Business Background Megaupload Limited is the Hong Kong-based company Established 17th of July 2005; 150 employees Business type: File hosting service (including Image, Video, and music hosting ) Visitors per day: 50,000,000 (13th most visited website) Registered member: 180,000,000 Incomes: Premium subscriptions ($150M) and online advertising ($ 25M) Source: The United States district court for the eastern district of Virginia (2012) >>APMG 8119: DIGITAL ENTERPRISE
Main income - Service feesSubscription: Paypal, Inc $9.99 Monthly $59.99 Yearly $199.99 Lifetime Moneybookers €9.99 Monthly € 59.99 Yearly € 199.99 LifetimeAdvertising: AdBirte - $840,000 PartyGaming - $3 Million Source: The United States district court for the eastern district of Virginia (2012) >>APMG 8119: DIGITAL ENTERPRISE
Main Expenses – 4 sources1. Corporate entities, co-conspirators and employees2. Developing and promoting websites3. Uploader Rewards4. Infrastructure supporting to its businesses 65 million for Internet Hosting Services Carpathia Hosting-Carpathia.com: 25 petabytes of data storage Cogent Communications-Cogentco.com: computers, internet bandwidth, hosting, and support services Leaseweb-Leaseweb.com: computers, internet hosting, and support services Source: The United States district court for the eastern district of Virginia (2012) >>APMG 8119: DIGITAL ENTERPRISE
The basic flow how Megaupload works Megaupload harm to Copyright holders? Reproduce and distribute copies of popular copyrightcontent over the internet without authorisation Account for up to 40% of all file downloads on the internet Cause more than 500 million USD in lost revenue Source: The United States district court for the eastern district of Virginia (2012) >>APMG 8119: DIGITAL ENTERPRISE
The basic flow how Megaupload works What Governments Acted 2009 blocked in Hong Kong 2010 blocked in Saudi Arabia 2010 intermittently blocked in the United Arab Emirates 2011 blocked in Malaysia 2011 blocked in India 2012 shut down by U.S Government Source: The United States district court for the eastern district of Virginia (2012) >>APMG 8119: DIGITAL ENTERPRISE
The basic flow - Megaupload works 1 Upload copyrightedClient A song/movie 3 2 Song link Megaupload.com Server Others 5 Abuse Tool Upload copy ofClient B Copyright holders 4 copyrighted song 6 Source: The United States district court for the eastern district of Virginia (2012)>>APMG 8119: DIGITAL ENTERPRISE
The basic flow - Megaupload works (cont.)Megaupload:Megaupload is the first and only site on the Internet which pays consumers forhosting their files (Uploader Rewards):$1USD cash per 1,000 downloads of consumers’ uploaded files Basic service is available for free and allows users to upload files of up to 1,024MB (Expiration <21 days) Free registered users are offered 50 GB of total file storage (Expiration < 90 days) Free users cannot download files larger than 1 GB Premium users are offered 1 TB total file storage (No Expiration)Megavideo: is a free online video sharing service for a premium subscription >>APMG 8119: DIGITAL ENTERPRISE Source: CrunchBase (2012)
The Company Web Services Main WebsitesNo. Website Description of Service 1 Megaupload.com A one-click hosting service 2 Megavideo.com Upload associated and ad-supported video 3 Megapix.com Uploading of images 4 Megalive.com A live video-streaming service 5 Megabox.com Uploading of whole music libraries and playlists Put the “dinosaur record labels” out of business 6 Megaporn.com File-sharing of pornographic movies and images >>APMG 8119: DIGITAL ENTERPRISE Source: Sidenius, Jensen, Jensen, Fiktus, & Tommerup (2012)
Mega Networks - WebsitesNo. Mega Conspiracy No. Mega Conspiracy 1 Megaupload.com 11 Megahelp.com 2 Megavideo.com 12 Megagogo.com 3 Megaclick.com 13 Megamovie.com 4 Megaworld.com 14 Megaporn.com 5 Megalive.com 15 Megabackup.com 6 Megapix.com 16 Megapay.com 7 Megacar.com 17 Megabox.com 8 Megafund.com 18 Megabest.com 9 Megakey.com10 Megaking.com Source: The United States district court for the eastern district of Virginia (2012)>>APMG 8119: DIGITAL ENTERPRISE
Mega Networks - CompaniesNo Mega’s supporters No Mega’s supporters No Mega’s supporters1 Megaupload Limited 11 Kimvestor Limited 21 Mega Services Europe2 Vestor Limited 12 Trendex Limited 22 Megateam Limited3 Megamedia Limited 13 Monkey Limited 23 Megastuff Limited4 Megavideo Limited 14 Kimpire Limited 24 Megacard Inc5 Megarotic Limited 15 A Limited 25 Megasite Inc.6 Megapix Limited 16 N1 Limited 26 Seventures Limited7 Kingdom Int Venture 17 RNK Media Company 27 SECtravel8 Netplus Int Limited LLC 18 Megapay Limited 28 Bramos B.V9 Basemax Int Limited 19 Megamusic Limited10 Mindpoint Int Limited 20 Finn Batato Kommunikation Source: The United States district court for the eastern district of Virginia (2012) >>APMG 8119: DIGITAL ENTERPRISE
Kim Dotcom Kim Dotcom (38 year olds) is the CEO of MUL A dual citizen of Finland and Germany A resident of both Hong Kong and New Zealand (PR 29 November 2010) Director and sole shareholder: Vestor & Kingdom International Venture 64 bank accounts worldwide Sole shareholder of Megavideo.com, Megaporn.com, and Megapay.com Hold 68% of total shares of Megaupload.com, Megaclick.com, Megapix.com Source: The United States district court for the eastern district of Virginia (2012) >>APMG 8119: DIGITAL ENTERPRISE
Other ExecutivesNo Name Country Position on Megaupload Limited Benefits from Mega (Infringing copies of copyright works) Conspiracy1 Finn Batato Germany Chief Marketing and Sale Officer > $400,0002 Julius Bencko Slovakia Graphic Directors > $1,000,0003 Sven Echternach Germany Head of Business Development > $500,0004 Mathias Ortmann Germany Chief Technical Officer - Founder > $9,000,0005 Andrus Nomm Estonia Chief Development Software officer > $100,0006 Bram Van Der Kolk Dutch Programmer-in-charge > $200,000 Source: The United States district court for the eastern district of Virginia (2012) >>APMG 8119: DIGITAL ENTERPRISE
Copyright Act 1994Copyright Defined:“Copyright is an intellectual property right that exists in various kinds oforiginal works listed in the Copyright Act. Copyright is not concernedwith original and new ideas but with expressions of them in various formsor works”pg.505 - Gerbic, P., & Lawrence, M. (2006).
Copyright Act 1994What does the Copyright Act do/cover - Section 2 Sound All other Recordings & Copyrights Film
Global LawHow do you copyright something?Global – how does that work?• WIPO
Kim SchmitzKim.Com also know as:• Kim Schmitz• Kimble• Kim Tim Jim VestorColourful history:• Hacker• Dealing in stolen property• Computer fraud• Data espionage• Insider Trading• Faking your own death• Breaching trading laws
Kim.ComCharges:• Conspiracy to commit racketeering;• Conspiracy to commit copyright infringement;• Conspiracy to commit money laundering;• Criminal copyright infringement by distributing copyrighted work being prepared for commercial distribution on a computer network and aiding and abetting criminal copyright infringement;• Criminal copyright infringement by electronic means and aiding and abetting criminal copyright infringement.
Angry CustomersCarlos Sanchez Alveida – Spanish Anger• Barcelona Spain belonged• Complains his legal contents stored now was inaccessible for companies customers• Users gather together to file legal claim• Spain has already proved to be one tough cookie for U.S. Law after a similar file sharing website “Roja Directa”• As Roja Directa survives but in a different domain expectedly mega upload will survive
Suzanne Barbieri• London based musician – Beloved Aunt• Using Mega upload since 2009• Sends songs to producers & record label• YouSendIt could not be used by her• 2GB free account mega upload offered• Pre-release tracks in hand of US Govt.• Digital version of her work - freebie downloads“Piracy hurts artists”But so does this heavy – handed approach ofPenalizing legitimate users for sharing their work
Mark Ellul• Reader by profession• Used mega upload account for online storage and backups• Also send personal home videos about her daughters to their grandparents from Spain to Australia (HD Videos)• It was a pirated use but personal• No trust left for any file sharing website any more even drop box whether any time they will also be shut down by the FBI
DJ’s legal creations are also behind the locks now Mark Ellul receivedtweets regarding this, who is another victim of this file sharing website“Mega Upload”
Geoff Luk - Vancouver resident• Used 4GB space of mega upload for storage of files• Worked voluntary to take photos & Videos at 2010 winter Olympic games• Loss – 2 ISO DVD images that were created from PPT slide shows and photos and video taken while he was volunteering with 2010 Vancouver winter Olympic games• Was not possible to physically share both DVD copies of the photos videos, and ISO files with team of 75 Downtown Vancouver, and another 25 in Whistler/Blackcomb• Problem – had everything backed up locally, although uploading files again to another service will be inconvenient
Movant Kyle Goodwin• Deprived of access to his own property wanted the permission to grab his own file which was a part of his growing business in Ohio• Filed Motion for his property pursuant to 18 U.S>C. § 1963 AND/OR FEDERAL RULE, CRIMINAL PROCEDURE 41(g ) in May• His living is taping high-school sports events
The dramatic unexpected shutdown of mega upload• 180 million registered users• More than 50 million daily visitorsHad a chilling effect on the growing online storage industry which somepeople place in the “cloud computing” businessSufferers even many who were the sole owners and had proper copyright of their materialReason“Piracy”
Copy-rights vs. File-sharing“Due to deep changes in technology […] we are entering a new age where people participate in economy like never before” “… new forms of mass collaboration are changing how goods and services are… distributed on a global basis” (Tapscott & Williams, 2008)File sharing is the practice of distributing or providing access todigitally stored information:• computer programs,• multimedia (audio, images and video),• documents• electronic books.
Copy-rights vs. File-sharingPrimary information.File sharing is not necessarily illegal,even if the data being shared are covered by copyright.Primary property.File sharing is clearly to infringe on copyright laws.
Transparency Report Copyright Owners – 2,223 URL’s Requested to be Removed – 7,010,047* Top “Pirate” Domains in the Past Month: • fenopy.eu • filestube.com • isohuntz.com • torrentz.eu • 4shared.com* 10th of October 2012
MechanismsPlatform based cloud storage:• Apple iCloud• Google DriveMulti-platform based cloud storage:• DropBox• SugarSyncPeer-to-peer (P2P) and torrents:• Napster• The Pirate Bay• BitTorrentSome social networks:• VK (V Kontakte)• Odnoclassniki
Apple iCloudfor Apple users with Apple ID: Stores:• Mac-based computers • music, photos, apps• Apple TV • apps• iPad, iPhone, iPod • documents & filesFunctions:• access iTunes purchases• Synchronize data between devices• share digital images
DropBoxTool for storing and accessing any files from any devices withInternet connection.Tool, that integrates into any operation system = “virtual flash-drive”.Simplified the process of uploading, downloading, and updatingall kind of digital content.Allows to designate which files and folders will be accessible toanyone.
Piracy InfluenceThe technology itself is perfectly legal.Functional limitations:• Tightening access to shared files• Content scan (based on file’s control sums)• Automatic remove of “suspicious” files = censorship• Privacy reduction• Prohibition of “direct” links
P2P & TorrentsPeer-to-peer file sharing allows users to download media files using aspecial software client that searches for other connected computers.Peer-to-peer file sharing began in 1999 with Napster, a file sharingprogram and central servers that linked people who had MP3 fileswith those who requested these files.BitTorrent is a protocol used for distributing large amounts of data overthe Internet.Peer-to-peer networks have accounted forapproximately 43% to 70% of all Internet traffic.BitTorrent is utilized by 150 million active users.
Two Sides of File Sharing Positive:BitTorrent protocol can be used to reduce the server and networkimpact of distributing large files. • Amazon S3 "Simple Storage Service" equipped with built-in BitTorrent support. • The UK government used BitTorrent to distribute details about how the tax money of UK citizens was spent. • Florida State University uses BitTorrent to distribute large scientific data sets to its researchers. • Facebook uses BitTorrent to distribute updates to Facebook servers“We grew up with the Internet and on the Internet. […] The Internetto us is not something external to reality but a part of it. […]We do not use the Internet, we live on the Internet and along it. “ Piotr Czerski
Two Sides of File SharingNegative: Pose a threat to distribution of pirated content. File sharing hurts sales and influences on economic development. File sharing represents high risk in terms of malware. The risk to be punished by court decisions. Example: Minnesota woman to pay $220,000 fine for 24 illegally downloaded songs Ethic of illegal content download: • 75 percent of young people aged 18-20 supported file sharing: "I think it is OK to download files from the Net, even if it is illegal." • We forget the idea that content creators should be rewarded for their work.
Content Must Be Legal and Paid• Movies, books, music, games should be downloaded from the network only for a fee from the owner’s permission.• If person pays, he/she becomes a discriminating consumers who vote for the content by “paying money”.Psychology:1. People do not appreciate things that they get for nothing.2. People feel uncomfortable in excess of choice.3. Unlimited access to all desired content results in a spoiled child syndrome.
Copy Right into Copy Risk“Music can and should be made to feel free, even when it is not free.” Jim Griffin • Monthly payments • Blanket (collective) license –grant rights to distribute recordings to ISPs, collect money from them, and distribute the funds to copyright holders.
References:Go – Kim & MegauploadBBC News. (2012). Porfile: Megaupload file-sharing site. Retrieved October 6, 2012, from BBC Newshttp://www.bbc.co.uk/news/world-us-canada-16657800CrunchBase. (2012). Megaupload Limited. Retrieved October 6, 2012, from CrunchBasehttp://www.crunchbase.com/company/megaupload-limitedSidenius, K. H. R., Jensen, M. S., Jensen, B. H., Fiktus, M. K., & Tommerup, E. (2012). Copyright VS. Megaupload.Roskilde University Digital Archive. Retrieved from http://rudar.ruc.dk:8080/handle/1800/7515The United States district court for the eastern district of Virginia. (2012). Indictment. Virginia, VA. Retrievedfrom http://www.scribd.com/doc/78786408/Mega-IndictmentTonya - CopyrightCase 1:12CR3 (United States District Court for the Eastern District of Viginia Alexandria Division 2012).Gerbic, P., & Lawrence, M. (2006). Understanding commercial law (6th ed.). Wellington: LexisNexis NZ Ltd.World Intellectual Property Organization. (n.d.). Encouraging creativity and innovation.from http://www.wipo.int/portal/index.html.en
References (cont.):Garima – Customershttp://www.clipartguide.com/_named_clipart_images/0511-0811-0415-3734_Cartoon_of_a_Red_Faced_Angry_Man_clipart_image.jpg (Picture 1)http://comm200fa11.files.wordpress.com/2011/09/music_piracy_cartoon.jpghttp://www.fotosearch.com/CSP193/k1935509/ (Picture 2)http://knowyourmeme.com/memes/events/operation-megaupload (Picture 4)http://www.fotosearch.com/clip-art/angry.html#comp.asp?recid=55770885&xtra= (Picture 6)http://news.cnet.com/8301-1023_3-57441702-93/eff-to-federal-court-return-megaupload-data-now/(Picture 7)BRIEF OF KYLE GOODWIN IN SUPPORT OF HIS MOTION FOR THE RETURN OF PROPERTY PURSUANT TO 18 U.S.C. §1963 AND/OR FEDERAL RULE OF CRIMINAL PROCEDURE 41(g), 1:12-cr-00003-LO (IN THE UNITED STATES DISTRICTCOURT FOR THE EASTERN DISTRICT OF VIRGINIA ALEXANDRIA DIVISION May 25, 2012). Retrieved fromhttps://www.eff.org/sites/default/files/filenode/BriefMotRetProp.pdfBrodkin, J. ( 2012, January 21). Megaupload wasnt just for pirates: angry users out of luck for now. Retrievedfrom ars technica: http://arstechnica.com/gadgets/2012/01/megaupload-wasnt-just-for-pirates-angry-users-out-of-luck-for-now/
References (cont.):Garima – Customers (cont.)Roman, D. (2012, January 20). Spanish Anger at Megaupload Closure. The Wall Street Journal. Retrieved fromhttp://blogs.wsj.com/tech-europe/2012/01/20/spanish-anger-at-fbi-megaupload-closure/Dmitriy – iCloudCarmack, C. (n.d.). How BitTorrent Works. Retrieved from How Stuff Works:http://computer.howstuffworks.com/bittorrent1.htmCzerski, P. (2012, Feb 15). We, the Web Kids. Retrieved from Pastebin: http://pastebin.com/0xXV8k7kErnesto. (2010, Jun 25). Facebook Uses BitTorrent, and They Love It. Retrieved from Torrent Freak:http://torrentfreak.com/facebook-uses-bittorrent-and-they-love-it-100625/Ewing, A. (2006, Jun 8). Young voters back file sharing. Retrieved from The Local Swedens News in English:http://www.thelocal.se/article.php?ID=4014&date=20060608Fisk, N. W. (2009). Understanding Online Piracy: The Truth about Illegal File Sharing. Santa Barbara: ABC-CLIO, LLC.Holpuch, A. (2012, September 11). Minnesota woman to pay $220,000 fine for 24 illegally downloaded songs.Retrieved from The Guardian: http://www.guardian.co.uk/technology/2012/sep/11/minnesota-woman-songs-illegally-downloadedLevine, R. (2012). Free Ride: How Digital Parasites Are Destroying the Culture Business, and How the CultureBusiness Can Fight Back. New York: Anchor Books.
References (cont.):Dmitriy – iCloud (cont.)Maxey, R. (2011). The Infinite Dropbox. Salt Lake City: RMWP.Rich, J. R. (2012). How to Do Everything iCloud. McGraw-Hill Osborne Media.Tapscott, D., & Williams, A. D. (2010). Wikinomics: How Mass Collaboration Changes Everything. PortfolioTrade.