Peer-to-Peer File Sharing and the Market for Digital Information Goods

Abstract

We study competitive interaction between two alternative models of digital content distribution over the Internet: peer-to-peer (p2p) …le sharing and centralized client-server distribution.We present microfoundations for a stylized model of p2p …le sharing where all peers are endowed with standard preferences and show that the endogenous structure of the network is conducive to sharing by a signi…cant number of peers, even if sharing is costlier than freeriding. We build on this model of p2p to analyze the optimal strategy of a pro…t-maximizing …rm, such as Apple, that o¤ers content available at positive prices. We characterize the size of the p2p network as a function of the …rm's pricing strategy, and show that the …rm may be better o¤ setting high prices, allowing the network to survive, and that the p2p network may work more e¢ ciently in the presence of the …rm than in its absence.

Using Data in Decision‐Making: Analysis from the Music Industry

“…Therefore, if A&M consider that sales displacement could be smaller than one, they are assuming that file‐sharing sites and the music industry compete with heterogeneous goods. This is consistent with Casadesus‐Masanell and Hervas‐Drane (), who posit that commercial legal online content providers can optimize and deliver new experiences to consumers (i.e., speed, quality, fashion) which cannot be matched by decentralized, self‐sustained P2P networks. Therefore, there is agreement in the literature with A&M that there is a degree of sales displacement and that file‐sharing sites and commercial music firms are providers of non‐homogeneous goods and hence have different prices.…”

Business model innovation and competitive imitation: The case of sponsor‐based business models

“…Our work also contributes to the growing literature examining competitive dynamics between firms with different business models. Studies have examined such dynamics in a number of industries, including the software industry (e.g., Casadesus‐Masanell and Ghemawat, ; Economides and Katsamakas, ; Casadesus‐Masanell and Yoffie, ; Lee and Mendelson, ), the cable industry (Seamans, ), and the music industry (Casadesus‐Masanell and Hervas‐Drane, ). Much of this literature has focused on interactions between firms with exogenously given business models.…”

Quality of Service Based Pricing Schemes for Content Sharing in Peer‐to‐Peer Networks

“…File swarming has become an increasingly common practice – a technology to expedite content delivery, small segments of a requested file are downloaded from multiple provision nodes simultaneously. This indicates that the expected download time depends on the satisfied request rate (i.e., the download rate) and the aggregate service capacity from sharing peer nodes (Casadesus‐Masanell and Hervas‐Drane , Qiu and Srikant , Yang and de Veciana ). Given sharing decision s i and upload capacity μ i for node i , the total capacity is The expected download time of a request from node i is estimated as follows:…”

“…For example, KaZaA rewards sharing users with bonuses such as free hotel stays or similar gifts from allied firms such as advertisers. Research studies have shown that payment‐based mechanisms – which often take the form of pricing schemes to rebate users’ sharing behavior charging users’ requesting behavior – can effectively mitigate the free‐riding issue and restore network efficiency (Casadesus‐Masanell and Hervas‐Drane , Kang and Wu , Park and van der Schaar ,b).…”