Shootout At The P2P Corral - Page 2

The first panel discussion of the morning dealt with the "Economics of P2P." It featured Liebowitz, Strumpf, Yagan, and Eric Garland from BigChampagne Media Measurement. Liebowitz discussed his time-series studies (more on those here) that show a relation between the rise of P2P and the decline in CD sales (post hoc fallacy, anyone?). He also critiqued the other studies in the field, including the study conducted by Strumpf, who spoke next. Strumpf has looked at data related to music sales, downloads, and popularity which suggest that there may even be a positive sales effect of using P2P technology. (His study can be found here.) Strumpf responded to Liebowitz's criticism by offering some of his own, saying that time-series studies are less accurate than the individual data that Strumpf uses in his own research. Time-series studies fail to take into account factors like increased DVD sales that might have contributed to the decline in DC sales. According to Strumpf, Liebowitz also fails to explain why, over the past nine months, file-sharing usage has remained constant, while CD sales have increased by about 10%.

Garland then addressed the necessity of copyright and P2P coexisting. File sharing is not going to be shut down. The problem is digital technology itself and the Internet, because all of the tools of the digital age are de facto tools of infringement. The opportunity cost for the industry of failing to build business models around the tremendous amount of online activity is enormous. "Why are we still talking about a war on piracy while ignoring this huge market?" Finally, Yagan spoke about the business from the P2P perspective. Most of the moeny made by eDonkey comes from advertising, because only 1% of eDonkey users buy the professional-level software. eDonkey is working to build its legitimate content by licensing indy films and bands and working with graduate film schools to license their material. The tactics of the recording industry have a chilling effect on business partnerships by making the P2P companies leery of implementing software changes suggested by the adversarial recording industry.

At this point the floor was opened for questions, which provided the opportunity for the exchange between Strumpf and Liebowitz to become a bit more heated. Both took turns rebutting the other's criticisms and offering fresh criticism of the other, and at one point Strumpf, exasperated, offered sarcastically to get his research approved by Liebowitz prior to any other speaking engagements.

Article Author: Bobby Allison-Gallimore

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