In the last decade file-sharing has turned from a hobbyist activity into something with mass market appeal. From just a handful of sites there are now many thousands, many of them in the rat-race to become the biggest, fastest, most exclusive location, or a combination of all three. The problem is that for many options are narrowing, particularly when it comes to financing their operations. Is it time for file-sharing to go back to its roots?

While more people than ever before are sharing files online, one would be hard pressed (SOPA aside) to find a balance of positive and inspiring news stories in the file-sharing space last year.

Sure, many of the bigger public sites (Pirate Bay, Torrentz, KickAss, isoHunt, ExtraTorrent etc) continue to do well, but 2012 was awash with stories of web blockades, site shutdowns, arrests, copyright trolls and, perhaps most importantly, developing financial restrictions that limit sites’ abilities to operate.

Last year hundreds of sites lost their ability to do business with PayPal and other payment processors and this year it looks like that trend will continue.

Just yesterday we published an article on research from Boston’s Northeastern University that recommended going after sites’ opportunities to process payments through PayPal or credit card processors.

And just a few hours later we published another which explained the plight of some private trackers that are being subjected to PayPal demands for invites so the company can snoop around the site to decide whether to carry on doing business with it.

A site mentioned in the article, the 37,000 member TorrentBytes (TBy), is facing closure after its options for processing donations ran out. Founded in late 2004, TorrentBytes has its next server bill due at the end of January but thanks to a PayPal withdrawal has no way to collect money from users to pay it. Not even Bitcoins will work according to an admin.

“Bitcoin is not an option. We can pay next to nothing with it and there seems to be no ‘certain’ way to convert it to something we can use,” he says.

Additionally, a suggestion on how to bypass PayPal’s verification system by using a third party site is also rejected by the TorrentBytes admin.

“Using another site/community/forum/whatever as a ghost site to funnel funds to this one is also a no-go. If you people can find the link from this page, so can PayPal,” he explains.

So how do you fund a file-sharing site if donations are wiped out? Well there is advertising, but apparently that is also a problem when applied to the largely tech-savvy private site community.

“Advertisements would work if 99% of the userbase did not run Adblock. And even then the funds that come from somewhere would have to get passed through. And they are something that has been on the no-no list for this site since before day 1,” the TBy admin concludes.

Of course, advertising is being cracked down on too.

As reported earlier this month, the University of Southern California has just published its first Advertising Transparency Report in which it criticized the use of ads on ‘pirate’ sites. The report received widespread coverage and seems to be having an effect. According to Digital Music News, several advertisers including Levis are ordering their ads to be removed from file-sharing related sites.

However, at least for the immediate future and despite the rhetoric, public sites will still be able to finance their operations from advertising and affiliate programs. There are apparently enough companies prepared to place ads on the big sites at the moment but the drawback is that they don’t want to pay good rates to put them there, at least not when compared to those placed on a ‘normal’ website.

The future for some private communities is not so rosy. Despite being able to run on a $200 per month server many have taken on many extra costs, not least seedboxes and other servers to ensure that their sites are competitive in the torrent racing scene. Many are also investing in VPN tunnels to ensure their true locations aren’t discovered. These costs are continually adding up, just as sites’ abilities to receive funds are being throttled.

But it’s not all bad news, far from it.

There are still hundreds of sites to choose from and more content than ever before, but things will probably have to change if things get worse. Just like any other entity going through financial issues, belts will have to be tightened, compromises will have to be made. Do sites really need ten seedboxes and an expensive pay account on some scene topsite to exist?

The beauty of P2P and BitTorrent is that it’s a distributed system. Indeed, as far as sites are concerned bandwidth between users (and of course content) are both available for free and running in basic mode requires only a few dollars a month on top to pay for a server. Trading in the big gas guzzler for a something a little more frugal should be a survival option.

Of course, in many cases this could potentially mean file-sharing backing up in sophistication to 2004, to what may as well be the stone age to many of today’s younger enthusiasts. That said, ask anyone who was around at the time if it was so bad. Yes, at times Suprnova required 30 refreshes until a page actually loaded and yes, initial seeders uploaded at a snail’s pace, but the scene was buzzing and people were having fun. And if it’s not about having fun anymore, something has gone wrong along the way.

Maybe a fresh start and a resurgence of some old fashioned non-monetary gain values is what is needed. The money can’t be targeted if there isn’t any.