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This paper appears in the publication, International Journal of Enterprise Information Systems, Volume 2, Issue 3
edited by Angappa Gunasekaran© 2006, Idea Group Inc.
Intrinsic and Extrinsic Values
Associated With File Sharing
Alan D. Smith, Robert Morris University, USA
ABSTRACT
This article examines potential and active customers’ intrinsic and extrinsic values associated
with selected legal, ethical, and economic impacts of file sharing, especially in relation to potential impacts on customer relationship management (CRM). The pros and cons of file sharing
are highlighted in a conceptual model and empirically tested through graphical and statistical
analysis through hypothesis testing via factor analysis and principal component analysis (PCA)
techniques. Recommendations on the potential growth of the file sharing industry through the
lens of price, competition, increased selection, and regulation are included. These file-sharing
topics, issues, and concerns will have a variety of impacts on potential and active customers,
businesses, and strategic leveraging of CRM.
Keywords:
CRM; Digital Millennium Copyright Act; e-books; Internet file sharing; music
industry; Napster; P2P networks
INTRODUCTION
File Sharing and the
Emergence of MP3
With broadband Internet service becoming more accessible and affordable,
there is an ever-growing group of users who
is looking to exchange files with other users
of similar interests. The concept of peerto-peer (P2P) file sharing initially became
popular when the digital music revolution
hit in 1999 and Napster was introduced to
the public. MP3s (MPEG Audio Layer 3)
have revolutionized the music industry and
are considered the global ex facto standard
for digital music. MP3s have CD quality sound but are relatively small in size
because they are in digital format. Since
they are a small file size, it makes them
easy to transfer over the Internet. These
small files are transferred over two main
types of servers and networks. They include
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60 International Journal of Enterprise Information Systems, 2(3), 59-82, July-September 2006
pay Web sites in which the user pays for
each song downloaded and free sites for
which there is no cost to the user (Healy,
2002; MP3 information, 2004; Saroiu,
Gummad, & Gribble, 2002). The ease and
accessibility of these cost-free files makes
P2P file sharing very popular. Perhaps the
general public does not realize that P2P
file sharing has moved past the exchange
of digital music into other entertainment
media. Along with MP3 files, movies, video
games, and books are also readily available
to download for free or for a reasonable fee
on the Internet.
All of these media types and more can
be found through a variety of easy-to-use
file-sharing programs. A consumer now can
find movies even before they are released
in the theater. It is possible to download
episodes of favorite television shows,
books, and audio books in MP3 formats.
Magazines, video games, and computer
software are also available through filesharing programs (Clark & Tsiaparas,
2002). Unfortunately, due to current copyright laws, these files can be considered by
some to be illegal in nature.
Roots of File Sharing
One model of P2P file sharing is based
on the use of a central server system that
directs traffic between individual registered
users. The central servers maintain directories of the shared files stored on the respective PCs of registered users of the network.
These directories are updated every time a
user logs on or off the network. Each time a
user of a centralized P2P file-sharing system
submits a request for a particular file, the
central server creates a list of files matching
the search request by cross-checking the
request with the server’s database of files
that are currently connected to the network.
This is the model used by Napster and
certain other P2P networks. This also has
been the most successful model employed,
because it gave users fast, direct connections to each other (Aberer, Hauswirth, &
Schmidt, 2002).
Napster, a peer-to-peer file-sharing
program for MP3 files, experienced legal problems in just six short months in
service. The lawsuit brought by the Recording Industry Association of America
caused Napster to change its method and
philosophy of doing business (Heidmiller,
2002). Although Napster is no longer a
free site, more than 180 other file-sharing
services entered the market in order to
ease the distribution of files by providing
a free network (Schwartz, 2004). These
file-sharing services have grown rapidly in
popularity, mainly by word of mouth and
via the Internet.
File-sharing programs work by making a connection to a network’s central
computer and automatically uploading a
digital file that is currently on the users’
hard drive and computer. These networks
collect a master list of the digital files
from every user connected to its server
(Schwartz,2003). When looking for music,
an individual can type in a name of a song
or artist in a network’s search engine. The
network then will check its collective database obtained from every logged-in user.
Once a search is complete, it will display
a list of songs from various users. After
the user finds the desired file, downloads
will be sent automatically to the file, thus
completing the P2P file-sharing exchange.
When connected to a file-sharing program,
you also must allow others to download music from your personal files and computer.
These file-sharing networks are used most
frequently for exchanging MP3 files, which
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