A flaw in Kim Dotcom’s defence

Kim Dotcom essayed a smooth, reasonable sounding defence during his Campbell Live interview.

Eight hundred files a second were added to the internet file sharing service he founded.

Megaupload did its best to monitor this huge volume of traffic for copyright-infringing material, but as a small business there was only so much it could do. 180 companies, including movie studios, were given direct access to delete pirated content.

More, Mr Dotcom said many companies offered services that let you store and share files on the internet.

He named Microsoft’s SkyDrive as one example (which lets you store and share up to 25GB of files free).

“Everyone is in this cloud arena, in the same business, has the same problems that we had battling piracy,” Mr Dotcom said.

Mr Dotcom’s US attorney, Ira Rothken, has taken a similar tack, saying Megaupload is “Just like YouTube.”

This "mere conduit" argument recalls a analogy used by Maurice Williamson during his time as ICT minister, while debating the culpability of ISPs in piracy. That is, if two men held up a bank, then took off down State Highway 1, you wouldn't hold NZTA responsible for the crime.

Microsoft NZ responds
So how does Microsoft NZ feel about being lumped in with Megaupload? I asked the company’s in-house legal counsel, Waldo Kuipers.

“The most important thing now is that the Megaupload defendants get a fair hearing," Mr Kuipers responded.

"We’ll provide evidence about Microsoft SkyDrive if it’s required in that context.” 

Indeed. Very equable.

A key difference
Had he taken the bait, Mr Kuipers could have pointed out a key difference between cyber-locker services offered by Megaupload, and those provided by Microsoft, Google, Apple and others:

Mr Dotcom’s service offered a series of tiered cash incentives to uploaders.

The US government indictment against him details an “Uploader Rewards” scheme awarded one point for every 1000 downloads. 500,000 downloads of a file placed on Megaupload earned its uploader $US300. One million reward points earned $US1000 and 5 million reward points $US10,000.

Crown Law, on behalf of the US government, can be expected to argue this system incentivised people to upload illicit material, and provided Mr Dotcom and his co-defendants with mechanisms to make money from it through ads served around it and premium subscriptions. (Although, of course, the material didn’t have to be illicit. It’s conceivable that thousands would download a video of your cat skateboarding. But in the indictment, the the FBI claims this led to a proliferation of pirated movie and music files.)

Neither does the YouTube comparison hold up. Google’s video sharing service restricts most users to 15 minute files. Megaupload allowed people to upload longer video files. People could watch up to 72 minutes for free. To see the rest of a movie they had to become a Megaupload premium subscriber, paying $US10 a month, or $US260 for a “lifetime” subscription.

Mr Kuipers declined to comment on Megaupload’s cash incentives programme, beyond confirming that Microsoft’s SkyDrive had “no rewards programme to encourage people to upload files.”