Much has been made of the use of Napster for what the music industry would like to define as “piracy.” Even though the dictionary definition of piracy is quite broad, this is something of a misnomer, because pirates are ordinarily in business to sell what they copy. Not only do Napster users not profit from making copies available, but Napster works precisely because the copies are free. (Its recent business decision to charge a monthly fee for access doesn’t translate into profits for the putative “pirates” at the edges.)
What Napster does is more than just evade the law, it also upends the economics of the music industry. By extension, peer-to-peer systems are changing the economics of storing and transmitting intellectual property in general.
The resources Napster is brokering between users have one of two characteristics: they are either replicable or replenishable.
Replicable resources include the MP3 files themselves. “Taking” an MP3 from another user involves no loss (if I “take” an MP3 from you, it is not removed from your hard drive)—better yet, it actually adds resources to the Napster universe by allowing me to host an alternate copy. Even if I am a freeloader and don’t let anyone else copy the MP3 from me, my act of taking an MP3 has still not caused any net loss of MP3s.
Other important resources, such as bandwidth and CPU cycles (as in the case of systems like SETI@home), are not replicable, but they are replenishable. The resources ...