An Empirical Analysis of Network Externalities in Peer-To-Peer Music Sharing Networks

41 Pages Posted: 17 Sep 2003  

Atip Asvanund

Carnegie Mellon University - H. John Heinz III School of Public Policy and Management

Karen Clay

Carnegie Mellon University - H. John Heinz III School of Public Policy and Management; National Bureau of Economic Research (NBER)

Ramayya Krishnan

Carnegie Mellon University - H. John Heinz III School of Public Policy and Management

Michael D. Smith

Carnegie Mellon University - H. John Heinz III School of Public Policy and Management

Date Written: 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.

Keywords: peer-to-peer, file sharing, empirical, network externalities, network size

JEL Classification: L86, L11

Suggested Citation

Asvanund, Atip and Clay, Karen and Krishnan, Ramayya and Smith, Michael D., An Empirical Analysis of Network Externalities in Peer-To-Peer Music Sharing Networks (September 2003). Available at SSRN: https://ssrn.com/abstract=433780 or http://dx.doi.org/10.2139/ssrn.433780

Atip Asvanund

Carnegie Mellon University - H. John Heinz III School of Public Policy and Management ( email )

4800 Forbes Avenue
Pittsburgh, PA 15213-3890
United States

Karen B. Clay

Carnegie Mellon University - H. John Heinz III School of Public Policy and Management ( email )

Pittsburgh, PA 15213-3890
United States

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Ramayya Krishnan

Carnegie Mellon University - H. John Heinz III School of Public Policy and Management ( email )

Pittsburgh, PA 15213-3890
United States

Michael D. Smith (Contact Author)

Carnegie Mellon University - H. John Heinz III School of Public Policy and Management ( email )

Pittsburgh, PA 15213-3890
United States

HOME PAGE: http://www.heinz.cmu.edu/~mds

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