The Futility of Monetizing P2P

After all these years feuding with the entertainment cartels, p2p is becoming legitimated. News.com has a writeup discussing the coming launch of MashBoxx and how SonyBMG CEO Andy Lack thinks it'll make millions for MashBoxx head Wayne Russo. The recent Supreme Court decision against Grokster makes it apparent that US operators will be found liable for copyright infringement but this desire has been in the works for years. However the emerging authorized services don't mean that P2P will go from record industry bane to digital music retail stars. Currently the only largely successful retailer is iTunes Music Store but they offer the traditional server-client approach. It results in effective search, lightning fast downloads, and an extensive catalog that can be readily downloaded.

Contrast that to current p2p applications: search is spotty, download speeds vary greatly depending on the peer's upload speed and number of uploaders, and the catalog available is polluted by the likes of MediaDefender or Loudeye's Overpeer. While authorization will take that last problem away, the other 2 issues are outstanding. Perhaps the next crop of legitimized p2p services like MashBoxx will relieve the searching problems but if they rely on the peer system, download predictability will remain suspect.

The second big issue is whether peers will appreciate their paid-for broadband connections being used for music industry profits. After years of being sued by the RIAA, will users be agreeable to providing free infrastructure to line executives' pockets? With iTMS, Apple supports the entire infrastructure and bears the bandwidth costs. This creates a significant bar of entry; for example iTMS Japan racked up a million downloads in its first 4 days online. If you assume the average file size is 4 megs (about 4 minutes of music), the service transferred about a terabyte of data each day. In order to even move that much data in 1 day you'd have to provide at least 2 T3 connections which theoretically only provide close to half a terabyte maximum. Once you factor in the network bursts and redundancy, even more connectivity is required.

On the other hand utilizing users' bandwidth instead of bearing those costs is workable only when there are perceived benefits. In that sense, p2p has shown hugely successful because you can find rare, prereleased, or catalog deleted songs (or movies or video games or porn). A second reason p2p providers have flourished is because their systems barter upload streams and user data collections in exchange for unlimited data downloads.

Monetizing this ends the community's bartering system. No longer given the free data downloads, will users continue providing their upstream bandwidth and their data collections? Considering that most p2p users already limit upstream rates or disable shared files, it's very likely the "sharers" (who provide the bulk of available data) will simply vanish.