1. What is Peer-to-Peer?
In its origin, the expression “peer-to-peer” refers to a computer network, where a distributed computer application architecture partitions tasks or workloads between peers.
However, the concept has since moved to social and economic spheres, where it covers issues such as distributed networks, based on the equipotency of its participants – the principle that things can be organized through the free cooperation of equals in view of the performance of a common task.
Such systems reject classical top-bottom hierarchies, and are based on principles of meritocracy and cooperation.
Classical examples of peer-to-peer networks that are relevant in order to understand the impact of peer-to-peer systems on Intellectual Property are Napster and the Pirate Bay; but also other BitTorrent applications, and of course certain aspects of social media such as Facebook or MySpace. To a lesser extent, open knowledge systems such as Wikipedia and the Wikimedia Commons are also peer-to-peer systems.
Peer-to-peer allows direct access to the crowd, giving rise to phenomena such as crowdsourcing, where information exchange is gathered and increased through Peer-to-Peer communication systems, or crowdfunding such as Kickstarter, IndieGoGo or many more.
A key aspect of peer-to-peer organizations is the lack of a centralized authorization system for the distribution of the proceeds of its participants.
In other words: anyone can get access to anything without asking permission.
2. Impact of P2P on Intellectual Property
Such decentralized system of distribution and communication sits very awkward with the fundamental principles of Intellectual Property.
Intellectual Property is, by its very nature, a system of control and restriction of the use, copying, distribution, reproduction and creation of derivatives of certain aspects of human activity.
To the extent such distribution, reproduction and creation of derivatives occurs outside a formal distribution network, it becomes virtually impossible to control such distribution, other than by resorting to the draconian (and arguably unconstitutional) measures such as blocking the Pirate Bay.
What is more, while these measures are debatable in respect of their legal and philosophical basis, it is quite clear that they are woefully inadequate and inefficient, and very easy to circumvent. Regardless of the many local bans by courts and governments, traffic on the Pirate Bay keeps climbing steadily, and BitTorrent technology also keeps growing rapidly. As of 2009, up to 70% of all traffic on the Internet was attributed to BitTorrent protocols.
While it is, at this point in time, not easy to evaluate the economic impact of peer-to-peer networks, they have had a profound impact on the way Intellectual Property is used in business models. In the last two decades, the music distribution industry (the classical record companies) has lost roughly 2/3rd of its revenue. At the same time, the amount of music available to consumers has increased enormously, giving rise to new business models such as iTunes, Spotify, and many others. It is hard to imagine other content industries such as film, documentaries or books not going in the same direction.
Intellectual Property requires visibility of distribution networks in order to be enforceable.
When matters covered by IPRs can be shared between individuals or organizations in an easy, cheap or automated manner, without centralized distribution, the enforcement of those IPRs quickly loses any semblance of cost efficiency.
A similar phenomenon occurs in social media. Whether it is via Facebook, YouTube or other more niche-oriented players, Intellectual Property rules are not actually applied to anything shared on these networks. Of course, the platform provider will use token words to ensure that all its users respect copyright (patents really don’t play at this level).
Yet, from a theoretical perspective, it is clear that pretty much every user on Facebook, Instagram, Pinterest or YouTube is a serial copyright-infringer. Yet, no-one is ever prosecuted, and the take down notices are a drop in the ocean.
3. The erosion of IP-enforceability
The consequence is that Peer-to-Peer approaches make the enforceability of IPRs either technically or economically unfeasible, or both.
As a result, the social and economic value of monetizable (classical) Intellectual Property has started to decline significantly.
When users cannot be confronted with the need to pay for matters that are under supposedly exclusive rights in a Peer-to-Peer network, they will fail to see the need to pay for such rights in other formats.
When enforcing IPRs provides a negative return on investment in one technological environment, it will affect (and ultimately destroy) the economic rational of enforcing, and therefore, holding, any IPRs at all.