The unanimous Supreme Court ruling on Grokster bodes mighty poorly for companies whose primary purpose is to facilitate music piracy through peer-to-peer file sharing. My out-on-a-limb investment advice: this might not be the best place for your retirement nest egg. Getting paid to propagate spyware while encouraging people to pirate music never was a great business model and the legal risk now probably outweighs any upside.
I don’t have a strong opinion on whether this ruling will have the “chilling’ effect on innovation that some have raised. In general I lean to the view that sanity will prevail and we live in a world that can reasonably weigh the positives and negatives associated with any new technology (rule of thumb: make sure the legitimate uses outweigh the illicit ones and you’re probably ok).
I do however hope that peer-to-peer doesn’t get relegated to the dustbin of history along with Grokster and its cohorts. Peer-to-peer has gotten a bad name by association but there is much more to peer-to-peer than just pirated media. It is important as an application topology. Nodes on the Internet can talk directly with one another and don’t have to be mediated by a server or other central control point. The Internet can be a pipe as opposed to a destination. Applications like Groove and Skype show the positive side of peer-to-peer. As developers continue to refine firewall and NAT traversal which is the biggest challenge with peer-to-peer applications today, you’ll see more and more of these direct connections.
Why for example does photo sharing need to go through a server? If I want to order some prints or share them very broadly, sure, a server model makes sense. But when it comes time to share photos of the kids with grandma, there is little reason not to go direct. In a world of always-on broadband connections and really powerful clients, we simply don’t always need a server. There are scenarios where you must have a server or will want to mix centralized and peer-to-peer topologies, but the reality is server hosting is still expensive. Server hardware and software are relatively cheap – but bandwidth in big dollops is very expensive as are the people required to manage the servers (there is still tons of opportunity to simplify and automate server management). Some of the biggest advocates of going peer-to-peer and getting traffic off servers are the people with the biggest datacenters – they understand these costs first hand.
Hopefully the obituaries being written this week put peer-to-peer in the proper (that would be not dead) perspective.