PEER-TO-PEER CONTENT DISTRIBUTION

An Analysis of the Internal and External Potentials and Obstacles

Jorn De Boever

Centre for Usability Research, K.U.Leuven, Parkstraat 45(b 3605), 3000 Leuven, Belgium

Keywords: Peer-to-peer systems, content distribution, SWOT analysis, adoption.

Abstract: The popularity of (illegal) peer-to-peer file sharing has a disruptive impact on the internet traffic and the

business models of content providers. In addition, several studies have found an increasing demand for

bandwidth consuming content. It is widely recognised that illegal file sharing applications demonstrated the

potential of peer-to-peer systems to distribute popular content in a scalable and inexpensive way. However,

there has been relatively little economic analysis of the potentials and obstacles of peer-to-peer systems as a

legal and commercial content distribution model. Many content providers encounter uncertainties regarding

the adoption or rejection of peer-to-peer networks to spread content via the internet. The recent launch of

several commercial, legal peer-to-peer content distribution platforms, which are still mainly beta versions,

increases the importance of an integrated analysis of the internal strengths / weaknesses and the external

opportunities / threats. This paper explores these internal and external aspects by means of an integrated

SWOT analysis.

1 INTRODUCTION

Peer-to-peer systems have been associated with

illegal file sharing since the introduction of Napster

in 1999 (Shirky, 2001). But, this negative image has

shifted because of the arrival of innovative peer-to-

peer systems that demonstrate the potential of these

applications for legal content distribution.

Nevertheless, we still notice that the adoption of

peer-to-peer systems, to distribute content in a legal

way, is still not widespread. In this context, the

question arises which opportunities and challenges

peer-to-peer systems offer for legal and commercial

content distribution. Some technical aspects of peer-

to-peer networks – e.g. performance, information

retrieval, and self organisation – have been

extensively studied in recent years. However, there

has been relatively little analysis of the economics of

peer-to-peer systems. Consequently, we consider it

to be important to have a broader more business

oriented approach toward peer-to-peer platforms as a

content distribution model.

The introduction of innovations causes a certain

level of uncertainty for the industry, which must

decide whether or not to adopt it (Rogers, 2003).

The industry will try to compensate this uncertainty

by exploring the different aspects of an innovation

or by looking at what other companies have decided.

That is why it is important to understand why

companies would (not) adopt peer-to-peer systems

and with which uncertainties the industry still

struggles. We conducted an extensive SWOT

analysis (Strengths, Weaknesses, Opportunities and

Threats) by means of interviews and literature

review. The aim of the present paper is therefore to

briefly explore the obstacles and potentials of peer-

to-peer technology to distribute commercial content

in an efficient and legal way. This study will allow

us to evaluate the current business viability of peer-

to-peer technology. The results of this analysis

should enable us to understand how peer-to-peer

networks might be positioned strategically in order

to raise the chances for a successful commercial

application for legally exchanging media content.

This paper comprises a study that might assist

content providers in the adoption process.

This paper starts by reviewing some relevant

literature in the area of economics and peer-to-peer

systems, followed by the elaboration of the

methodology. The next section presents the results

of the SWOT analysis by enumerating these aspects.

The final section will confront and link the internal

and external elements so as to put meaning and

interpretation to these results.

367

De Boever J. (2008).

PEER-TO-PEER CONTENT DISTRIBUTION - An Analysis of the Internal and External Potentials and Obstacles.

In Proceedings of the Fourth International Conference on Web Information Systems and Technologies, pages 367-377

DOI: 10.5220/0001517103670377

 SciTePress

2 LITERATURE

Substantial research effort has been devoted to the

technical aspects of peer-to-peer technology. This

has resulted in an extended body of literature about

architectures (e.g. Androutsellis-Theotokis and

Spinellis, 2004; De Boever, 2007), availability (e.g.

Bhagwan, Savage and Voelker, 2003; Chu, Labonte

and Levine, 2002), security (e.g. Divac-Krnic and

Ackerman, 2005) and etc.

As we stated in the introduction, this paper will

elaborate more on the economics of peer-to-peer

technology. One of the most characteristic aspects of

peer-to-peer systems is that – like in virtual

communities – to a large extent, value is being

created by the end users. End users are more than

solely consumers in that they at least also cooperate

to distribute the content (Lechner and Hummel,

2002). MacInnes and Hwang (2003) analysed four

cases – KaZaA, Kontiki, SETI and Groove – of

peer-to-peer business models. According to these

authors, the most important challenges for the

business models were the revenue model, security

and user behaviour. In the study, conducted by Rupp

and Estier (2003), different actors in the music

industry were compared on how they were being

confronted with and affected by new technologies

such as peer-to-peer networks. Other studies

explored the revenue models of several peer-to-peer

systems (Hummel, Muhle and Schoder, 2005;

Hummel, Strømme and La Salle, 2003). The revenue

models of most existing file sharing applications

failed on efficient allocation. This means that the

revenues do not always end up with the rightful

claimants. It is obvious that these studies already

identified several of the issues that lead to

uncertainty about the viability of peer-to-peer

networks as content distribution models.

We will elaborate, integrate and build our

findings on the studies that are stated below. The

papers that will be integrated in our SWOT analysis

are the following: Smith, Clippinger and Konsynski

(2003), Hughes, Lang and Vragov (2005), Kwok,

Lang and Tam (2002), Sigurdsson, Halldorsson and

Hasslinger (2005) and Rodriguez, Tan and

Gkantsidis (2006). The combinations of these

studies with interviews provide us with a detailed

analysis in which several new aspects have been

identified. Although we value the results of the five

selected studies, we argue that these papers suffer

from some flaws which add to the significance of

our contribution. For that reason, the drawbacks of

these studies require further examination of the

internal and external potentials and obstacles. We

will now contend why these studies are deficient to a

certain extent.

The study of Smith, Clippinger and Konsynski

(2003) mainly reflects on the use of peer-to-peer

technology within organizations (internally),

whereas our analysis emphasizes peer-to-peer

technology as a content distribution model in a

commercial B2C (Business to Consumer)

environment. Another limitation of their study is the

fact that they only held discussions with CIOs,

which results in only one point of view. In contrast,

we have tried to recruit respondents with different

backgrounds.

The research of Hughes, Lang and Vragov

(2005) provides more of a theoretical, analytic

framework for market design of peer-to-peer

networks than it offers empirical results. We have

integrated some elements of this framework in our

study so as to corroborate our results. Another

limitation of this study is that they primarily focus

on the constraints – legal, technical, economic,

structural, political, cognitive and socio-cultural –

while not paying attention to the strengths and

opportunities.

Although Kwok, Lang and Tam (2002) use the

words “risks and opportunities” in the title of their

article, they limit their examination to the free riding

problem, the related motivations for cooperation,

and piracy. In addition, the analysis of these authors

is merely from a theoretical perspective.

Furthermore, these academics do not pay a lot of

attention to the opportunities.

Sigurdsson, Halldorsson and Hasslinger (2005)

provide an analysis that primarily focuses on

technical and financial aspects while ignoring e.g.

user-related aspects. Furthermore, we pose that these

authors have failed to make the different concepts of

a SWOT analysis operational, which resulted in

confusion about the terms.

Finally, Rodriguez, Tan and Gkantsidis (2006)

described the results of a workshop on the issues

regarding legal peer-to-peer content distribution.

This paper offers a list of items that stresses the

weaknesses and threats, while paying little attention

to the strengths and opportunities.

In this paper, we will integrate the results of

these five studies, while addressing the flaws of

former research in our own analysis.

3 METHODOLOGY

Our methodology consisted of three levels: a

literature review, expert interviews and the data of

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the former two levels were used in a SWOT

analysis. The first phase of our methodology

comprised a detailed literature review. We already

gave an overview of some of these articles above.

From this literature review, we selected five papers

to elaborate and integrate in our SWOT analysis. We

only selected studies that covered a broad range of

issues involved in peer-to-peer research and

excluded others that only focus on one or a limited

number of topics so as to make sure that

overrepresentation of some topics would be avoided.

In the second phase, we conducted 15 in-depth

interviews with people from the industry and with

some academics. We have interviewed people with

different backgrounds to obtain as accurate and as

objective results as possible. Therefore, participants,

with different backgrounds (social – 3, economic –

3, technical – 8, and law – 1), were selected from

different actors for these interviews. We interviewed

respondents working for broadcasters (4), other

content providers (4), ISPs (2), research community

(4) and copyright lobby organisations (1). Of the

researchers, two are working on research projects in

which a peer-to-peer application is being developed.

Based on the results of these interviews, we were

able to accomplish a significant contribution to the

existing literature by broadening the scope.

The findings of the former two phases resulted in

the data for the SWOT analysis. First, we clearly

defined what was meant by the concepts strengths,

weaknesses, opportunities and threats so as to avoid

confusion. Second, we scored the different topics

that were mentioned in the results section of the

papers and in the interviews for our analysis. Based

on the defined concepts, we decided – by means of

qualitative interpretation – for each item to which

category it belonged. Third, based on literature

review and the results of the in-depth interviews, we

examined why the mentioned items were issues.

Finally, we tried to confront or relate the items of the

four categories by analysing e.g. which strengths

might be used to address some weaknesses or to take

advantage of certain opportunities; which

weaknesses might be mended by further research;

which threats must be avoided and etc.

Although SWOT analyses are mainly used

within organisations (Vermeylen, 2004; Sabbaghi

and Vaidyanathan, 2004), we argue that it is an

effective tool as well to grasp the major positive and

negative issues of applications and technologies.

While studying technologies or information systems,

researchers run the risk of considering the

technology or the adoption of it as a positive fact.

This has also been termed as the pro-innovation bias

(Rogers, 2003). The danger of the pro-innovation

bias is that it becomes difficult to have a neutral and

objective perspective. The advantage of a SWOT

analysis is that the researcher is forced to analyse the

weaknesses and threats as well. A SWOT analysis

consists of two main parts, namely the internal

aspects and the external aspects (Vermeylen, 2004).

The internal aspects consist of the strengths and

weaknesses. The external aspects contain the

opportunities and threats. The external elements are

the occurring changes, events, and etcetera that are

taking place in the environment.

In the past and today, peer-to-peer networks have

been very successful in sharing files, mostly in an

illegal way. Peer-to-peer applications to share files

or distribute content in a legal way are not

widespread yet. The SWOT analysis will reveal

several internal strengths / weaknesses and external

opportunities/ threats of peer-to-peer as a

commercial application for the legal exchange of

media content (video, images, text and film).

4 RESULTS

In this section, we will explore the internal strengths

/ weaknesses and external opportunities/ threats. We

will define what we understand under these concepts

within each part of this section. The data in this

section result from 15 interviews and five selected

papers.

4.1 Internal Strengths

The strengths encompass the internal aspects that

offer peer-to-peer systems for instance possibilities

to take advantage of certain factors in the

environment. These are the strengths that are

characteristic of peer-to-peer systems.

Cost Savings. Peer-to-peer is a technology that is

capable of reducing the costs for content distribution

because it utilizes fewer resources such as

bandwidth, storage capacity and etc. (Norton, 2007;

Smith, et al., 2003). In addition, the avoidance of

centralised servers limits the costs in terms of

investment and upkeep (Sigurdsson, et al., 2005).

The lower costs make it possible for the industry to

serve a larger audience or to distribute more

bandwidth consuming content. This might lower the

need for compression techniques so that the content

has better quality. This makes peer-to-peer networks

an interesting technology for the distribution of

bandwidth consuming content. The implementation

of techniques, such as swarming, makes it possible

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for end users to more efficiently download larger

content. In other words, the industry does not have

to buy that much distribution capacity anymore. It is

also an inexpensive solution for the worldwide

distribution of content. There is no need for

adaptations on the network level, which reduces

costs as well. All these aspects result from the fact

that peer-to-peer systems utilise the available

resources that are available for instance on the end

users’ personal computers. Norton (2007) has

examined and compared several content distribution

models based on a cost analysis. The result was that

peer-to-peer systems were the most inexpensive

content distribution models.

Scalability. Peer-to-peer systems scale with the

amount of use, which results in limited marginal

costs (Ding, Nutanong and Buyya, 2005; Taylor,

2004; Sigurdsson, et al., 2005). The extra costs for

each additional user are restricted because each

additional consumer in theory also means additional

resources. These are positive network externalities

of peer-to-peer systems which makes them very

scalable. Some peer-to-peer networks are even able

to cope with ‘flash crowds’ (i.e. a sudden and

extremely increase of the number of users that

consume the same service or content which might

overload a system). Peer-to-peer technology might

be utilised to develop overlay networks so as to

distribute content around the globe. Furthermore,

these overlay networks are cost-efficient as the costs

for implementation and maintenance are limited

(Sigurdsson, et al., 2005).

Easy Implementation. From the position of

content providers, peer-to-peer systems are easy and

inexpensive to implement because it operates more

on the application layer. To distribute content on a

worldwide scale, there is little need for large

investments in infrastructure and control. However,

some peer-to-peer providers pose that the opposite is

true. It is more complicated to start a peer-to-peer

system in comparison with installing a central

server.

Fault Tolerance. Peer-to-peer systems are fault

tolerant because there are limited centralised

components in the network that are potential

bottlenecks or single points of failure (Sigurdsson, et

al., 2005). Because of the distributed nature of peer-

to-peer networks and the redundancy of nodes, the

disappearance of one or several nodes mostly has

only limited impact on the overall performance.

Availability. Some respondents consider peer-to-

peer systems to be more efficient because these

systems utilise the idle resources that are available in

the network. This leads to more availability of

resources such as bandwidth, storage capacity, and

content.

4.2 Internal Weaknesses

The internal weaknesses contain the distinctive

characteristics of peer-to-peer networks that are

disadvantageous. These are the direct constraints of

these systems.

Quality of Service (QoS). The reliability of peer-

to-peer systems in terms of QoS is a major issue for

the commercial viability of these systems

(Parameswaran, Susarla and Whinston, 2001;

Sigurdsson, et al., 2005; Hughes, et al., 2005;

Rodriguez, et al., 2006). QoS in this context relates

to the performance of the network for instance on

the level of delays, content availability, distribution

speed, scalability and etc. The end users’ personal

computers operate as nodes in the network. This

makes it hard to guarantee service quality because

these nodes can suddenly appear and disappear, and

there are still end users with low bandwidth

connections. Content might become unavailable if

nodes, that host certain content, suddenly leave the

system. This might result in delays and high buffer

times. This is especially problematic for large

content that takes more time to download. If the

download requires more time, than there is more

chance that the content exchange cannot be

completed because the hosts become unavailable.

The more decentralised a peer-to-peer network is,

the more that QoS is an issue. The service quality

might also influence the real time experience of

peer-to-peer live streaming applications. Peer-to-

peer content distribution is in this sense a best effort

model with low guarantees of service quality. The

uncertain QoS is probably the most important

obstacle for content providers to adopt peer-to-peer

systems for content distribution. In addition, it

remains unclear whether users will accept that

content, from professional content providers, that is

being shared in a legal way, is unavailable or

requires delays. In summary, it seems difficult to

guarantee a certain performance level and it is

therefore hard to formulate reliable service level

agreements.

Inefficient use of Resources. Most peer-to-peer

systems handle the available resources – e.g.

bandwidth – in an inefficient way. This results from

the fact that there are mostly no centralised

components in the system that manages the use of

these resources because peer-to-peer networks are,

to a large extent, self organising systems. This self

organisation requires much traffic to maintain the

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operability of the system. This was e.g. a significant

issue in a former Gnutella version (e.g. Ripeanu,

Iamnitchi and Foster, 2002).

Security and Privacy. These issues are still

worrisome within the context of peer-to-peer

systems because of decentralization (Taylor, 2004;

Smith, et al., 2003). Peer-to-peer implies that other

peers can access your computer to retrieve certain

data. This makes it easy for malicious nodes to enter

your computer and cause damage. This danger for

malicious attacks has social implications as well,

related to trust (Rodriguez, et al., 2006). In most

peer-to-peer systems, users encounter unknown

anonymous peers they should trust if they want to

exchange data. Inflicting damage in this trust

relation might cause users to abandon peer-to-peer

systems. The ‘older’ generations of peer-to-peer

systems are mainly anonymous without actual social

interaction, which limits the trust relation among

peers. In addition, the lack of centralised monitoring

facilities causes difficulties in guaranteeing security

(Sigurdsson, et al., 2005). By using peer-to-peer

networks, users expose private data such as IP

address, the content they have consumed and etc.

This can inflict damage to the users’ privacy

(Rodriguez, et al., 2006).

Usability and Adoption. These are two issues that

received little attention in peer-to-peer research and

it proved to be a concern for some of the

respondents. Most peer-to-peer file sharing

applications have complex interfaces that are little

intuitive. Several terms (e.g. seeders, trackers and

etc.) might have no meaning to some users. Good

and Krekelberg (2005) have conducted usability

research on the KaZaA user interface. They came to

the disquieting result that many users were not able

to locate their shared folder, so they did not know

which content they were actually sharing. This is

probably the reason why these researchers found

personal data on KaZaA such as e-mails and even

credit card data. Today, peer-to-peer systems are

mainly used by persons who regularly surf the

internet and who probably know how peer-to-peer

networks function. If one wants to develop peer-to-

peer applications to be consumed by a wide

audience, the user interface needs to be more

accessible, usable and learnable for users who are

less familiar with peer-to-peer systems (e.g. Morris,

2007). For instance, the fact that users have to

download and install a separate client might be a

threshold to adopt these systems. Furthermore, file

sharing might frustrate users as they have to wait

until the full file has been downloaded before

consuming it (Rodriguez, et al., 2006).

Costs to Users. Peer-to-peer systems utilise

resources that are available on the end users’

personal computers. The users’ resources – e.g.

storage capacity, bandwidth, electricity – are being

used for the distribution of content, which entails

considerable costs for these users. It remains an open

question whether the average user will accept that a

content provider utilises the user’s resources to

distribute content.

Business Model. Peer-to-peer systems are being

confronted with indistinctness’s and strains

regarding several elements of business models.

There is still no proof of concept of a clear,

comprehensive business model that integrates peer-

to-peer systems and where there is a fit between the

several business model components. The main

bottlenecks in this area, according to most

respondents, are related to control. The lack of

control over large parts of content distribution is

problematic to some content providers. In addition,

there are often no means to measure the

consumption of the peers, which makes it difficult to

attract advertisers. There exists no proof of concept

of peer-to-peer systems that integrate an advertising

or payment model for revenues. Peer-to-peer

systems therefore need a centralised component

which monitors the consumption of the peers in

order to be able to implement a revenue model.

4.3 External Opportunities

The opportunities contain the external elements to

which peer-to-peer systems can anticipate from its

internal assets. In other words, these topics consist

of the aspects in the environment that might have a

positive effect on the adoption and use of peer-to-

peer systems. The opportunities of peer-to-peer

networks often result from the flaws of other

distribution models.

Costs centralized Models. In a client/server

network where there is a situation of augmenting

popularity of bandwidth consuming content – such

as audio, video and games – the costs for

distributing this content will increase. Furthermore,

the risk of a bottleneck and single point of failure

increases as well. Researchers have noticed an

increasing use of and demand for bandwidth

consuming content such as video, audio, HDTV and

etc. (IDC, 2007). These researchers predict that the

amount of digital data will expand even more in the

following years. Some experts predict that video

content will have a share of about 80% of the

internet traffic (Norton, 2007). For centralised

distribution models, this implies additional costs in

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the sphere of for instance distribution capacity,

storage capacity, bandwidth, servers, control and etc.

Disadvantages of other Distribution Models. We

will demonstrate some opportunities for peer-to-peer

systems by addressing some flaws of other

distribution models such as unicasting, multicasting

and CDNs (Content Delivery Network). Unicasting

is a centralised streaming method that has the same

drawbacks as client/server models. Unicasting does

not scale with the amount of consumption, it runs

the risk of a bottleneck and the costs rise as content

is consumed more often. Therefore, most content

providers that utilise a unicasting model, limit the

quality of the content to confine the costs when

popularity increases. Multicasting is a more

decentralized streaming method, but this technique

has some drawbacks as well. Multicasting requires

adaptations in the network infrastructure and many

networks are not multicast enabled. Therefore,

multicasting is not suitable for worldwide content

distribution. Furthermore, multicasting is mainly

interesting for live content distribution and less for

on demand content. A third example of a distribution

model is a CDN, which is a distributed network of

computers to distribute content. An elaborated

analysis of CDNs can be found in the text of Pallis

and Vakali (2006). When content providers decide

to utilise a CDN, they first make strategic decisions

about the necessary performance and QoS and

include these requirements in a service level

agreement. But, it is often difficult to predict the

popularity of services or content which might

influence the service quality.

Increasing Capacity of end Users’ Equipment.

The end users possess an expanding amount of

resources – such as bandwidth, storage and

processing capacity – that can be exploited by peer-

to-peer networks (Sigurdsson, et al., 2005). This also

means that there are more idle resources available on

the edge of the internet. Peer-to-peer systems have

become a success because of the availability of

unutilised resources. Users have become more than

purely consumers in the value chain and they now

add value by replicating and distributing content in

peer-to-peer systems.

Evolution toward Symmetric Networks. The

internet today is still organised in an asymmetric

way, i.e. it expects users more to download and less

to upload content. This is why users have more

download capacity in comparison with their upload

capacity. But this trend is shifting because of

developments such as peer-to-peer file sharing

networks and, more recently, user generated content.

Several respondents expected the internet to become

more symmetrically organised in the future so that

the down-/upload ratio will gradually equals one.

This might be an opportunity for systems such as

peer-to-peer networks that require users to utilise

their upload capacity to serve content.

User Orientation. Several respondents posed that

peer-to-peer networks focus more on the end users

by giving them more roles in the value chain. In

peer-to-peer file sharing systems, a social filtering

process occurs in which the community of peers

decide which content might remain available and

which content not. Content that does not fit the

users’ needs, or that becomes less relevant, will

slowly disappear from the system. In other words,

peer-to-peer systems offer the opportunity to involve

the end users more closely in the value chain.

4.4 External Threats

The external threats are factors in the external

environment that can interrupt or threaten the

success of commercial and legal peer-to-peer

systems.

Data Limits. ISPs or network providers still

maintain data limits in several countries as a part of

their business model and to be able to guarantee a

certain level of performance and control over the

traffic. If a content provider wants to distribute large

content such as video files, end users will soon attain

their data limit. This is problematic since more

content providers want to distribute video over the

internet in high definition. If users exceed the

allowed limit, they need to pay for the extra

consumed volume.

Asymmetric Networks. The commercial internet

has been build from a top down perspective. The

content owners distribute content, and the users

download this content. In other words it focuses

more on the download link, which resulted in

asymmetric organisation, e.g. ADSL. This

asymmetric architecture causes low upstream rates

(Sigurdsson, et al., 2005). For the efficient operation

of peer-to-peer systems, it would have been better to

have a more symmetrical relationship between up-

and downloading – for instance SDSL – because

peer-to-peer systems emphasise uploading as well.

In the current asymmetric organisation of the

internet, there is a risk that the upstream bandwidth

capacity will not be sufficient to compensate the

downstream bandwidth capacity in a situation of

widespread peer-to-peer traffic (Norton, 2007). If

the use of peer-to-peer systems would be ubiquitous,

the ISPs fear that the upload capacity might become

congested during peak hours.

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Measurability and Control. In server oriented

models, it is easier to keep track of the different

flows of data in the system which is a prerequisite

for advertisers and content owners (Smith, et al.,

2003; Sigurdsson, et al., 2005). This measurability is

important to the revenue model within the business

model. This measurability of other distribution

models is a threat to peer-to-peer networks and it is

an internal weakness as well.

Competing distribution Models. By means of

some examples, namely multicasting and CDNs, we

will demonstrate that peer-to-peer systems are being

threatened by some characteristics that other models

display. In the assessment of using a certain content

distribution model, content providers will balance

the pros and cons of these systems against each other

in order to make the right decision. Multicasting, for

instance, is a streaming model that offers some

answers to the flaws of the unicasting model,

particularly in the area of live streaming. In addition,

multicasting is a system that reinforces itself so that

it is very scalable. Furthermore, multicasting can

offer better QoS compared to peer-to-peer

streaming. In this sense, multicasting can be

considered as a more reliable model that is mainly

suitable for popular live events. A second example

of content distribution models contains CDNs. In

contrast with peer-to-peer systems, CDNs offer high

guarantees on the level of QoS which makes it

possible to draw up reliable service level

agreements. In general, CDNs are considered to be

reliable content distribution models that are able to

address several security issues.

Position of ISPs. We will now explain why ISPs

might not sympathize with peer-to-peer content

distribution models (Rodriguez, et al., 2006).

Content providers, that implement peer-to-peer

technology for content distribution, avoid bandwidth

expenses by passing the costs on the users. The users

will try to prevent these costs by making sure that

they do not exceed their data limit. The result of the

adoption of peer-to-peer technology is an increasing

traffic volume on the network infrastructure of ISPs,

while these ISPs receive less revenues.

Measurements studies have demonstrated that more

than 50% of internet traffic is emanating from peer-

to-peer systems (Haßlinger, 2005; CacheLogic,

2004). The increasing traffic volume (especially the

upstream traffic), caused by peer-to-peer systems,

originates from the fact that peer-to-peer technology

allows exchanging large files and because there is

much message overhead required to self organise the

system. In addition, most peer-to-peer applications

lack locality awareness which implies that a lot of

traffic crosses several ISP networks whereas the

content might be available on a node of the local ISP

(Rodriguez, et al., 2006). In other words, the current

revenue model of ISPs does not fit a situation in

which the use of peer-to-peer networks is pervasive

because the traffic volume might not be in

proportion to the revenues. If large traffic volumes

are congesting the network, ISPs might decide to

squeeze, queue or even block peer-to-peer traffic.

We have to remark that ISPs will not be likely to go

that far because these actions can cause

unfavourable churn rates. The consequence might be

that many ISPs change their price policy from e.g.

flat rates into a system of layered pricing according

to the traffic users generate (Rodriguez, et al., 2006).

Legal Issues and Image. Peer-to-peer technology

has to cope with an image problem, in which there is

still a connotation of illegal file sharing, piracy and

sharing of pornographic content. This is why some

authors (e.g. Rodriguez, et al., 2006) argue that legal

uses of peer-to-peer content distribution should be

promoted. The MP3 encoding format, combined

with the exchange possibilities of peer-to-peer file

sharing, have lead to a situation in which illegal file

sharing has become an omnipresent and accessible

practice that is not likely going to disappear (Kwok,

et al., 2002; Smith, et al., 2003; Sigurdsson, et al.,

2005). Decentralisation makes it difficult to monitor

and manage peer-to-peer networks. Making content

downloadable is difficult from a business

perspective, because content owners fear copyright

infringements. If users are able to store content on

their hard drives, the chances increase that files are

being copied and spread in an illegal way. Control

over the rights remains an important issue. However,

several respondents posed that control of copyrights

was not their major concern. They emphasised the

importance of control of their business model. These

respondents accept for instance that content is being

copied and distributed by the end users, as long as

they are able to capture these ‘eyeballs’ for

advertising purposes. On the other hand, most of the

interviewees hold an opinion that solutions such as

DRM are not suitable for fighting piracy because (1)

every version will be compromised sooner or later

and (2) it does not fit the consumers’ needs. In

addition peer-to-peer providers have to cope with

different legislations in different countries. For

instance, the USA has developed the fair use

doctrine, whereas European jurisdiction utilises an

exception list. For a more in-depth analysis of

jurisdiction concerning illegal file sharing in

different countries, we refer to (Werkers and Gilio,

2006; Dogan, 2005).

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373

Critical Mass. The operation and viability of

peer-to-peer systems require a critical mass of

cooperating users that make sufficient resources

available (Rodriguez, et al., 2006; Kwok, et al.,

2002). In client/server systems, it does not matter

that content is consumed by little people as long as

the server stays available. If a new peer-to-peer

application is being introduced, it must generate

sufficient mass so that content would be sufficiently

available. But, as is the case in many virtual

communities, peer-to-peer networks are being

threatened by the free riding phenomenon (Adar and

Huberman, 2000; Hughes, Coulson and Walkerdine,

2005). Free riders are users that consume resources

from the network while not contributing anything in

return. In a situation without critical mass and a

large amount of free riders, content will often be

unavailable. This causes users to leave the system

with the result that the peer-to-peer network is no

longer viable. Consequently, peer-to-peer

technology is mainly interesting for the distribution

of popular content because it is easier to attain a

critical mass of cooperating peers.

Content Aggregation. Several peer-to-peer

platforms – such as Babelgum and Joost – operate as

content aggregators as well. Peer-to-peer platforms

try to acquire popular content to increase the

popularity of their service. A part of the revenue

model of several peer-to-peer platforms is based on

advertising and revenue sharing (e.g. Warner Music

Group, 09.04.2007). There are several competing

peer-to-peer companies trying to gather the same

content providers. As more peer-to-peer systems will

start up, it will become more difficult to aggregate

popular content providers and as a result to attain a

critical mass. This threat of content aggregation is

linked to the issues of competing distribution models

and the acquisition of a critical mass.

Decreasing bandwidth Prices, Network Address

Translation (NAT) and Abandonment of Open

Source. The first issue concerns the relevance of

peer-to-peer content distribution if the bandwidth

prices would decrease significantly. Peer-to-peer

content distribution is mainly regarded as a

technology to save on bandwidth costs. As

bandwidth capacity might become cheaper, the

question arises whether a content provider would

still adopt a distribution model that performs badly

in terms of service quality. The second issue, NATs,

involves mainly a technical burden that needs to be

solved (Rodriguez, et al., 2006). The use of a NAT

makes that several hosts within a private network

only use one IP address to have access to the

internet. The use of NATs is increasing for instance

because of the use of wireless routers. The exchange

with nodes that operate behind a NAT router

generates a technical issue, by limiting end-to-end

connectivity, which needs to be addressed. The final

issue relates to the abandonment of open source

because of commercialisation of peer-to-peer

technology. Most commercial peer-to-peer providers

use closed source. Closed source software is not

subject to peer review with the result e.g. that it

might be engineered poorly and that it is less

reliable.

5 CONFRONTATION

Some people criticise SWOT analyses for being just

an enumeration of several points without any

reflection (Vermeylen, 2004). We therefore will try

to discover links between the internal and external

aspects that have an impact on peer-to-peer systems.

Peer-to-peer systems can take advantage of some

external opportunities by deploying the internal

strengths. Research and experiments might be

necessary to address the internal weaknesses, while

peer-to-peer providers are sometimes not able to

change the external threats.

The results of the SWOT analysis indicate that

peer-to-peer networks still have not been able to

break through their infancy. The identified

limitations of peer-to-peer technology still entail

major issues on the way to a legal and commercial

content distribution model. The relation between the

strengths and opportunities is certainly existent.

Particularly, peer-to-peer networks can be perceived

as inexpensive, fault tolerant and scalable content

distribution models. These internal assets can be

used to address some external opportunities. Peer-to-

peer technology provides solutions for some of the

flaws of other content distribution models, such as

the client/server model (e.g. bottleneck, not

scalable), unicasting (e.g. bottleneck, not scalable),

multicasting (e.g. network adaptations). The costs of

several current distribution models will increase as

demand for popular bandwidth consuming content

grows. Peer-to-peer technology distributes content in

a cost efficient manner that requires less limiting the

quality of the content by compression techniques. In

addition, the possible evolution toward symmetric

networks might create opportunities for peer-to-peer

systems to utilise the users’ uplink even more.

On the one hand, there are several weaknesses –

for instance on the level of usability and business

modelling – that still can be mended. These are

elements that require further research and

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374

experimentation, but these are not insurmountable

problems. On the other hand, other weaknesses (e.g.

QoS and security) and threats (e.g. legal issues,

control) require the integration of a centralised

component in the peer-to-peer architecture.

Moreover, as we indicated, a business model

requires that companies are able to monitor and

measure the consumption of users, to support for

instance the advertising model. To pursue these

goals, a centralised component is necessary in the

architecture. Finally, to improve the QoS of peer-to-

peer systems, it might be an option to close

agreements with ISPs to equip its infrastructure so

that the traffic becomes more manageable. In this

way, ISPs might be able to generate revenue from

the additional load on their infrastructure, caused by

traffic of peer-to-peer networks. For instance,

BitTorrent has closed a service level agreement with

GNi, a company that offers data networking

solutions, so as to be able to offer better user

experience (Del Conte, 28.06.2006).

Most of the external threats and opportunities are

beyond the manipulation of peer-to-peer providers.

Peer-to-peer providers can only take advantage of

the opportunities by promoting the criticalities of

these aspects (e.g. demand for bandwidth consuming

content, costs of centralised models and etc.). On the

level of threats, a strategy might include avoiding

these elements, although this seems to be

impossible. Peer-to-peer providers cannot ignore

issues such as data limits, asymmetric networks and

the control of ISPs. Every peer-to-peer provider, that

offers solutions for the distribution of popular

bandwidth consuming content, is being confronted

with these threats.

We will now describe a worst case scenario, in

which peer-to-peer content distribution is massively

used for legal content distribution and in which the

threats have not been addressed. In a situation in

which peer-to-peer systems would be used by the

average internet user, and not only by young more

computer literate users, the positive network

externalities of peer-to-peer networks might fall into

negative network externalities. The network

infrastructure of the ISPs would be overloaded

which would result in insufficient QoS, which would

reveal itself in for instance delays. To retain control

of the traffic, ISPs might decide to squeeze or to

block peer-to-peer traffic which would decrease user

experiences. Because of these inadequate user

experiences, users might decide to stop using the

peer-to-peer system with the result that content

would be less replicated throughout the network.

The unstable availability of content will cause

additional loss of users, which results again in less

available resources. In other words, this vicious

circle would prevent peer-to-peer systems to attain a

critical mass resulting in the extinction of peer-to-

peer systems. This is a worse case scenario that is

not likely going to occur because peer-to-peer

providers will try to avoid or address these

weaknesses and threats.

6 CONCLUDING REMARKS

The present study examined the internal/external

potentials and obstacles of peer-to-peer systems to

distribute commercial content in an efficient and

legal way. Data gathered from interviews and

literature was utilised to conduct an extensive

SWOT analysis from a business perspective.

Overall, this study reflected previous research

findings (Smith et al., 2003; Hughes et al., 2005;

Kwok et al., 2002; Sigurdsson et al., 2005 and

Rodriguez et al., 2006). We argue that our research

succeeded in addressing the limitations of former

research as was discussed in the literature section.

Interestingly, by conducting interviews with several

respondents with different backgrounds, this SWOT

analysis added several new elements to the existing

results in a structured way. Whereas most

researchers primarily examined the internal

weaknesses, this study highlighted the importance of

the internal strengths and external

opportunities/threats as well. In addition, this

examination paid important attention to the position

of the users, since the users are essential in the value

creation within the peer-to-peer value chain. On the

one hand, users have more resources – e.g.

bandwidth or storage capacity – at their disposal,

which creates opportunities for peer-to-peer systems.

On the other hand, the use of peer-to-peer systems

implies that users experience additional costs

because they have to make these resources available

for other peers in the system. Furthermore, usability

requirements of peer-to-peer systems have received

little attention. This lack of knowledge might

impede the widespread adoption of peer-to-peer

systems among end users. Finally, a large proportion

of users, in a great deal of peer-to-peer systems, are

free riding on the contributions of others. There is a

need for incentives to increase cooperation so as to

ensure network performance.

Beside users, we focussed on another often

forgotten actor as well, namely the ISPs. Peer-to-

peer systems cause an increased load on the network

infrastructure of ISPs, while the ISPs are less

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375

remunerated. This causes a negative attitude of ISPs

toward peer-to-peer systems, which might motivate

the ISPs to hinder peer-to-peer traffic.

In comparison with the five selected papers, our

research added the following topics: strengths (easy

implementation, availability), weaknesses (usability

and adoption, costs to users, business models),

opportunities (disadvantages of other distribution

models, evolution toward symmetric networks, user

orientation) and threats (data limits, competing

distribution models, content aggregation, decreasing

bandwidth prices, abandonment open source).

In contrast with former studies, this examination

goes beyond a mere enumeration of aspects by

confronting and linking the internal and external

elements. Several external developments offer

opportunities for peer-to-peer technology. In this

sense, peer-to-peer content distribution can be

envisaged as an inexpensive, fault tolerant and

scalable model for content distribution that offers

some advantages in comparison with other content

distribution models. Some of the internal

weaknesses can be addressed by further

examination, for instance on the level of usability

and business modelling. The QoS, peer-to-peer

systems produce, remains the major obstacle for a

widespread adoption of peer-to-peer technology

among content providers. Most of the external

threats and opportunities are beyond the control of

peer-to-peer providers. Peer-to-peer providers

cannot avoid issues – such as asymmetric networks,

data limits – which threatens their commercial

position.

Despite of the above mentioned positive qualities

of this analysis, we have to address the limitations of

this study as well. The reliability of this examination

might be threatened by the underrepresentation of

some actors in the interviews. We only conducted a

limited amount of interviews with copyright

lobbyists (1) and ISPs (2). However, we did not

manage in recruiting peer-to-peer providers for this

analysis which might have affected the results. In

this sense our results might primarily represent the

issues identified by content providers. In addition,

many issues have been raised involving users

whereas this research did not gather data from end

users. Indeed, a promising line of study would be to

interview peer-to-peer providers and end users so as

to improve the reliability of the results.

Overall, the results of this study imply that peer-

to-peer technology offers some opportunities for

commercial and legal content distribution. The

recent launch of several legal, commercial peer-to-

peer systems – e.g. Zattoo, Babelgum, Joost, Vuze –

have demonstrated the feasibility of these models.

However, the results of this study indicate that

several issues still need to be addressed. Centralising

some elements of the architecture might be

necessary to address the weaknesses – e.g. security,

QoS – of this content distribution model. In

conclusion, we pose that further development and

examination of peer-to-peer technology is still a

prerequisite for commercial viability.

ACKNOWLEDGEMENTS

FLEET (an interdisciplinary research project on

FLEmish E-publishing Trends) is an IWT SBO

project, with research partners IBBT SMIT, Cemeso,

LSTS, MOFI, ICRI, CUO, MICT, ECDC and TNO.

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