Peer-to-peer, or P2P, is a decentralised approach to computing and the Internet whose best-known incarnation is Napster, the music downloading service. Last summer, there was an explosion of interest in the new field from Silicon Valley programmers, entrepreneurs and venture capitalists.
Some said P2P--a somewhat amorphous term that means different things to different people--represented nothing less than the future of the Internet, and would soon be used for all manner of services, from Yahoo-style searching to eBay-style auctions. Millions of dollars were invested in P2P, scores of companies were founded and an ocean of ink was spent by the press to chronicle the burgeoning movement.
Overlooked in all the excitement, though, were a few problems. No one knew whether P2P really worked, at least in the way some theorists were proposing. Or whether there were many uses for it that didn't end up violating copyrights, the charge leveled against Napster. Or if there were, whether companies could make any money on them.
Now, with technology funding in a funk after the bursting of the Internet bubble, those problems suddenly don't seem so small anymore. And the P2P party, which once looked like an exception to the dot-com downturn, seems more like a wake.
Among the recent setbacks:
- InfraSearch, a widely publicised Web-search company whose founders once boasted that P2P would be as big a business as the telephone, was sold last month at a fire-sale price after it was unable to raise more money. Last summer, a group of prominent investors, including Netscape co-founder Marc Andreessen, poured millions of dollars into InfraSearch, which quickly became the blue chip of the P2P world. But Sun Microsystems snatched it up for US$10 million--a sum that doesn't even register on the Richter scale of Silicon Valley deals--and then promptly folded it into an existing research-and-development project.
- Another well-known P2P company, Popular Power, closed completely last month after also striking out in raising funds. "We got caught in a bad time," sighs co-founder Marc Hedlund.
- And then there are companies formerly known as peer-to-peer purveyors, which now say they no longer like the term. "We've listened to the market and repositioned ourselves," says a spokeswoman for Engenia Software. A spokesman for Groove Networks, the company founded by Lotus Notes creator Ray Ozzie, says, "We clearly rode the P2P wave, but the sooner we move the conversation beyond the technology, the better."
