Continued fall out from MegaUpload arrests

A few days ago I discussed some of the actions taken by the hacker community and the impression that the MegaUpload arrests were related to SOPA. After some time we see that this arrest didn’t happen over night, you could argue the announcement and the timing was done poorly. However, I think that we should be paying attention to the ramifications of these arrests. Torrent Freak is reporting that there has been a massive response from the Cyberlocker companies. These cyberlockers were similar to MegaUpload in that a user would be able to upload a song and then anyone would be able to download it or stream the video. Now these companies are removing the search capabilities from their website and are restricting users to only their files.

While, what MegaUpload may have done may be illegal, the impact of the arrests is a foretelling of the impact of a law like SOPA. Internet companies argued that SOPA would be a job killing bill that it would kill innovation and break the internet. I think that this action clearly demonstrations that they are correct. For instance, Torrent Freak mentioned that several companies are shutting their doors and others are changing their services. Since it’s space based service, it is likely that each of these companies only has a few employees. However, they make a good chunk of change. MegaUpload was making several million and their competitors were likely making millions a month.

All of that money is going to be gone by next billing cycle. Not a single one of those companies where users were paying a premium will pay them another dime. Ad revenue will dry up, MegaUpload made almost a million alone since 2007 on ads. All of this money was getting put back into the economy through the purchase of servers, software and other equipment. It allows employees to buy stuff and was making a positive contribution to the economy.

From the different companies there was obviously innovation occurring. MegaUpload never allowed duplicates on its servers and when a duplicate was uploaded it would find another version of it and supply the link to the end user. Infringing content would just have the link removed, not the actual content. This would make searching for the real version difficult for copyright holders as it would be a game of wack the mole where the content would appear here, then with another link and so forth.

What other solutions could have been reached? I think there’s plenty of space here for further innovation for a business model. As users are using sites like this for personal storage and for video streaming, users are paying for content as well as clicking and viewing ads. Clearly there should be a way for the content owners to make money off of it as well. However, I have yet to read an article or a comment about the content industry approaching any of these companies, other than through DMCA, about working to pay some sort of royalty or set up a license agreement.

I think that a way to bring the balance back from the power being exclusively in the hands of the RIAA and MPAA (I’m just going to type RIAA from here on out), companies like Pandora.com, Spotify, Last.FM, MegaUpload (or any of its competitors), Google/YouTube, Vemeo and anyone else that uses licensed content should form their own consortium. Let’s just call it Content Users and Managers of America or CUMA for sure (I couldn’t think of anything really witty there (it doesn’t have to be just of America)). CUMA would provide a counter balance to the RIAA in that it provides equal footing and a way to combine the might of the end users. There are demands for these products, but the products simply do not demand the price premium they used to demand. Since these products aren’t able to demand the premium and the RIAA thinks that it should, they are overcharging as there are freely available alternatives which people flock to. Essentially, the RIAA needs to realize that for the websites allowing people to access the are getting paid pennies (if that) for a single view on a website. So for most sites, they can make more money if they don’t pay licensing fees. Lowering licensing fees is something that CUMA would be able to work for, to put it inline with expected ad revenue. This would allow for broader innovation in the market and reduced piracy.

It’s obvious from the amount of money that MegaUpload made that people are willing to pay to be able to watch as much content as they can when they want it. I feel like a broken record here (ha HA!), but people are willing to pay for content if it’s easily accessible.

I expect additional fall out from this. If SOPA or some similar style bill ever passes, expect this type of reaction to occur in other segments of the online industry. Online content is one of the places with a great deal of innovation and killing it would be a shame when there are possible solutions to this problem without resorting to industrial policy making and picking winners.

Update: I just saw this article Looks like MegaUpload has figured out a way to allow musicians to make money off of free downloads for original works through their site. This is some seriously awesome innovation.

The Government Strikes Back

The internet had thought it won a great victory with the black out of some seriously major websites, however it was a short lived victory as the Fed and its allies the vicious RIAA and MPAA have regrouped and launched a stunning counter attack destroying a rebel outpost on Hoth… errr Actually, The US government has shut down MegaUpload.com and arrested several employees for copyright infringement. You may remember MegaUpload for recently being involved in a dispute with Universal over a YouTube video. Where Universal issued false DMCA take down notices which required YouTube to take down the video. However, this video wasn’t infringing and MegaUpload sued Universal for the false claims. The interesting thing about this video is that it’s about all the legal ways you can use MegaUpload. The video is essentially an attempt by the company to show that there are legitimate uses for their services which, I’m assuming, was an attempt to get them into the safe harbor provisions of the DMCA.

To me, this action really shows that the US government doesn’t need SOPA to pass for it to censor the internet. It already has the ability to do so. SOPA would just put a rubber stamp approval on the actions that the government is already taking. This should be a wake up call. Yes, we had one with the joke of hearings for SOPA previously, however this is a slap in the face of the internet. It’s basically saying, sure we heard you, but you know what? you don’t matter.

Sure it might not be as easy as it would have been with SOPA passing and it’s not breaking the internet the way that SOPA would, but it’s still happening. As much as I hate Maddox, he’s right in his post about SOPA. We really have been pretty complacent, myself included. Yes, I’ve written a bunch, signed petitions and emailed my senators and congressmen multiple times, but big deal. Right now this is a hot button topic, but this isn’t going to go away. No one spoke up about the NDAA because it didn’t impact your ability to read Reddit or surf wikipedia. That law is as bad or worse than SOPA depending on what you think of freedom and civil liberties.

When I got home last night and saw that MegaUpload had been shut down, I was miserable. It made me feel completely impotent. That I was unable to impact the way the US government acts in any meaningful way. At this point, I’m not really sure what to do about this. If any other government would be doing this the US would be up in arms (perhaps literally) and would put a stop to it. Our government is doing this in our name and it’s horribly depressing that I can’t do anything to stop it.

Maddox is right. SOPA only failed because we were paying attention and we were able to get the tech giants behind us on it. SOPA will rear its ugly head again and we might be sleeping. The empire has struck back and we need to decide what we are going to do about it. Are we going to get some ewoks and take it down or are we going to keep signing petitions?

Anonymous has decided to fight back and has launched a large number of attacks on internet websites. As citizens that are deeply concerned with the MegaUpload action we need to ask ourselves, is this an appropriate response? Is this a way of protesting and assembling in an online space? Should anonymous be locked up for doing this? I think that this is a type of protest. Anonymous is as frustrated as I am and have decided to do something in response. It’s obvious that they felt like this is a direct attack on the internet in response to the SOPA protests and the “abuse of power” the internet displayed in taking down websites to protest SOPA.

It also begs the question, what will these website attacks actually accomplish?

What are some of your thoughts on this?

Update 1: I just saw that some 9,000 Hackers have joined Anonymous

Update 2: Apparently Anonymous is using a link that directs users to a Low Orbit Ion Canon DDoS tool that uses the users computer to attack a website. This is an interesting tactic as it will make it very difficult for agents to determine who was malicious and those that were  ignorant of what they were doing. Thus making the tool a more effective protest tool. It will be interesting to see what the ramifications of this new tactic are. I think it will be used again in the future and will make it as “easy” as signing a petition to join a DDoS without having to do the hard work of setting up the LOIC on your computer. Interesting.

MegaUpload and the DMCA

We’ve recently had a perfect example of the dangers of giving copyright holder more powerful weapons in their war on “piracy.” Megaupload works as a service where a user can upload content and allow other people to download it or share it at a later point in time. A good amount of the material is, in fact, copyrighted. There are versions of Game of Thrones and plenty of other videos. This services has totally legitimate uses though. There are competing services that you can use, something like DropBox or GoogleDocs which works in a slightly different manner. The users is required actively share the files. In Megaupload the uploader doesn’t have to actively share the file it can be accessed by many people.

MegaUpload would be a sure fire target if SOPA or Protect IP gets passed. What would happen is that MegaUpload would effectively be blacklisted from the Internet and cease to exist if they can’t fix the problem within five days. Additionally, any payments they would receive can also be blocked. This of course isn’t anything new, but recently Universal Music decided to use a DMCA take down notice to remove a MegaUpload video from YouTube.

This happens on a regular basis. These companies have programs that look for copyrighted material and then any offending material is issued a take down notice, which YouTube is required by federal law to comply with. There’s just one problem in this case. MegaUpload claims to own all of the copyrights to this song and video. Universal was issuing a false take down notice. As a result MegaUpload is now suing Universal.

What can we take from this? Well, that giving the authority of content control to companies that have an incentive to silence material that is harmful to their business is a bad thing. In this case, we have a company abusing state authorized power to censor a music video about another company. We should expect this type of behavior to continue if these copyright holders are given additional authority to censor the internet.

It appears that not only are record labels abusing their authority, but the DHS had seized a website, Dajaz1.com, for over a year without any sort of recourse. Particularly troubling in this case is that the blog did contain copyrighted material, but it was given to the blogger by the record labels and artists.

As users of the internet we all should be extremely concerned about what is happening on the internet in the name of Copyright. Freedom of culture is something we all enjoy and relish, however actions by Universal and the DHS severely threaten our cultural freedom and ability to have public discourse on the usage of technology. MegaUpload was using famous pop stars to stake a claim that they are a legitimate company. Using a law in an illegal manner was trying to silence that conversation.