E-Business Presentation
Sendspace Consultancy Report
Current Situation
Competitors Review
In the last decade there has definitely been an increasing trend of online file sharing (Cisco, 2011). While in the beginning users mostly downloaded files from basic P2P systems, over the years these systems have evolved in response to user requirements, faster internet connections, and mounting legal pressures to curb illegal copyright infringement. BitTorrent files became a popular alternative after direct P2P sharing systems began being systematically shut down by litigation. However, more recently, systems known as Cyberlockers have effective replaced BitTorrent sharing systems (TorrentFreak, 2011) (Lee, R., 2007).
In a Cyberlockers system, the illegal distribution of copyrighted material occurs by the users themselves and the webhosting service technically has no liability (Envisional, 2011). However, Megaupload, the industry leader, has been inundated with an overwhelming array of criminal charges and their site has been shut down. This creates an interesting position for companies like Sendspace. On the one hand, there is a considerable amount of market share up for grabs. However, on the other hand, if they continue operations in a cyberlocker system it will likely only be a matter of time before the company faces the same fate as Megaupload. Therefore, it is recommended that Sendspace begins to diversify its product lineup immediately so that it can hedge its future risk.
Introduction
Cyberlockers are one-click file hosting systems that have become the new development in file sharing technology and peer-to-peer file transfers (Antoniades, D., Markatos, E.P. And Dovrolis, C., 2009) (Lee, R., 2007). Sendspace currently operates solely in this industry and only provides online file hosting services to their clientele. The company was founded in 2005, and all of its servers are located in the United States. Since the U.S. led the charge to bring down Megaupload, this could be a risky location to host servers.
Sendspace offers a unique product mix that provides solutions for users to share large files (up to 10GB per file) over the internet. Their storage services support all file formats such as music, video, software, document etc. The company's target demographic is individual internet users however some corporate users also find the services useful. Users may upload files to the Sendspace site as well as download files totally free with some limitations to size and speed. There is also a substantial amount of revenue generated from premium users who subscribe to premium account to get larger storage, faster speed and use the site ad free.
Figure 1 - Sendspace Membership Options
This company was chosen because it has a unique stance in an incredibly turbulent marketplace. Although it is not likely for Sendspace to be the next in line to face legal issues pertaining to copyright infringement, the company will undoubtedly will encounter legal problems if it keeps operating with the same business model. Therefore Sendspace must make effective use of their time to diversify their product mix so that if legal issues ensue then the whole company will not be devastated. It is time for Sendspace to make a bold move in a different direction and this report was prepared with that in mind.
Current Situation
Various C2C e-commerce models were analyzed and applied to the Sendspace business model (Rayport, J.F. And Jaworski, B.J., 2001). In a C2C model like the one Sendspace uses transactions can occur in one of two ways. Transactions can take place either when:
1. Users (C) upload files to Sendspace - storage of contents
2. Users (C) download files from Sendspace - distribution of contents
Furthermore, financial transactions can occur either when users click the ads banner or subscribe premium account.
Sendspace acts as:
1. One of intermediates of online file sharing
2. Response for file storage and distribution
Figure 2 - Sendspace Business Processes
In 2011, global monthly internet traffic was estimated to be 1.78 Exabyte's (4.5 billion DVDs), 33% of the traffic or 6,000 petabytes (1.5 billion DVDs) were generated by file sharing (Cisco, 2011). According to a report launched in Jan 2011 (Envisional, 2011): 7% of global internet traffic was contributed by cyberlockers and of that traffic the follow breakdown was registered:
Figure 3 - Cyberlockers Traffic...
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