The technology advances
P2P technology, meanwhile, has advanced greatly since Microsoft released Windows XP in late 2001. At the time, P2P networks such as Napster and Gnutella were solely used to exchange music files. Since that time, Napster has been closed and re-opened as a legitimate pay music service similar to Apple Inc.'s iTunes. The second-generation Gnutella has waned in popularity because of aging technology and partial neutering by the record companies, which have flooded Gnutella with decoy files masquerading as songs, Ishikawa says.
Enter BitTorrent, which boasts faster file transfers and more reliable downloads than other P2P networks. BitTorrent was not the first P2P network to host pirated DVDs and software, but it was the first to make the trade of such hefty files practical. Moreover, BitTorrent claims it automatically cleanses its network of both viruses as well as decoy files. The latter defeats related antipiracy efforts by the music industry.
BitTorrent's other great advantage is its ease of use compared to "darknet" services used by more sophisticated pirates, such as Internet Relay Chat channels, private FTP sites and Usenet newsgroups. For most Internet users, darknets remain hard to find -- you can't simply Google them -- and intimidating to use.
Microsoft's worst nightmare would come to pass if P2P software piracy becomes as pervasive as the movie and music piracy. Already, the number of songs swapped illegally online surpasses the number sold in stores or online at sites like iTunes, says BigChampagne CEO Eric Garland, citing music industry estimates.
Victory by assimilation?
Faced with this situation, music and movie companies are starting to co-opt P2P. Record companies are using services like BigChampagne to scout music trends and sign up-and-coming bands, while movie studios such as Paramount and Fox have linked up with BitTorrent to sell movies via downloads.
The software industry lags by comparison. Microsoft is allowing consumers to download and buy Vista from its own Web site for the first time. Otherwise, Microsoft has "nothing new to announce in regards to any new distribution channels," Hartje says.
BitTorrent did not return a call and an e-mail seeking comment.
For Microsoft to ink a deal with BitTorrent to sell full software or even put up free trials would send out mixed messages, Ishikawa says.
"If you ever want to litigate, don't send out any freeware," he says.
Still, people like BigChampagne's Garland point out that P2P software piracy today remains a drop in the bucket compared to video piracy, which involve similarly hefty files. His reason: downloaded movies are just entertainment, but business software is used to run companies, do people's taxes and other important things. For those, most users still prefer the security blanket of technical support, access to software fixes and updates -- even manuals -- that only buying the software can provide, Garland says.
"Forget backdoor viruses or trojans," he says. "There are some things that are worth paying for."