Academic journal article JITTA : Journal of Information Technology Theory and Application

The Economics of Peer-to-Peer Networks

Academic journal article JITTA : Journal of Information Technology Theory and Application

The Economics of Peer-to-Peer Networks

Article excerpt


Peer-to-Peer (P2P) networks have emerged as a significant social phenomenon for the distribution of information goods and may become an important alternative to traditional client-server network architectures for knowledge sharing within enterprises. This paper reviews and synthesizes the relevant computer science and economics literatures as they relate to P2P networks, and raises important questions for researchers interested in studying the behavior of these networks from the perspective of the economics of information technology.

With regard to the economic characteristics of these networks, we show that while the characteristics of services provided over PIP networks are similar to public goods and club goods, they have many important differences and hence there is a need for new theoretical models as well as empirical and experimental analysis to understand P2P user behavior. We then identify several important areas for study with regard to the economics of P2P networks and review recent academic papers in each area.


Peer-to-peer (P2P) networks allow a distributed community of users to share resources in the form of information, digital content, storage space, or processing capacity. The novel aspect of these networks is that, in contrast to client-server networks where all network content is located in a central location, P2P resources are located in and provided by computers at the edge of the network (a.k.a. "peers").

It is interesting to note that while they are perceived to be a recent phenomenon, P2P networks have their origins in many of the early Internet applications and architectures. Internet Relay Chat (IRC), which was developed in the late 1980s, was one of the first P2P services on the Internet. IRC allowed for the transmission of text messages, and later digital content, directly between groups of network users. Likewise, the Domain Name System, and Usenet bulletin boards exhibit elements of P2P design. Thus, it can be argued that the P2P design concept is embedded in many of the original Internet protocols and applications (Minar and Hedlund 2001).

Still, the widespread popularization of P2P at the consumer level can be traced to the release of the Napster file-sharing program in May 1999. Napster was developed in a matter of months by Shawn Fanning, then a Northeastern University student. Initially distributed to 30 friends, the program grew to 25 million users worldwide within its first 12 months of operation (Strahilevitz 2002).

In all P2P file-sharing networks, the content resides with the network users. The only difference between the architecture of these networks is the nature of the catalog of this content. In Napster and OpenNap (an open source version of the Napster protocol) the catalog of content is centralized in a single server or a set of mirrored servers to accomplish load balancing (Asvanund, Clay, Krishnan, and Smith 2003). Users who logged into the Napster network would automatically upload a list of the content they were sharing to a mirrored set of central content databases owned by Napster.

Users who wanted to access content on the network would issue a query against this central database that would then point them to a list of peers who had the content on their computer. The Napster program at the peer initiating the search would then automatically issue a ping message to each of the peers in the list of search results to determine the level of congestion on the network and at the peer. The Napster client would then display the search results in a tabular format with the names of the files returned by the search along with the file size and length, bitrate and encoding frequency, and the name of the user along with the user's self-reported connection speed and ping time (Figure 1).

The searching peer could then decide which of these search results they were interested in accessing, and initiate a file download directly from the peer who provided the content. …

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