Kim DotCom Thinks You Are a MegaIdiot

On Sunday evening, CBS’s 60 Minutes aired a report that reviewed the trials and tribulations of Kim DotCom—the self-styled villainous creator of the website MegaUpload. Prior to its infamous shutdown in 2012, MegaUpload was the premiere website for the illegal sharing of copyrighted works such as movies, TV shows, and music.

The 60 Minutes piece focuses primarily on the perspective of DotCom, including his delusion that he has been unfairly targeted by the U.S. Department of Justice (DOJ). He repeatedly states that he should not be held responsible for the actions of his users; the website was designed for file sharing, and what his users chose to share is not his concern. In fact, DotCom expresses a desire for his work to be compared to that of movie heroes such as James Bond, only to have Bob Simon aptly point out that he is in fact much closer in persona to Dr. No — the flamboyant lifestyle, the private island, etc. It is this persona that DotCom alleges is responsible for the FBI targeting him, rather than the fact that he built a website designed to illegally exploit copyrighted works for his own profits. He even goes so far as to make the outlandish claim that he is “just a plain businessman” (a remark at which even Bob Simon scoffed).

He must think we are all a bunch of MegaIdiots to believe such a line. Prior to the creation of MegaUpload, DotCom was a hacker, claiming to have broken into computers at NASA and the Pentagon.  In the 1990s, he was arrested for using computers to hack telephone lines and credit card numbers. Later, he pled guilty to insider trading, as well as being found guilty of embezzlement and other white collar crimes. In addition, not only was MegaUpload widely known to be a piracy haven for many years, the DOJ has released a mountain of evidence showing beyond all doubt that DotCom knew exactly what he was doing. The DOJ summary of evidence against MegaUpload lists 23 examples of instances (primarily from DotCom’s own personal emails) where it is obvious he is aware of the illegal behavior his site is promoting, as well as the fact that profit is his main concern:

On or about April 23, 2009, DotCom sent an e-mail message to VAN DER KOLK, ORTMANN, and BENCKO in which he complained about the deletion of URL links in response to infringement notices from the copyright holders. In the message, DotCom stated: “I told you many times not to delete links that are reported in batches of thousands from insignificant sources. I would say that those infringement reports from MEXICO of ‘14,000’ links would fall into that category. And the fact that we lost significant revenue because of it justifies my reaction.”

Furthermore, the business model of a piracy-based website like MegaUpload differs substantially from legitimate file sharing sites like DropBox. MegaUpload paid subscribers that uploaded infringing content because it drove traffic to the site, which in turn allowed them to earn increased ad revenue and premium download subscription fees from those users that downloaded pirated content. As a result, the DOJ indictment states the DotCom and his co-conspirators caused more than $500 million in economic harm to copyright owners. In contrast, DropBox does not pay its subscribers to upload content, earns no ad revenue, and sells no “premium download subscriptions.” Instead, it focuses on selling subscriptions to users who wish to upgrade from the initial 2GB of free storage they are allotted, and it limits the amount of traffic that each link can receive (thereby preventing abuse).

Despite all this, because of New Zealand’s extradition laws, it appears that for the time being, DotCom will remain in his adopted home country instead of returning to the United States to face the music. But the DOJ is still pursuing the case, which means that copyright owners still have reason to hope that this will turn out just like a Bond movie: a disastrous end for the villain.

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About the author

Michelle Wein is a research analyst at ITIF, specializing in the connections between international trade, innovation, intellectual property and economic productivity.
  • Steve

    Wow, biased much? Look, i’m not saying he’s innocent. But plenty of silicon valley entrepreneurs were once “hackers”. Dotcom identified a market and served it. Yes he probably also exploited copyright. But he’s not too far wrong to say he is not responsible for the actions of this users. They may have profited from the copyright infringement of users, but that is not a crime. The crime is not copyright infringement in itself, but perhaps an unwillingness to remove material that breached copyright laws. Youtube and other content hosting services also often remove copyright infringement content (and also often fail to remove it) but should they really remove this content? This is the flaw of copyright law in itself. Those notices are sent by industry bodies representing copyright holders. They are not independent. It is in their interest to send notices on all material (especially competitors material). So ethically, I think Mega can claim that they should not respond to those notices. Notices are not decided by a judge.

    The copyright holders are trying to be prosecutor, judge and jury. This is not right.

    It is complex in this digital age, but laws need to be revised with technology and legal systems need to be independent. It must be an independent source who verifies copyright infringement before any content host can be forced to take it down. I therefore think you’re really pushing it to say he is a criminal. He may not be the most ethically acting businessman, but the laws are flawed, and he took advantage of it. That is all.

    Also you should be careful to say it’s because of NZ’s extradition laws. Extradition law in NZ is pretty standard, and plenty of people are extradited in a relatively quick process. It is just a long process in Dotcom’s case given the legal complexity of how Dotcom was spied on by both the FBI and the NZ Police. The same thing (perhaps worse) would happen if the UK was trying to extradite someone from the US and Scotland yard had used potentially illegal tactics to gather evidence. I suggest before you comment on this again, you do some research rather than jumping on the bandwagon of the American media who have plenty to gain from Dotcom’s prosecution.

  • Michelle Wein

    You seem to think it’s both legal and ethical to help
    someone commit a crime as long as a judge hasn’t told you to stop. We
    know this isn’t true. Even DotCom knows it isn’t true. If you look
    at the DOJ’s summary of evidence, MegaUpload always responded when they learned about child pornography and other offensive material being stored on their
    servers. Why? Because they know they will be held responsible for what’s on
    their servers. And in addition to all of that DotCom was knowingly
    engaging in mass piracy—not just his users. If you read through the evidence
    you see that MegaUpload was trying to copy every single video from YouTube back
    in 2006—a clear violation of their terms of service.

  • Steve

    I didn’t say it was ethical or legal. I said it is unethical to respond to notices where the person sending the notice has something to gain from spurious notices. Is the government responsible for crimes committed using public assets (like roads etc)? Mega provided a service that didn’t have to be used for illegal purposes. Dotcom may have suspected illegal practices were occuring using his service, but that doesn’t make him complicit. And if someone else is to make an accusation where should Mega step in? At the accusation stage? What if that was done for other potential crimes? What if I locked up anyone who I thought was committing a crime? what if the police did it? surely the police would be acting illegally. So how is copyright different? Why should mega be made responsible for a policing service? especially when the people making any accusations have something to gain from this?

    The copyright laws are flawed. And just because one side is unethical, it doesn’t make the otherside automatically ethical. It is a very grey area. An alternative position might be sitting on the fence until such time as an independent process has been conducted. Which is worse? Preventing innovation by handing judicial rights to the rightsholders or potential infringements taking longer to resolve because it must go through some sort of tribunal? The U.S. is trying to do the first. It hands judicial power to companies. This is not right. This is not ethical. And I would have thought the ITIF would be the first to realise this. You surely want an innovative ICT future. Yet the current state of copyright law is aiming to prevent this. And you are now perpetuating it!

  • Steve

    Just one more point. A question really. What is your opinion of changing the format of content? i.e. ripping my cd’s so I can listen to them on my iPod. or ripping a movie so I can watch it on my laptop or iPhone (while on the train or whatever).

    In my opinion, I should only have to purchase content once to still use it on newer or alternative technologies. Copyright law may be yet to catch up with this in some countries – in NZ this is allowed but it is the sharing of content that is illegal. This also supports innovation. Copyright law should not be about preventing innovation, it is about protecting it. And in the virtual world it is not as clear cut as it once was.

    People don’t necessarily want to use hard drive space for storing their content (that they have rights to). Cloud services are all the rage at the moment. Services like skydrive, google drive etc probably don’t have to take content down because it appears to be used personally. It can also be shared relatively easily using skydrive or google drive. And these are not much different to Mega by the way. Mega provides a whole lot more space but less functionality. it is a good service where one could store all their content that has been purchased legally and use it personally. While they can also share it (as with other cloud services) they don’t have to and the provider of the service doesn’t know which content should not be shared or which content is/isn’t being shared. But we don’t see the FBI arresting the founders of skydrive or google drive. Its just that Mega might be an easier target for setting a precedent. It is a scary thought. If Dotcom is prosecuted successfully, don’t be surprised to see similar accusations being thrown at google and microsoft by the copyrights holders. Do we really want to head down a path of preventing the sort of innovative services that have come up in recent years simply because existing laws are flawed?!

  • Steve

    Your suggestion regarding child porn is ludicrous. It is clear to anyone who might view that content that it is illegal (and certainly unethical). If the content owner could prove otherwise I’m sure it could be restored. But this is not the case if I were to store a copied movie or mp3 on my mega account. It is not clear to them that I have shared it or if I do that I do not have a right to share it. If I am using it personally there is no problem and if I am a competing content producer providing it for free, it is very detrimental to me if Mega preemptively removed it. They can not respond in any where near the same way they could for child porn. There must be a greater process first. Furthermore I would regard the emotional damage from perpetuating child porn to be considerably worse than any financial damages some content holder may suffer by waiting for a process to occur. So yes there is a pretty strong reason to respond to accusations of child-porn and a very weak one for responding to accusations of copyright infringement.