A critical factor here is the social fabric -- as designers of secure networks know, protecting the perimeter of a network only works if the people inside the perimeter are trustworthy. New entrants can only be let into such a system if they are somehow vetted or vouched for, and the existing members must have something at stake in the behavior of the new arrivals.
The disadvantage of social sharing is simple -- limited membership means fewer files. The advantage is equally simple -- a socially bounded system is more effective than nothing, and safer than Kazaa.
as always clay's got some wonderful points and this makes for some awesome lunchtime reading. [via waxy]