Keall on the Dotcom case

writes at NBR:

I’ve previously written that Megaupload’s cash-incentive payments would loom large in Kim Dotocom and co’s extradition case.

And so it proved yesterday as the Crown alleged one user of Mr Dotcom’s file sharing service was paid more than $US50,000 as a reward for uploading files that proved popular with Megaupload members.

Files uploaded by user “H” – just one of many to take advantage of the cash-incentive rewards scheme – generated 1.2 million downloads between 2006 and 2011 (the expanded FBI evidence summary covers it in detail here).

The US Department of Justice, plus major Hollywood studios and multinational record labels, say most of the files covered by the cash-incentive scheme were copyrighted works and that Megaupload was rewarding piracy.

This is at the heart of the case, and the argument that Megaupload was not just like Dropbox – because it paid users for sharing content that got widely downloaded.

Mr Dotcom has also pointed out that YouTube gives uploaders of popular files a share of the Google Ad revenue generated by their clip. That could well be construed as an incentive programme. But to get a share of that Google Ad money, you have to be a trusted user. And if, in its vetting process, YouTube notices there is copyright-infringing music (for example, a zany wedding dance clip features a Taylor Swift soundtrack), the service then approaches the artist or rights-holder concerned and offers to either a) take the clip down or b) leave it up but cut them in on the revenue. Megaupload never gave a cent to an artist or rights holder when it generated an alleged $US175 million in membership fees and ad revenue generated around their material.

It is no surprise they were unhappy. It is possible though Megaupload did not breach US law. They certainly knew they were making money through encouraging copyright infringment. But they may hev done just enough to comply with the US MDCA which has a process for dealing with complaints.

Mr Dotcom has also styled Google as a giant piracy machine, saying it makes it easy to find copyright-breaching material, whereas Megaupload featured no search engine or other mechanism to help users find files stored by other members.

But the Crown has already focused on FBI evidence, gatheredthrough intercepted Skype conversations, that the Megaupload crew worked with third parties to make offending content on Megaupload easily discoverable.

Again quite damning.

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