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Explosive growth of file-sharing groups not sure sign of success, scholar says

Mark Reutter, Business & Law Editor
217-333-1085

9/28/2006

Mu Xia
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Explosive growth of file-sharing groups not sure sign of success, business administration professor Mu Xia says.

CHAMPAIGN, Ill. — Online file-sharing communities have experienced explosive growth in recent years. YouTube, started in May 2005 so that people could share and download videos, now attracts 100 million visitors a day, while Gnutella and Kazaa, for music sharing, are attracting users at an increasing pace.

These sites differ from traditional chat-room and other message-based Internet communities in two ways, according to Mu Xia, a professor of business administration at the University of Illinois at Urbana-Champaign.

“Users in these communities have no social ties before joining the community, and there is little or no verbal communication between users,” Xia said. What communication exists mainly comes from users observing the activities of other users.

Such loose ties among members make the sustainability of such networks difficult to evaluate, Xia said. For example, a poster child of the Internet bubble, theglobe.com, boasted 9.3 million registered users and its stock price surged by 600 percent at its initial public offering (IPO). Within three years, the site was closed.

“Even when a community experiences growth as explosive as YouTube, it is not clear how these communities work,” Xia said. “For investors, valuing the long-term investment prospects of these communities requires understanding how its members’ behaviors and interactions affect the site.”

To study this question, Xia and colleagues Wenjing Duan from George Washington University and Yun Huang and Andrew B. Whinston from the University of Texas at Austin collected data from music-sharing networks based on the Internet Relay Chat (IRC) protocol. They analyzed data from more than 300 million individual user activities between March 2001 and May 2006.

They discovered that IRC sharing networks hosted two types of users. “Sharers,” who provided content, had a dominant influence on the growth of the site. “Free riders” never contributed and are thought to negatively affect a site’s viability.

But Xia’s group found that the impact of free riders depended on their numbers and how frequently they downloaded. The more free riders used a site, the more likely a sharer would continue to share content. But the more free riders download, the more likely it is that a sharer stops sharing.

The commercial implication of these findings was that creators of online sharing sites “should encourage all types of users to join, even if some of them may not contribute any content,” Xia said. “The mere existence of free riders will be a reason for potential contributors to join. At the same time, the operator of the site should carefully monitor free riders’ download activities and should consider imposing an upper limit to their download volume or bandwidth.”

Xia also recommended that sharing sites provide more ways for contributors to interact with other users. “For example, recognition of some sort always has a positive impact on sharer retention, even if it is as simple as adding a special mark in front of user names.”

The researchers’ working paper is titled, “Unravel the Drivers of Online Sharing Communities: An Empirical Investigation.”