Peer-to-peer file sharing

The early days of file-sharing were done predominantly by client-server transfers from web pages, FTP and IRC before Napster popularised a Windows application that allowed users to both upload and download with a freemium style service.

After much discussion on forums and in chat-rooms, it was decided that Napster had been vulnerable due to its reliance on centralised servers and their physical location and thus competing groups raced to build a decentralised peer-to-peer system.

[2] Because this process occurred on a central server, however, Napster was held liable for copyright infringement and shut down in July 2001.

The first is that no individual, group, or company owns the protocol or the terms "Torrent" or "Bittorrent", meaning that anyone can write and distribute client software that works with the network.

Norbert Michel, a policy analyst at The Heritage Foundation, said that studies had produced "disparate estimates of file sharing's impact on album sales".

[9] In the book The Wealth of Networks, Yochai Benkler states that peer-to-peer file sharing is economically efficient and that the users pay the full transaction cost and marginal cost of such sharing even if it "throws a monkey wrench into the particular way in which our society has chosen to pay musicians and re-cording executives.

However, it is efficient within the normal meaning of the term in economics in a way that it would not have been had Jack and Jane used subsidized computers or network connections".

The economic effect of copyright infringement through peer-to-peer file sharing on music revenue has been controversial and difficult to determine.

[11][12][13][14][15] It has proven difficult to untangle the cause and effect relationships among a number of different trends, including an increase in legal online purchases of music; illegal file-sharing; drop in the prices of compact disks; and the closure of many independent music stores with a concomitant shift to sales by big-box retailers.

[24][25] A 2010 study, commissioned by the International Chamber of Commerce and conducted by independent Paris-based economics firm TERA, estimated that unlawful downloading of music, film and software cost Europe's creative industries several billion dollars in revenue each year.

[26] A further TERA study predicted losses due to piracy reaching as much as 1.2 million jobs and €240 billion in retail revenue by 2015 if the trend continued.

[citation needed] Researchers applied a substitution rate of ten percent to the volume of copyright infringements per year.

This rate corresponded to the number of units potentially traded if unlawful file sharing were eliminated and did not occur.

[27] Piracy rates for popular software and operating systems have been common, even in regions with strong intellectual property enforcement, such as the United States or the European Union.

Explicit values are information that peers provide about themselves to a specific community, such as their interest in a subject or their taste in music.

Users who share do so to attempt "to reduce...costs" as made clear by Cunningham, Alexander and Adilov.

[38] This two way process is defined by Vassileva as a feedback loop, and has allowed for the birth of file-sharing systems like Napster and KaZaA.

[38] Corporations continue to combat the use of the internet as a tool to illegally copy and share various files, especially that of copyrighted music.

[39] One effort of the RIAA has been to implant decoy users to monitor the use of copyrighted material from a firsthand perspective.

[41][42][43] In 2003, Congressional hearings before the House Committee of Government Reform (Overexposed: The Threats to Privacy & Security on File Sharing Networks)[44] and the Senate Judiciary Committee (The Dark Side of a Bright Idea: Could Personal and National Security Risks Compromise the Potential of P2P File-Sharing Networks?)

[45] were convened to address and discuss the issue of inadvertent sharing on peer-to-peer networks and its consequences to consumer and national security.

Researchers have examined potential security risks including the release of personal information, bundled spyware, and viruses downloaded from the network.

[46][47] Some proprietary file sharing clients have been known to bundle malware, though open source programs typically have not.

[48] Since approximately 2004 the threat of identity theft had become more prevalent, and in July 2008 there was another inadvertent revealing of vast amounts of personal information through P2P sites.

The "names, dates of birth, and Social Security numbers of about 2,000 of (an investment) firm's clients" were exposed, "including [those of] Supreme Court Justice Stephen Breyer.

[49] The United States government then attempted to make users more aware of the potential risks involved with P2P file sharing programs[50] through legislation such as H.R.

[51] According to this act, it would be mandatory for individuals to be aware of the risks associated with peer-to-peer file sharing before purchasing software with informed consent of the user required prior to use of such programs.

In addition, the act would allow users to block and remove P2P file sharing software from their computers at any time,[52] with the Federal Trade Commission enforcing regulations.

[53] The act of file sharing is not illegal per se and peer-to-peer networks are also used for legitimate purposes.

There are also millions of users worldwide who use P2P systems illegally, which made it impractical to seek widespread legal action.