free to be p2p

March, 2001.
By Molly E. Holzschlag. (Link to original article.)

The promises aren't new. Neither are the challenges. Yet P2P is being touted as the Second Coming. If you're looking for technologies, ideologies, and companies with questionable chances of survival, then rise and meet your savior.

The promise of P2P is familiar. Online pioneers have envisioned a fully interactive environment in which people can freely exchange ideas, information, and inevitably commodities in real time since early in the life of the online world via BBSs, Commercial online services, and of course, the Internet and Web.

Many WebReview.com readers are likely to remember the early days of online fun. You'd connect your Commodore 64 to your pal's using a direct modem-to-modem connection, and then play a game of Pong. This, in essence, is the basis for today's P2P models—at least from a technical standpoint. As with any questioning of what is myth and what is real, there are interpretations, opinions, and compelling if not downright confusing beliefs.

In an effort to define and explore what P2P is, and what we as technologists and developers can do with it, O'Reilly hosted the first-ever P2P conference in late February. Held in San Francisco, the conference was inspiring and a bit out of the ordinary, with a definite hint of new and exciting flavors up for the tasting.

On the meatier side of P2P is the idea that there are specific technologies that act in a specific way. Clay Shirky, a highly articulate orator and P2P pundit, shared his perspective: "P2P is a class of applications that takes advantage of resources—storage, cycles, content, human presence—available at the edges of the Internet."

But not everyone is convinced that Shirky is correct. Ed Dumbill, the Managing Editor of XML.com, offered a broader palate. "P2P is whoever says they're P2P." From that point of view, any situation in which information of some sort is exchanged is essentially P2P.

So where does the real definition of P2P reside? It may be too early to determine, but to combine the technological and ideological perspectives seems an interesting approach. That means that if we simultaneously merge Shirky's ideas with Dumbill's, we end up with a salad of vision and reality that is quite tantalizing. It's this combination of ideas that is also truly revolutionary. We just didn't realize until Napster woke technologists and lay folk up to the technological, social, and legal issues of what the emerging realities of P2P really are.

A revolution in the making?

"The recent furor over peer-to-peer file sharing using Napster masks a deeper revolution," says Tim O'Reilly, founder of O'Reilly Publishing, OReillynrt.com, and host of the P2P conference.

Since O'Reilly brings up Napster, and since Napster is a well-recognized P2P model, let's use it to examine both the technological and ideological perspectives. First, you go to the Napster Web site and download its software. Once the software is installed, you then connect over your modem or broadband connection and log in to a central server which gives you access to the database of other users and what they are offering to share. Then, you can run a search, find something you want, and choose to download it. At that point, you are connected to another user and bypassing the central server. The connection is pretty much a direct one, hence the concept of peer connected to peer.

While this technology might not be new, the platform it espouses can easily be seen as the next new phase in B2B computing. Peer to Peer is "not just some little market segment, but the new shape of the computer industry as a whole" or so asserts O'Reilly.

Now, let's look at the ideological aspect of P2P. The people on Napster (and this extends to other familiar P2P models too, such as AIM, ICQ, and other messaging systems) are individuals from different backgrounds. Different beliefs. Different religions. Races. Nationalities. And here they are exchanging information, in most cases for free—without the structure of the 'Net itself to get in the way. In fact, true P2P infrastructure is decentralized. In many ways, it's this decentralization of information exchange that is at the heart of the ideological revolution of P2P. It's also why individuals, lawmakers, governments, and corporations are concerned.

Part of the concern, as many readers are well aware, has to do with intellectual property laws. And there is no doubt that complex issues of global industry and marketing will have to be addressed as well. Civil rights issues could also be at stake—particularly when the information exchanged is entering the global information space from closed societies.

Lawrence Lessig is a law professor at Harvard University, and a clear voice speaking out about the issues of intellectual property and freedom of information exchange. He encourages people to take a wait-and-see approach. "Let's build it first" Lessig proclaims. "We can expect that there will be conflicts. The question is whether we stay committed to that initial ideal... before we send in the lawyers." It's a good, moderate approach, especially when we consider that this is a global, not U.S. dominated, exchange.

Revolutionary or not, well defined or not, one thing is certain. P2P is gaining the interest of an awful lot of people.

So what about the money, honey?

And where there are people, there's money to be made. Or so one would think.

So far, despite seeing over 150 companies emerge in the last year and having more than $350 million invested in capital, the P2P sector has amounted to a lot of promise and very little profit. Even some of the P2P-ish community entities—like Slashdot and About.com—rely predominantly on old-fashioned ad dollars. Yes, that's the same source of sustenance that's supposedly been dying for years.

With startups failing, and even the big players laying off employees, people throughout the industry are looking for a solid hook to hang their hats on, and hopefully improve their drooping portfolios. But since the buzz of P2P hit the wires, sector leader Napster has run into legal woes and tech stocks—well, they don't look so good, leaving this new breed of entrepreneurs in a lurch.

O'Reilly's P2P conference aimed to solve this dilemma, forming a petri dish for the new, new (but really still the old) economy. After all, P2P companies, while offering what originally drew many old school developers, designers, and visionaries to the Web, still faces the same challenges as other dot-coms—many of which are having a hard time meeting financial goals. There are technology hurdles to clear, business models to validate, too many companies targeting the same customers, and the threat of a competitive response from the big guys—like Microsoft, Yahoo, and AOL.

But these factors didn't stop the visionaries from dreaming. In fact, Battery Ventures associate Larry Cheng believes the skepticism is a positive for those looking to build in this space. "It may be harder to raise capital," he says, "but it will limit competition."

And the potential benefits of P2P networks far outweigh the drawbacks. According to conference speakers and attendees, peer-to-peer will make everything work better. The power will truly move to the desktop. Decentralization will be the only way. The browser will become bi-directional. Even the media stands to prosper. "We get info faster from others, rather than let it travel through the journalism system," says DaveNet creator Dave Winer. Up to now, journalism has been a lecture with reporters telling readers what happened, adds Dan Gilmor of the San Jose Mercury News. "The people who read what I write know more than I do, and I want to take advantage of that," says Gilmor.

While no one can blame these industry experts for getting excited, there's still the question: Where's the money? One attendee on a cell phone (as if there were only one) was even overheard saying, "That seems to be the theme of the entire conference, lots of great ideas and no money." In fact, great ideas flooded just about every discussion, without ever crossing the bridge of how or if these schemes will be profitable.

But the promise of P2P isn't the revenue. "The promise is on the expense side," says Jerry Neumann of Communicade. "Napster doesn't have to pay to store all those songs. They don't have to pay for the bandwidth centrally." It's about not having a bunch of T3s to store and distribute all your information. And that's the reason VCs are excited by P2P. Not that there aren't new revenue opportunities in the P2P sector, but there aren't many.

Tour de force

Overall, the conference hosted more than 1000 programmers, developers, investors, and plenty of media, all gathered in hopes of breeding solutions. The result: We'll need another meeting—and probably a few dozen more after that. But this doesn't mean that P2P isn't a force to be reckoned with, just that there are some serious bridges to be built to link the concept with the cash-out. The true theme of the conference was that the Web has finally reached a point where this type of idealized interactivity could happen.

As O'Reilly editor and WebReview.com columnist Andy Oram wrote on the OreillyNet site: "People at the O'Reilly P2P conference are telling me something over and over, but I can't quite hear it yet. There's some unspoken thread running underneath their fervent descriptions of their projects, where they believe some peer-to-peer model is critical to success."

So, with P2P encompassing technological, ideological, and financial perspectives—what will the outcome be? We'll just have take Lessig's advice: wait and see.

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Resources

• OpenP2P.com is the O'Reilly Network home for all things P2P.
• O'Reilly Conference Coverage with articles, news updates, interviews, and photos.