with Napster
$5 Gets You 5 MP3s and Unlimited On-Demand Streaming Music

Here and Now

What is Kazaa?

Kazaa is a peer-to-peer file sharing application using the FastTrack protocol and owned by Sharman Networks.

How was it used?

Kazaa is commonly used to exchange files
MP3s Videos Applications Other documents

Difference from Napster

There is no single list from single server. It used Fast Track Protocol.

Against the law suite

Napster was ordered to shutdown
2001-Jun

Court reverse an earlier judgment

2002-Mar

RIAA filed lawsuit against 261 individuals

2003-Feb

Court Order To filter Copyright content

2005-Sep

2001-Mar

2001-Nov

2002-OCt

2004-Feb

Kazaa Consumer was founded Empowerment was sued by Dutch

Sharman was sue in LA.

Sharman was used in Australia

Against the law suite

Bittorrent
Protocol Developed by Bram Hohen (2001) by Python
it has been estimated that it accounts for approximately 27-55% of all Internet traffic (depending on geographical location) as of February 2009

Bittorrent Concept

Solve Problem about inequality speed of upload and download & Server overloaded File Separation, Parallel Download.
Idea from MojoNation : split a single file into pieces

Motto : Give and ye shall received

Seeder : Original Source, Upload Only. Leecher (Peer) : Sender(Upload) and Receiver(Download)

Bittorrent Conponent

Client : Tracker Client Program Server : Collect Torrent File & Tracker
Close System
Member / Ratio (Upload / Download)

Open System

Torrent File

Advantage / Limitation
Advantage
Higher Speed Enable to transfer bigger file

Limitation
Speed depends on No. of peers Problem with streaming file

Why They cant sue Bittorrent?

if it can be used for legal purposes. BitTorrent passes that test, says Fred von Lohmann, a lawyer at the Electronic Frontier Foundation, because Linux groups and videogame companies regularly use it to shuttle software around the Net. "That puts Bram in the same situation as Xerox and its photocopiers.

Agenda
P2P Definition
Evolution of P2P Case Study Question and Answer

Case Summary: P2P Networks Rock

Court battle: MGM Studios, Inc. v. Grokster, Ltd.
June 2005: The U.S. Supreme Court unanimously concurred that Internet file-sharing services such as Grokster, StreamCast, BitTorrent, and Kazaa could be liable for inducing copyright infringement. Business model: Steal the music, gather a huge audience, and monetize the audience by advertising

Legal victory!!! but do not solve problems facing the music industryWHY??

Case Summary: P2P Networks Rock

Downloading legal music
Business growth 50% per year since 2006 Not strong enough to compensate for the plunging CD sales Not downloading entire albums

Downloading illegal music:

Using file-sharing P2P networks Younger people Falling CD sales revenues

Question from case

Question 1
How can P2P file-sharing networks make money if they do not sell music?
Direct
Sell movie online (e.g. www.cinemanow.com)

Indirect
Provide the download service for online game and earn from Air Time Sell advertising on the sites Distributed Software for advertisement to peer PC directly

Question 1
How can P2P file-sharing networks make money if they do not sell music?
Indirect (cont.)
Member fee for Bittorrent website. Bittorrent Broadcaster. Cohen get Donation by followers. Another Service like Colo

Question 2
Into which category or categories of ecommerce do P2P file-sharing networks fall?
Anything of file that the vendors would like to sell such as; Books CDs/DVDs Application PC Game

Question 3
What social issue are raised by P2P file-sharing protocols and programs such as BitTorrent?
Pornographic Film/ Movie Piracy of Intellectual property Privacy/Cultural Change in Consumer Mind-Set & Behavior Change in business model/ business strategy
e.g. U2: Free music and revenue comes from concert and others.

Question 3
Is the record industry justified in attempting to shut them down? Why or why not?
Yes:
P2P file-sharing protocols/programs lead to loss in revenue. For long term effect: Investors might not be interested in this business. A disaster for artists (loss of income), consumers (loss of platforms the music industry COULD develop), and society (loss of jobs, artists). the proposed policy to disconnect file-sharers from the Internet; however, this couldnt be done since the technology itself is legal

Question 3
On the other hand, creativity and quality of work might be improved to handle with the loss of income crisis

Question 4
Will the supreme courts decision inhibit the development of P2P technology or the internet itself, as proponents of P2P services have claimed?
Not prohibited - The concept behind file-sharing is totally legal - But a the same time sharing copyrighted material is illegal - Sharing file without the permission of the copyright holder is against the law

Question 5
Why do people older than 21 tend to use legitimate downloading sites whereas younger people tend to use illegal sites?
Income/ Credit cards issue Ethics/ Legal issue Kid/Teen Convenience Lifestyle (Youtube and MP3 file sharing)

Question 6
What difference would it make if the existing music labels disappeared for lack of revenue?
No big company Deficit/ bankruptcy Business will change business process.
Cross functional business Targeting revenue from Brand Identity, Souvenir, Performance ticket rather than selling the CDs

Long tail artist e.g. Increase in Indy artists

Question 6
What legitimate function do the music labels perform in the creation and distribution of original music?
Sample music/Teaser w/o protection as a part of promotion tool and creating a buzz with no financial cost Targeting revenue from Brand Identity, Souvenir, Performance ticket rather than selling the CDs e.g. U2: Free music and revenue comes from concert and others.

See you again at Final Project

The End