Economic Impact of File Sharing

The year is 1969, and the United States remains gripped by Cold War paranoia of an imminent Russian nuclear attack. In the event of an attack, communication to other cities would be among the first casualties, and backup routes would need to be established. This fear was the catalyst for early Internet research funding, and ultimately resulted in the theory of packet switching – the basis for all Internet connections. Charley Kline, a UCLA student programmer, sent the first packets as he attempted to connect to the Stanford Research Institute on October 29th, 1969. The system crashed as he reached the ‘G’ in ‘Login’.

Fast-forward a two decades to a period when the public was only barely consuming computers, as they were still primarily being used only for research and business communication. The general public simply could not afford a personal computer.

Emerging from the dot-com boom of the 90’s and a technological explosion of innovation through the 2000’s is a global issue that has left U.S. politicians and CEOs scrambling. While computers have become more affordable, and the Internet more user friendly and intuitive, both have become integral parts of everyday human existence for nearly a third of the Earth’s population (30.2%).

As people have discovered the incredible potential for commercial gain that the Internet presents, it is only natural that a new “virtual economy” would develop. Just like in the real world, there are always people trying to cheat the system to gain some type of leverage (financial or otherwise), whether it is through slander, blackmail, gossip, or even theft. Such behavior exists in the Internet, often to greater extents. This type of questionable behavior is engrained in human nature, and is thus unavoidable. Society understands this inevitability and has had the benefit of thousands of years of justice systems to study and refine in order to arrive at a system that appears to work—in real life. The Internet, however, unlike...