megaupload

With MegaUpload Down, Who’s Next? RapidShare? SoundCloud? DropBox?

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Every digital locker service and file linking website is on notice now that MegaUpload and TVShack are down. The Feds have their banhammer out and aren’t afraid to use it. Sites better check their zettabytes of data. A single 50 Cent song can cause the Feds to swarm the founder’s house and seize their Predator statues. Forget SOPA and PIPA, apparently the US Federal Government doesn’t need new legislation in place to shut down major file storage sites and lock millions of users out of their file lockers. The bigger question, then, is who’s next?

It’s clear that the US Federal Government is ramping up its fight against illegal file sharing and hosting. It’s the new war on drugs. The plan is to have taxpayers foot the bill and then attack websites rather than regulating or encouraging innovation. The only thing missing is a C.A.R.E. (Computer Abuse Reinforcement Education) presentation at your kids’ grade school. Just say no to perfectly legal data sinks, everyone.

MegaUpload was a massive digital locker service. It was so large that the site accounted for 4% of the Internet’s total traffic. The site boasted 50 million daily users and 180 million registered users. Was much of that content pirated? Sure, but MegaUpload held the files the way a pawn shop holds a car stereo. Unless there’s explicit illegal intent expressed by the customer to the holder, it’s hard to figure out who is at fault. Plus there was plenty of legitimate data there. But it’s all gone now.

As pointed out in a Justice Department press release, MegaUpload’s downfall was that they seemingly promoted the sharing of copy-written material. The Feds also stated that MegaUpload utilized third-party sites to publicize the “infringing content” and “manipulated the perception of content” by omitting infringing content from the top content lists. Or, in other words, MegaUpload was actively hiding the fact its users shared illegal content — at least that’s what the Feds say.

This isn’t completely about piracy, though. The Justice Department asserts that the seven individuals and two corporations, Megaupload Limited and Vestor Limited, were involved in other criminal activities. They were charged with engaging in a racketeering conspiracy, conspiring to commit copyright infringement, conspiring to commit money laundering and two substantive counts of criminal copyright infringement. All they needed was drug trafficking and human slavery to make them the villans of the “You wouldn’t steal a car” anti-piracy commercials. The charges are serious even without the copyright nonsense thrown in. The defendants will face serious jail time if convicted of even a few of the charges.

The case of TVShack and Richard O’Dwyer is slightly different. The 23-year owner didn’t have life-size giraffe statues on his rolling New Zealand estate. No, instead, the young British student is now facing extradition to the US for simply linking to sites hosting illegal content. His mother says he has no connection to the US, a fact confirmed by his lawyer who stated the site’s servers were not even hosted in the US. In fact, as the story goes, O’Dwyer shut down the website himself the day after a visit from police and US officials in November 2010. O’Dwyer was not charged with racketeering, money laundering, or anything of the sort. His crime was linking to copyrighted material [pdf], a crime which could land him in a US jail for five to ten years under pre-SOPA and PIPA laws.

The US Government is on a slippery slope. MegaUpload was clearly operating a shady business. Sure, it’s likely that a good deal of its 150 million registered users uploaded personal, and therefore legal, content, but the site was also the notorious home of illegal content. Even TVShack encouraged the downloading of illegal content but just by linking and not hosting. But what’s next? Who’s next? What happens with someone drops an Uncle Kracker album into their SugarSync folder?

Several digital locker services operate like MegaUpload. RapidShare and MediaFire are two of the larger services. But these sites have undergone a face lift recently and at least appear to be much less nefarious than they once were. Other services like DropBox, iCloud, and Amazon S3 are open to hosting any file type a user uploads. They also make sharing easy, but in a way that’s a lot more private than MegaUpload. Still yet, there are sites like Zoho where users can easily share content, content that could be copy-written. But the prime goal of all these sites is open file sharing — just like MegaUpload.

It’s sites like SoundCloud and GrooveShark that worry me the most. I love SoundCloud and enjoy exploring other people’s musical works. But there is copywritten material uploaded to the service as well. A single 50 Cent song is listed in the Justice Department’s complaint against MegaUpload (General allegations, section 6). GrooveShark is also actively pursuing the licences needed for the material it hosts and streams. It’s a race GrooveShark might not win.

It seems the trick is to fly under the radar by not dominating in the space. MegaUpload was huge. At one time it was estimated to be the 13th most visited site on the Internet. But shutting it down will not curb file sharing en mass. More sites will pop up or users will turn to more underground services. When Napster crashed, Bit Torrent took off. ThePirateBay took Suprnova.org’s spot after it was shut down in 2004.

Valve’s Gabe Newell said it best, “Piracy is almost always a service problem and not a pricing problem.” Users flock to sites like MegaUpload, TVShack, and in the past, Napster, because they offer additional functionality and convenience. Look at Netflix, RDIO, MOG, Spotify: They all charge a fee for access to the same material that can be downloaded freely. People who care about their time don’t bother to download illegally. These services thrive because they offer the utmost in convenience, which is something the media companies have failed to provide yet.

The MPAA and RIAA have spent billions fighting piracy when they should have been instead spending billions to reinvent their constituents’ services. Their content is clearly desired. But they’re seemingly increasing their attacks. More sites will fall. The purposed legislation of SOPA and PIPA are simply ways to fast-track current practices. If they’re passed as currently written, Kim Dotcom will quickly have some new cellmates.