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 • at age of 19 !!!

• Specialized exclusively in music in the form of MP3 files

• Presented a friendly user-interface

Shawn Fanning

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 non-

infringing 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

2001-Mar

2001-Jun

Kazaawas founded

Napsterwas ordered to shutdown

2001-Nov

Consumer Empowerment was suedby Dutch

2002-Mar

Court reversean earlier judgment

2002-OCt

Sharmanwas suein LA.

2003-Feb

RIAA filed lawsuit against 261 individuals

2004-Feb

Sharmanwas usedin Australia

2005-Sep

Court OrderTo filterCopyright content

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 can’t 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 industry…WHY??

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 e-

commerce 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 couldn’t 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 court’s 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.

The EndSee you again at Final Project