P2P, CDNs, and Hybrid Networks : The Economics of Internet Video Distribution

One of the challenges of developing a cost effective distribution system that supports the proliferation of video streams is allocating the video files optimally among various means of media storage. In this paper we develop simple mathematical representations of the cost characteristics of two internet video distribution systems: Content Delivery Networks (CDNs) and Peer-to-Peer (P2P) networks and identify conditions under which each or a blend of the two proves most cost-effective. Our analysis shows that in many cases a hybrid system is likely to have lower costs than either a pure CDN or a pure P2P network. We identify the personal computers that form the backbones of P2P networks as a largely untapped network resource and suggest that potentially very large economic gains might be realized if policy makers can develop policies that effectively address some of the security and transaction cost problems that discourage PC owners from contributing capacity to P2P networks