A pricing mechanism for digital content distribution over computer networks
This paper uses modified economic growth theory to compare and contrast two currently available ways of digital content distribution: the client-server model and the peer-to-peer (P2P) model. We describe a monopolistic pricing scheme for distributing digital content over P2P networks that rewards peer users who actively participate in the distribution process. Our results show that digital distribution through a P2P network is more profitable and more efficient than in the corresponding client-server setting, if the pricing mechanism used provides strong incentives to users to share content. The basic results hold when the model is extended to include time-variant preferences across generations of consumers, and when the monopolist performs price discrimination based on generations. Some practical implications from the theoretical analysis are also discussed.
pricing digital content distribution client-server networks content sharing information goods monopolistic seller peer-to-peer networks user participation incentives