This is the second part of my interview with Wayne Rosso, ex-CEO of Grokster and ex-CEO of OptiSoft (a Spanish P2P company) who was kind enough to share his perspective of the file-sharing landscape with this Weblog. SEE PART 1 HERE.

4) More specifically, what's on the P2P horizon? What sort of killer P2P app would reunite the fragmented P2P marketplace?

I think that VOIP is the next killer app for p2p, but I'm sure that it will quickly become the target of similar legislative witchhunts, this time instigated by the telecom industry which makes the entertainment business look like a pimple. This could lead to true upheaval on a grand global scale that would dwarf the troubles that the record industry likes to lay at the feet of our business and technology.

5) How serious are the deficiencies of authorized music services? Infested with DRM, shredding the market with conflicting file formats, destroying consumer value by requiring closed loops between service and device—it's a bad situation. But how bad is it? What must music services do to effectively compete with P2P?

I think that the biggest problem the services have are actually the record companies themselves. They are the ones who insist on certain restrictions, pricing, distribution technologies, etc. At the moment there's no way that paid services compete with p2p on a volume basis. And you can't make money selling $.99 tracks unless you sell hundreds of millions of them. Let's look at the numbers. Apple has sold 70 million iTunes in it's first year, through 4 million copies of its iTunes software. And Apple claims to have 70% of the paid download market. So if that's correct, the entire paid download market last year consisted of 100 million tracks. That's gross sales of a little less than $100 million.  OK, 100 million tracks a year, and the sales have stagnated on iTunes. And in the case of Apple, each users evidently bought 17.5 itunes in the first year.  That comes to a little over 1 CD per user per year. So Apple sold between 4 and 5 million CDs last year.

Not very impressive when Norah Jones sold more than that with one release. Let's look at the p2p world. Hundreds of millions of people around the world have downloaded p2p software and at least 120 million globally use p2p networks on a regular basis. Over 1 billion files are traded every month.  That means that in one month p2p traffic is 10 times greater that the entire annual paid download business. The numbers are staggering. So the only way that paid services can start to get traction is through pricing. Prices are too high. They must come down if the industry truly wants to embrace online sales. Otherwise it's going to be a long hard road.

SEE PART 1 OF THIS INTERVIEW HERE.