Darknet is a term used by Microsoft in its paper "The Darknet and the Future of Content Distribution" written by
Peter Biddle, Product Unit Manager working on NGSCB

Paul England, cryptographer with Microsoft research

Marcus Peinado, Architect, Digital Media Division

Bryan Willman, presumably a Microsoft employee. He has written other papers, which can be found at
          http://www.informatik.uni-trier.de/~ley/db/indices/a-tree/w/Willman:Bryan.html

The term refers not to a physical network, like the Internet, but rather to an application and protocol that uses a physical network like the Internet. Such darknets include IRC, Peer-to-Peer networks such as KaZaA, Usenet, and even informal e-mail mailing lists. In the paper referenced above, darknets are decried as dens of thieves who wantonly break copyright law by sharing CD keys, files, programs, and information enabling others to obtain things and spread them around using the darknet in question.

Most interesting about the Darknet paper is a paragraph near the end, page 15, section 5.2 "Business in the Face of the Darknet"

There is evidence that the darknet will continue to exist and provide low cost, highquality service to a large group of consumers. This means that in many markets, the darknet will be a competitor to legal commerce. From the point of view of economic theory, this has profound implications for business strategy: for example, increased security (e.g. stronger DRM systems) may act as a disincentive to legal commerce. Consider an MP3 file sold on a web site: this costs money, but the purchased object is as useful as a version acquired from the darknet. However, a securely DRM-wrapped song is strictly less attractive: although the industry is striving for flexible licensing rules, customers will be restricted in their actions if the system is to provide meaningful security. This means that a vendor will probably make more money by selling unprotected objects than protected objects. In short, if you are competing with the darknet, you must compete on the darknet's own terms: that is convenience and low cost rather than additional security.
You can read the Darknet paper in its entirety at http://msl1.mit.edu/ESD10/docs/darknet5.pdf

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