John Naughton wrote a very interesting article in The Observer yesterday, following the news that the “quaintly named” British Phonographic Society (BPS) is following the Recording Industry Association of America (RIAA) in suing P2P file sharers.
The RIAA is claiming its legal actions (which included busting grannies and 12 year olds) are working, despite evidence from just about every other source imaginable that file sharing is still enjoying explosive growth.
Until recently, it wasn’t possible to track P2P activity over the web as most ISP tracking wasn’t accurate enough. But a UK start-up, CacheLogic, has developed a technology that enables ISPs to get a detailed analysis of network traffic:
The findings are fascinating. They suggest that P2P is now the largest single generator of traffic; that it significantly outweighs web traffic; and that it continues to grow. P2P traffic volumes are at least double those of web traffic during the peak evening periods and 10 times greater at other times.
The significance of this is not that the efforts of content industries to plug the dyke are doomed (though they are), but that when people look back on the evolution of the net, P2P will be seen as the biggest innovation since the web’s invention in 1990.
It may come as news to the BPS and RIAA, but the sharing of music files is the least significant application of P2P. For example, Skype – the sensational internet telephony software that enables anyone with a broadband connection to make freephone calls to anyone else similarly equipped – is a P2P application. So is instant messaging, which is spreading like wildfire. So is LionShare – a project started by Penn State University to create a series of networks for sharing scholarly information among academics. And BitTorrent – the best system yet devised for distributing large files (for example new releases of operating systems) – is likewise P2P.
I assume that this also doesn’t include website based P2P traffic such as chat, webmail and eBay.
The same thing has happened in the world of mobile, if you think about it – overwhelmingly P2P applications are where the huge volumes are. Voice + SMS = Most Revenues. And IM on phones appears to be on the brink of greatness too.
So if you want to get rich in mobile (or the web – it’s never too late), come up with a P2P application that allows people to enhance their communication.
The other way of getting rich would be to help me develop the tech for such a P2P application, that I’ve already researched, spec’ed out and am ready to build. Or you could fund it, if you’re in that kind of business 
But as far as the record business is concerned, I’m afraid the genie is out of the bottle and the one wish they can’t have is to get him to go back in. P2P is not going away, so they need to work out how they can add value to the value chain in the future.
The next big P2P scandal is when kids start sharing ringtones.
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