Hold Your Horses - We've Only Won a Reprieve

Quoting: Yesterday I wrote up a first reaction to the Megaupload case. Having spent some more time going through the indictment in much greater detail, I have some more thoughts and concerns.

First, it's important to acknowledge that the founder of Megaupload, who goes by Kim Dotcom, has a long history of flaunting flouting the law in a variety of ways. That makes him quite unsympathetic in a court. On top of that, there are certain claims in the indictment that, if true, mean it's quite likely that he broke the law. Whether or not the violations amount to racketeering & conspiracy is beyond any analysis that we're going to be able to do here. I would say that I would not be at all surprised if he's found guilty.

Where my concerns come in is in some of the "evidence" that's used to add to the overall indictment. To be clear, in a case like this, the issue is the evidence as a whole, combined to show intent and a general pattern to actions. So the allegations in the indictment don't necessarily mean that any individual action is, by itself, illegal. But, I still worry that some of the specific actions used to paint this picture are (1) potentially taken out of context, (2) are presented in a way that likely misrepresents the actual situation and (3) could come back to haunt other online services who are providing perfectly legitimate services.

Quoting:Coulton said: "Any other musicians notice that ever since they shut down MegaUpload, the money has just been POURING in?")

And that's the crux of it, isn't it? The DOJ claims that Megaupload's infringement has cost copyright holders a half-billion dollars over an unspecified timeframe. And now that it's been shuttered, the money should start pouring in. But, of course, it won't. So, what then? First off, as Coulton points out, there's bound to be collateral damage.

Quoting:One thing that anyone just becoming aware of these fights needs to know: the entertainment industry lobby is very, very good at what they do, and they never put all their eggs in one basket. While they love pushing for ever more draconian federal laws, they're always working multiple angles, including international trade agreements, laws in foreign countries and... state laws around the US, which they can then leverage to get other states to follow suit. If SOPA/PIPA really fails on the federal level, you'll see the same ideas pop up in all of those other places. In fact, we're already hearing stories of such plans in all three things, which we'll be covering in the days and weeks ahead.

Quoting:While many in the press have really enjoyed claiming that the SOPA/PIPA fight has been about Hollywood vs. Silicon Valley, we've been pointing out for a while just how silly that is. Months ago, we pointed out that it's a strange "fight" when one side (Silicon Valley) appears to give the other side all the weapons it needs to succeed (only to watch Hollywood then aim those weapons at its own feet). It's been pointed out time and time again that Hollywood has a habit of looking a gift horse in the mouth... and accusing it of piracy, when it later turns out to be the answer to Hollywood's prayers.

Quoting:CreativeAmerica, the astroturfing group that pretends it's a "grassroots" operation -- but which is funded by the major Hollywood studios and run by former studio/MPAA execs -- is amazingly inept at communicating with the public, especially considering these guys are supposed to be communications experts. Remember, this is the same group who, while fighting for stronger laws against copying, flat out copied the email of anti-SOPA activists, and changed a few words to push their own pro-SOPA message.

Their latest move is even more bizarre. The group is touting its latest slickly produced propaganda film, insisting that SOPA/PIPA are needed for a variety of reasons -- almost none of which are true. It throws out the bogus claim of jobs being at risk, even though the evidence shows otherwise. But where it gets totally ridiculous is that the video focuses mostly on Megaupload and Kim Dotcom/Schmitz. The point of focusing on Megaupload? To claim that it can't be reached under existing law. Seriously.

Quoting:Tim O'Reilly coined the famous saying that obscurity is a much bigger problem than piracy -- and it seems that the folks over at The Pirate Bay have constructed a simple experiment to test this aphorism out. It's called The Promo Bay, and it's a system for letting content creators promote their works on the front page of The Pirate Bay in up to three countries of their choosing (for free, of course). Remember, The Pirate Bay gets a tone of traffic -- over 1.8 billion pageviews per month, apparently. If you're an up-and-coming artist who no one's heard of, at some point it has to be pretty tempting to turn that firehose in your direction... even if it means having works distributed for free. In fact, it seems like artists should be lining up for such a program just to get that kind of traffic. Of course, we've seen some artists do deals with The Pirate Bay before -- to great success. The new program just seems like a away of making that easier for artists... and doing it more often. But it really does seem to be a quick way of asking the obscurity vs. piracy question in a much more direct and very, very real manner.

Quoting: Busta Rhymes Backs Megaupload, Says Record Labels Are The Real Criminals

There's a key point in all of this that we missed in our earlier analysis about paid accounts at Megaupload. In the indictment, the government seems to assume that paid accounts are clearly all about illegal infringing works. But that's not always the case. In fact, plenty of big name artists -- especially in the hip hop world -- use the paid accounts to make themselves money. This is how they release tracks. You sign up for a paid account from services like Megaupload, which pay you if you get a ton of downloads. For big name artists, that's easy: of course you get a ton of downloads. So it's a great business model for artists: they get paid and their fans get music for free. Everyone wins. Oh... except for the old gatekeeper labels.

In fact, this is part of the ecosystem, especially in the hip hop world. It's why the artists also support those hip hop blogs that the RIAA insists are dens of pure thievery. The artists release their tracks to those blogs, knowing they'll get tons of downloads -- and actually get money. If they do deals with labels, they know they'll never see a dime. Putting music on Megaupload is a way to get paid. Working with a gatekeeper is not.

And yet... Megaupload is the criminal operation? Seems like the actual artists know otherwise.

What Busta is pointing out is that services like Megaupload -- while it may be run by some sketchy individuals and probably crossed the legal line in some cases -- are actually a great new business model for artists, while also being the future of distribution. It's a great way to distribute, make money, and let fans get the works for free. And that's why the major labels are so freaked out by cyberlockers. It's not because there's so much infringement on there, but because it's a system whereby artists can get paid and can better distribute their own works to fans... without signing an indentured servitude contract with a label, which never pays any royalties.

Did Megaupload break the law? Perhaps. But it seems clear that the real fear on the part of the RIAA and the major labels is not so much about that. It's the recognition that such a distribution and payment system undermines much of their reason for existing, and takes away their ability to control artists. A smart label would learn to embrace these things. But we're talking about the major labels here, and so instead, they run to the US government -- who clearly knows nothing about the way modern artists monetize and distribute music -- and lets them try to paint a picture of just how "evil" services like Megaupload are.

But the artists know better.