Sharing Content Without Control
“Peer-to-peer” computing, or P2P to its friends, is hot right now. What is it? In its pure form, it means sharing content or performing other tasks among individuals, without central control or organization, without intermediaries.
In essence, it’s the “business model” for the hot Internet buzzword of several seasons ago: communities.
But the challenge with P2P is that in theory no one owns it, so how can anyone other than the members make money?
In reality, however, just as in business-to-business or business-to-consumer transactions, there’s often a central server that helps people find each other and the music or applications they want to share.
There are lots of questions about the role of Napster and its counterparts: Will Napster become a payment mechanism? Or will it support itself through advertising? Or will it lose out to the genuine peer-to-peer services, with no central server, no payments and no advertising? Can anyone make money selling P2P software to individual users, or will they always share it?
But there’s another question about Napster and, more important, the genuinely decentralized P2P services (aside from copyright issues): Will the system work if some users persist in trying to mess it up by offering corrupted versions of music--for example, music labeled as k.d. lang or “Twinkle, Twinkle Little Star” masquerading as the hottest new rap offering?
These communities may not need central control and organization, but--surprise, surprise--in addition to enabling software platforms and tools, they do need a way of defining and enforcing rules for themselves. And amazingly, it may be these mini-self-governments that provide the kernel of regulation and trust that a neutral third party can provide--and profit from.
Peer-to-peer communities need a way to define and identify their members. They need a way to define their own rules and to exclude people who break them. And they need a way of paying for this service. (In theory, that service could also be performed by volunteers, but I think that in most cases this function will provide the business model for P2P.)
You can think of this as ironic, or you can recognize that in fact it is already happening.
EBay, for example, began as a centralized service. EBay makes its money on transaction fees. In theory, these users could find each other without EBay; just connecting people no longer provides much value-added (as many business-to-business exchanges will ultimately find out).
But the underlying value EBay provides, which the users cannot do for themselves, is verification of people’s identities, management of a reputation system, quality control, enforcement of norms of behavior--that is, rules.
How does this differ from a government? Really in only one way: Membership is voluntary. Enforcement is based on a contract, not on laws.
Let’s step back for a moment to look at the context. In broad strokes, we think of the world in two sectors: the private (or market) sector and the public sector. The market is the world of individual choices, different results for everyone, commercial considerations. Participation is voluntary on both sides: Customers can choose whom to buy from. And within limits--nondiscrimination, etc.--companies can choose whom to serve. They can simply walk away from difficult customers.
The public sector is the sphere of “collective action”--group decisions (or dictator’s decisions) which are then imposed on the group. Exceptions can be made, but only according to well-defined rules. Citizens cannot decide which laws to obey, and governments cannot decide which citizens to serve; they have to deal with all comers. (Civil society, or the nonprofit sector, is relatively small.)
Thus, the Internet is giving rise to a proliferation of what I call private jurisdictions, semipublic spaces such as EBay (and perhaps Napster) where order is maintained by a private party. Membership is voluntary, and bad actors can simply be kicked out or handed over to legal authorities.
Because membership is voluntary, due process is less important.
If people don’t like the rules, they can leave.
Interestingly, these jurisdictions operate across national boundaries. Within limits, the group doesn’t care where you live or what nationality you are. It simply wants you to abide by its rules, and where money is concerned, it wants legally binding contracts under some government jurisdiction. These private jurisdictions do not replace all functions of governments; and indeed they often rely on governments for enforcement of contracts or for punishment when a member has caused real harm (such as fraud on EBay).
What kinds of rules can such a P2P system create and enforce? They could be everything from observance of copyright laws to propriety of language, requirements for persistent identity (no anonymity) to agreements to submit to a collective rating system.
On the other side, private businesses, as they become successful, are becoming increasingly subject to government constraints. Is Instant Messaging, as offered by America Online, a private service that AOL can offer to only its own customers, or is it a public service that AOL cannot legally refuse to open to everyone? As companies become monopolies they take on the same obligations, that governments do: a requirement to serve everyone.
Thus the Net, as it speeds up the growth of companies, also hastens the transformation of businesses into something more like governments, both in their ability to regulate and in their duty to be open. To some extent, EBay needs to have strong rules. If it stays small and private, it can be arbitrary; if it became so successful that it enjoys monopoly market share, it could be required by antitrust authorities to open up to all comers.
Back in the “real” world, a similar phenomenon--call it “regulation as business”--is happening with financial exchanges. Many of them used to “belong” to governments; now they are operating across national boundaries, merging and becoming more and more businesslike. Regulations are a business practice that attract customers, rather than a government imposition.
And interestingly, regulation could be one of the most enduring business models because it’s something individuals cannot do for themselves. It requires collective action, whether by a for-profit regulator or a tax-supported government.
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Esther Dyson edits the technology newsletter Release 1.0 and is the author of the best-selling book “Release 2.0.” She is also chairwoman of ICANN, the Internet Corporation for Assigned Names and Numbers. Send comments to edyson@edventure.com. Recent Release 3.0 columns are available at https://www.latimes.com/release.
