Introduction | What is B2b eMarket | Revenue Sources | Business Models | Landscape | The Alternative | Conclusion | eMarketplaces | Web Resources | Bibliography

The Alternative

Shaw Fanning, a few years ago, figured that millions of people scattered around the globe had MP3 files sitting on their hard disks, without any real chance to share them between each other. He decided to solve the problem, but it was clear from the start that he couldn’t just collect all MP3s on a central server and distribute them from there. Apart from the costs and copyright obstacles, the sheer size of all those files and the constant demand for uploads and downloads, would make physical centralizing impossible. Instead, Funning turned to peer-to-peer networking. The files stayed where they are, on individual hard drives. The central server, Napster, simply maintained the central list of who had what and, whenever a user requested a song, it put the user in touch with the source to exchange MP3 directly. The worldwide acceptance of the software brought peer-to-peer (P2P) into the spotlight, but made it unfortunately almost a synonym for MP3 file sharing.

P2P is a type of network in which each workstation has equivalent capabilities and responsibilities. This differs from client/ server architectures, in which some computers are dedicated to serving the others.

The technology was in use already for quite some time before Napster applied it, and was used for much broader purposes than the simple music exchange. For instance, Intel was using P2P networking already for years for distributed computing. However, Napster and the companies that followed up the idea, such as KaZaA and Gnutella, helped to introduce the advantages of technology to a broader audience and attracted the venture capital for the further technology adaptation for business use.

During the last two years, a couple of innovative entrepreneurs applied P2P infrastructure onto their e-marketplace models. One such venture was Netrana, an e-marketplace with a mission to facilitate online transactions. Netrana’s peer-to-peer trading product, SpotDealMaker was created to change the paradigm of doing business online by substituting the traditional, centralized hub approach with a system that allows business to transact and pass information by direct connections between them. Netrana’s CEO, Rusty Braziel, spotted that there are markets, such as niches in the chemical industry, where only 10 to 20 individuals are actively involved in trading. The centrally-based e-marketplaces models failed to attract those buyers and sellers, because the products characteristics were so unique that relying on an e-marketplace to set up the business rules for conducting transactions was not acceptable. The transactions there tended to have stayed on phone and fax, so Braziel configured SpotDealMaker to support those transactions exactly in the way they were happening offline. “What SpotDealmaker does is to replicate that process”, explains Braziel. “You and I, between ourselves, decide how we want a transaction to look, I push the transaction to you dynamically, and you change it and push it back to me. We’re not using a Web site, there’s not central server in the middle of the transaction. I am developing the transaction, sending it to you, like I called you up and told you about it over the phone, you react to the transaction, which you own on your machine ….. The dynamic that existed before between you and me over the phone was exactly duplicated by SpotDealMaker.” To put it in a broader context, the P2P infrastructure, unlike center-based e-marketplace, has proved to be able to recognize and support the existing market relationships and processes conducted between all market participants. This infrastructure could therefore be more suitable for a huge number of smaller, more customized spot markets that function like peer-to-peer webs where individual buyers and sellers conduct series of bilateral transactions with each other, based on continuous informal market communications. These markets are diverse, complex and self-organizing, and centralized B2B e-marketplaces that tried to morph them into one uniform model, with predefined business rules and payment terms, indeed found significant resistance from individual buyers and seller to join them so far. On the other hand, within the traditional spot markets, where large number of buyers and sellers are trading actively with intangible and standardized products, market liquidity is self-generating and centralized e-marketplaces have generally achieved a great success.

There is another possible application of P2P, the so called “enterprise collaboration” software. Such software lets numerous users work on the same project in real time and create working groups on the fly. Thus, again, it is able to mirror the way business actually functions, with a mix of outside contractors and company employees coming together to work on projects. For example, Groove Networks, downloadable client software, lets users create shared working spaces with others on the network. A user running Groove may invite participants into shared space using e-mail or Instant Messaging (IM). When they accept, the space appears on each participant’s screen. The group can share files, mark up virtual whiteboards, and surf together. The difference from the centralized e-marketplaces that offer collaboration tools is that the software lets a group define its own set of tools it wants to use for communicating and collaborating. An architecture firm may share AutoCad files, while law firms may share legal documents. The shared space is dynamic and vanishes when users decide that they do not need it anymore. Alliance Consulting, an IT consultancy, applied the Groove Networks to interconnect onsite workers and external employees and clients. The users got open access to files, proposal development, job tracking and product management, all of which added up to avoiding general meetings. According to John Wollman, senior vice president of solutions at Alliance, peer to peer enabled closer collaboration on projects, which led to a higher degree of customer intimacy. In partnership with Groove, Microsoft announced last year its premier P2P program, HailStorm, which combines Microsoft password technology and collaboration features. As an illustration, if a HailStorm user books a flight through an online agency, the program would pay for it with a person’s credit card. A handful of other big companies, such as Cisco, Ford Motors etc., are testing collaboration P2P systems as well, but for the moment, although most of them recognize their potential, they have not widely applied any of them. The two biggest obstacles seem to be lack of control over the system that is totally decentralized and security issues.

Advanced Reality, a company that makes applications collaborative, released a couple of months ago Presence-AR, a P2P collaboration platform that allows enterprises to embed real time collaboration capabilities into existing and new applications without modifying or rewriting source codes. In fact, the software is “data centric”, meaning that data is not bound to a particular hardware platform, operating system, application and user interface, whereby users may collaborate on the same data using different applications and access devices. For example, users from different companies could collaborate on financial spreadsheets using the applications that they are familiar with, such as Microsoft Excel, Lotus 1-2-3, or customized accounting applications. In addition, the software dynamically adapts views of the same data for the capabilities of any access device including PCs, handhelds and mobile phones. A couple of centralized e-marketplaces are pioneering the data-centric models as well. The idea is to leverage the capabilities of new technologies, such as UMTS and GPRS, onto e-marketplaces, so as to decrease costs of customer acquisition and support, while bringing at the same time more participants into the arena.

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