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File sharing is a process in which people trade media or software files with each other. Often, one person will make files available for sharing to anyone in the general public.
Peer-to-peer and filesharing
The history of Internet protocols is rich with mechanisms for transferring and sharing files. FTP, MIME and email, Gopher, and of course the World Wide Web are all mechanisms to distribute files. Windows file sharing (SMB) and Novell netshare, among others, are frequently-used LAN protocols for sharing files. Most of these systems, however, require a dedicated server computer for sharing files.
In modern parlance, "filesharing" has come to mean specifically sharing files through a peer-to-peer network. These decentralized networks make sharing files stored on a desktop computer with anyone else on the Internet much easier than traditional server-based file distribution protocols.
Filesharing and music
Filesharing became an important part of our cultural landscape in the late 1990s with four technological innovations.
The first was the introduction of broadband networking into homes, allowing people to retrieve and upload large files relatively painlessly.
The second was the MP3 compression file format, which allowed extremely efficient storage of music and sound files. A three-minute sound file for a song, which would take about 50Mb of space in its raw form, could be compressed to about 1Mb. This made transmission of songs over networks practicable for the first time.
The third was multi-gigabyte hard drives. A gigabyte of hard disk space can hold about 1000 songs compressed as MP3s.
A last element, by now almost ubiquitous, was digital compact disc or CD recordings. Most music buyers by the 1990s were purchasing most or all of their music in digital form. Not only did CDs put digital music, easily transferred (or "ripped") to computers, into the hands of the general public, but the high prices (about twice the price of an equivalent vinyl record) gave some people incentive to, well... cheat a bit on their music-buying.