Missing the point: The Megaupload takedown is about scaring the competition.

Logo shown on The Pirate Bay homepage after th...

I just saw this article on Torrentfreak where it reports on a recent Kim Dotcom interview, where he is dismayed that the law went against Megaupload so aggressively, even though they were co-operating so much with content owners and paid a lot of lawyers to confirm that they were within the letter of the law.

Towards achieving this protection, Dotcom told us that the company had developed relationships with 180 takedown partners – companies authorized to directly remove infringing links from Megaupload’s systems – and between them they had taken down in excess of 15 million links. Those companies included the major studios of the MPAA who, incidentally, in 7 years of the company’s existence had never tried to sue Megaupload for copyright infringement.

On the advice of Megaupload’s legal team, the company believed it had the same rights as YouTube in its case against entertainment giant Viacom. In that 2010 case U.S. District Judge Louis L. Stanton said service providers can not be held liable for infringement as long as they remove links upon copyright holder request – even if the provider knows that parts of their service are being used to host illicit content.

“[YouTube] won their lawsuit and I’m sitting in jail, my house is being raided, all my assets are frozen without a trial, without a hearing. This is completely insane, is what it is,” said Dotcom of his predicament.

This shows how naïve Kim Dotcom is about the causes of the aggressive raid on Megaupload. It wasn’t really that Megaupload was hosting infringing content. It wasn’t that Kim Dotcom is extravagant and an easy target. It wasn’t that the judges were misled by the content industry.

Is is because of this

Megaupload did something that scared the bejeesus out of the dinosauric content industries. It developed a new business model and got it endorsed by popular names of contemporary content culture. It was about to show the world that ad-supported content creation is viable and in the process steal some of their best-known names.

If it succeeded (and it would have if left unattended) it would have served as the first domino to fall, urging other companies to follow suit and more artist to bail the sinking ship that is the RIAA. This clearly had to be nipped in the bud.

It is no surprise that the content industry went from calling Megaupload a “rogue site” (even though it co-operated fully with them), to strongarming the New Zealand state to take action with such ferocity that they called anti-terrorist groups to raid the house of a non-violent citizen. The immediate action and the excessive response is not random. It is in fact perfectly planned.

The point is to make an example out of Megaupload, not as a detriment to pirates, but as a warning to anyone seriously thinking of challenging the obsolete business model of the RIAA without playing by their rules. The response was there to remind everyone that the law jumps at the behest of the plutocracy and publicly snubbing your noses at them is a recipe for pain.

In fact, the similarities with The Pirate Bay takedown of 2006 are not few. Both sites were considered legal in their respective countries until the moment that they were raided without warning. Both times the response was unheard of compared to the nature of the crime. Both sites mocked the old content industries and openly agitated people to embrace the future of content creation and sharing. Both sites were not the largest available. The takedown of both sites was hailed and promoted by the content industries as a bloody warning to others.

In the case of the Pirate Bay, it quickly surfaced that state officials had been strongarmed by US diplomats to “Take immediate and definite action or else…” and they followed suit. It will not surprise me in the least to hear that New Zealand state officials had been pressured off the record by the US via economic sanctions if they did not immediately take action against Megaupload, legal precedent be damned.

The point is not really to defeat Megaupload in court – even though given the farce that was the Pirate Bay kangaroo court, it’s not unlikely – the point is first to scare all sites like Megaupload into shutting down or toning down their business, regardless of how legal it seemingly is. This is why such excessive force was used by the police, to give nightmares to site admins. Secondly and most importantly, it was to disrupt Megaupload enough so that they won’t be able to proceed with their plans to try out a new business model.

Both seem to have been successful. Already many other large uploading sites have taken measures to prevent their users from effectively sharing files or closed down altogether. Furthermore even if Megaupload wins the trial, the time it will take and the disruption it will do to them due to their frozen funds and burnt clients (those who lost their subscription money) will most likely ensure that Megaupload won’t be able to recover its former glory1.

The distributed and free nature of the The Pirate Bay network/community helped them to quickly come back up and quickly resume services. As such, their takedown served actually as huge advertisement for them, and their popularity skyrocketed since then, making them one of the largest, if not the largest and most influential torrent site available, and a continuous trolling thorn in the content industry’s side.

Unlike them, Megaupload is centralized and concentrated in the hands of one leader figure, Kim Dotcom. As such, it is far easier to kill the beast by cutting off its head, which is exactly what happened in this instance. Megaupload cannot as easily be moved and brough up by allies, it cannot go rogue, and without the running accounts, it cannot function. It doesn’t matter if they are absolved in 5 years. By then it will be too late.

This is the weakness of centralized disruptive models I’m afraid and I doubt that Megaupload will recover from this, even though I’ll be pleasantly surprised if they somehow manage it. But until then, lets not delude ourselves that the takedown has anything to do with legality or proper procedure. We know it isn’t and so do they, but they do not care.

All they need to achieve is to convince everyone watching that when you go against them, the law will not protect you and even success in court will only be a phyrric victory.

 

  1. Naturally, I hope I’m wrong on this. []