Wide-spread usage of peer-to-peer file-sharing began in the late 1990's with Napster-a network that allowed users to share digital music without going through legal channels to purchase the copyrighted material. Since Napster debuted, over forty file-sharing applications that allow users to trade music, movies and computer software with each other have been created, costing the copyright holders of these materials billions of dollars in royalties. Today, peer-to-peer networks allow movie file-sharing and free long-distance voice phone calls. Since these uses are still emerging, a close look at the music peer-to-peer market may provide a useful guide to the likely evolution of the newer peer-to-peer applications. Drawing on interviews, primary survey data and secondary sources, this paper tracks the growth of peer-to-peer file-sharing and responses to it from the music industry, regulators, and the public. The investigation begins with the factors responsible for the growth of a peer-to-peer network, the factors that limit the growth of such a network, and how the dynamics of a file-sharing network change due to outside influences. With this background, we look at the current policies of the Recording Industry Association of America (RIAA), Internet service providers (ISPs) that provide Internet connectivity to consumers, and peer-to-peer application/network developers. Finally, based on models of the peer-to-peer system, recommendations are presented for future policies of all actors.
