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An Empirical Analysis of Network Externalities in Peer-To-Peer Music Sharing NetworksAtip AsvanundCarnegie Mellon University - H. John Heinz III School of Public Policy and Management Karen ClayCarnegie Mellon University - H. John Heinz III School of Public Policy and Management Ramayya KrishnanCarnegie Mellon University - H. John Heinz III School of Public Policy and Management Michael D. SmithCarnegie Mellon University - H. John Heinz III School of Public Policy and Management September 2003 Abstract: Peer-to-peer file sharing networks are becoming an important medium for the distribution of information goods. However, there is little academic research into the optimal design of these networks under real-world conditions. Our research represents an initial effort to analyze the impact of positive and negative network externalities on the optimal size of these P2P networks. Our analysis uses a unique dataset collected from the six most popular OpenNap peer-to-peer networks between December 19, 2000 and April 22, 2001. We find that users contribute value to the network in terms of additional content and additional replicas of content at a diminishing rate, while they impose costs on the network in terms of congestion on shared resources at an increasing rate. Together these results suggest that the optimal size of peer-to-peer networks is bounded at some point the costs a marginal user imposes on the network will exceed the value they provide.
Number of Pages in PDF File: 41 Keywords: peer-to-peer, file sharing, empirical, network externalities, network size JEL Classification: L86, L11 working papers seriesDate posted: September 17, 2003Suggested CitationContact Information
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