Megaupload Shutdown: Should RapidShare and Dropbox Worry?

An anonymous reader sends in an article discussing whether other commonly used file storage sites are in danger of being shut down now that Megaupload has been closed. Quoting: "In the wake of the crackdown on the file-sharing website Megaupload, sites offering free content-sharing, file linking and digital locker services, such as RapidShare, SoundCloud and Dropbox, could be next in the crosshair of anti-piracy authorities. ... RapidShare and MediaFire are two of the biggest services left after Megaupload's exit. However, these sites have undergone a revamp, and now ... no longer host pirated content that could lead to a permanent ban. Others in the line of fire are DropBox, iCloud and Amazon S3, which support hosting any file a user uploads. Though their intention of supporting open file-sharing is legitimate, there is really no control over the type of content being uploaded."

Comments

Yes

[tehlinux]

Yes they should.

Re:Yes

[FreeCoder]

You're correct, and there's big difference between RapidShare and the likes of Dropbox. MegaUpload, RapidShare etc is clearly profiting from copyrighted content. They pay users to upload popular files, and in 99% of cases it is pirated content. In turn they profit when users want to access those files. It's a huge "industry", and there will most likely be many more arrests when the list of affiliates that directly made money by uploading copyrighted content without permission goes public.

Dropbox doesn't have any such incentive for users, and they're free to download from. It's the uploader that pays for file upload space just like with web hosting, and he (nor Dropbox) cannot make money by uploading pirated content.

Re:Yes

[FreeCoder]

It's not a matter of expecting them to police content or users, it's a matter of MegaUpload's intentions. The site was clearly profiting from piracy. Likewise, not all hosting companies are going to be illegal just because police bust a hosting company that clearly is profiting from illegal content, for example by naming themselves "Child Porn Hosting" or "Warez ISP" or where it can be proofed that the company is actively acting as such. In this case MegaUpload's internal emails also showed they were fully aware of this. On top of that they went around DMCA laws by not actually deleting the files. If other user uploaded the same file, it was not actually uploaded again but was only given private url. When DMCA notice came, only the specific URL was disabled and the infringing content was still available at any other URL. Then there is still the whole matter of directly profiting from it.

Re:Yes

[fightinfilipino]

charging piracy for this is incredibly problematic, though. if the model is basically "we pay if your file is popular", but there is no checking of the actual file, whether the user has actual rights to the file or not, or encouragement of piracy specifically, all that's left is accusing MegaUpload of encouraging popular files.

last i checked, not only is it NOT illegal to pay for popular things, it's ALSO one of the fundamental principles behind the "free market".

this whole thing is troubling. especially since services like MegaUpload CAN serve as alternative distribution channels out of the control of old media. if old media can get these services shut down, it's not because of any criminality: it's because they're trying to eliminate competing business models.

Re:Yes

[poity]

No, the issue isn't about storage of pirated files, it's about leveraging access to pirated content in order to make money.

The difference between MU and hard drive makers is that hard drive makers don't have revenue sharing schemes whereby they pay people who advertise and sell hard drives filled with pirated content. The more apt comparison would be a situation wherein Toshiba, Seagate, etc. are paying private individuals who possess pirated content to make that content available to the public in a scheme to drive hard drive sales.

Re:Yes

[shark72]

if the model is basically "we pay if your file is popular", but there is no checking of the actual file, whether the user has actual rights to the file or not, or encouragement of piracy specifically, all that's left is accusing MegaUpload of encouraging popular files.

Note the IF. What you describe is not how MegaUpload operates. If the indictments are to be believed, the operators were caught numerous times encouraging the sharing of content that they knew to be pirated.

You're correct that a truly content-agnostic file storage and sharing site should have nothing to fear. DropBox is safe. The operators of MegaUpload, however, serve as a textbook example of purposely avoiding all the safe harbor opportunities. This isn't because they were stupid -- far from it -- but because this is their very business model.

The legal concept of mens rea -- latin for "guilty mind" -- applies here. The MegaUpload guys, through their actions, have been nailed fair and square. This is their choice. They took the lucrative, but risky, path, of actively courting piracy. Their business model is wholly different than that of DropBox.

Re:Yes

[X.25]

You're correct, and there's big difference between RapidShare and the likes of Dropbox. MegaUpload, RapidShare etc is clearly profiting from copyrighted content. They pay users to upload popular files, and in 99% of cases it is pirated content. In turn they profit when users want to access those files. It's a huge "industry", and there will most likely be many more arrests when the list of affiliates that directly made money by uploading copyrighted content without permission goes public.

So, for the sake of the argument, let's assume that 'pay for downloads' program is still running on Mega.

And decides to upload a new song that (s)he just made.

And 50 million people download it.

And (s)he gets paid by Mega.

Would you have any objections to that?

Program in itself is not a problem. Problem is that most popular downloads were those that infringed copyright and were uploaded by random people.

Re:Yes

[Dr. Hellno]

If you find the closure of Megaupload troubling, just read the indictment. I won't consider the legal matters here, but the emails cited in the indictment paint a pretty clear picture of intent. They show that:

A) In many cases, Megaupload employees knew that *specific* files on the site were in violation of copyright, but they took no action to remove the content
B) Knowing specific files were copyrighted, megaupload still paid out rewards to those files' uploaders
C) In a few instances, staff members shared links to copyrighted content with eachother and with the internet at large.

Those are just the most egregious points, which basically demolish their claim of safe-harbor. But there's more: The claim of conspiracy at first sounds ridiculous and overblown, but it begins to make sense when the indictment describes all the ways Megaupload is alleged to have actively worked to conceal piracy. Claims of DCMA compliance are shot to pieces by an allegation that certain links were the subject of takedown notices, but remained active for over a year. I could go on, but just read the thing yourself, it's actually pretty interesting for a while.

The guys at Megaupload sound hella guilty. The only other explanation is a massive conspiracy involving the FBI and the Justice Department, but I have trouble believing that.

Re:Yes

[Anonymous Coward]

The standard created by the grokster SCOTUS case rest upon if they are "inducing" users to infringe copyright. I think that rapidshare and megaupload clearly fit that standard based upon their business models but dropbox does not.

Re:Yes

[anagama]

You have made a couple assumptions in your post by relying solely on the indictment. As Glenn Greenwald pointed out in his article on the civil liberties issues at play here, http://www.salon.com/2012/01/21/two_lessons_from_the_megaupload_seizure/singleton/ :

The Indictment is a classic one-side-of-the-story document; even the most mediocre lawyers can paint any picture they want when unchallenged. That's why the government is not supposed to dole out punishments based on accusatory instruments, but only after those accusations are proved in an adversarial proceeding.

What you have done is convict MegaUpload based on nothing more than an assertion by the government, likely at the prodding of *AAs. The story told in the indictment may or may not be true and it definitely presents only one side of the story. Its this sort of rush to judgment, that allows the government to exercise due process free detention and execution and barely anybody bats an eye. Glen says it better than me though:

Whatever else is true, those issues should be decided upon a full trial in a court of law, not by government decree. Especially when it comes to Draconian government punishments - destroying businesses, shutting down websites, imprisoning people for life, assassinating them - what distinguishes a tyrannical society from a free one is whether the government is first required to prove guilt in a fair, adversarial proceeding. This is a precept Americans were once taught about why their country was superior, was reflexively understood, and was enshrined as the core political principle: "no person shall be deprived of life, liberty, or property, without due process of law." It's simply not a principle that is believed in any longer, and therefore is not remotely observed.

Re:Yes

[laughingcoyote]

No, it's not a matter of intentions. All the companies listed above (hard drive manufacturers) and many others (computer manufacturers, broadband ISPs, component manufacturers, encryption providers, etc.), directly or indirectly benefit from piracy, because to a significant portion of their users, that's a main or sole reason for using their product/service. That does not mean they are responsible for the actions of their users, any more than the telephone company can be sued under anti-telemarketing laws even though they very well know some users are violating them.

Also, your naming bit fails to make sense. The site was called "MegaUpload". "Mega" is a very common prefix, and "Upload" is exactly what the site allowed its users to do. I fail to see how that connotes illegal activity. Nor do I see how the internal emails matter-I'm sure any site that allows user uploads discusses internally the likelihood that some of those are copyright violations and what to do about them. I imagine you'd find similar emails at Flickr or Youtube, and I know you'd find discussions of that sort on Wikipedia. It's an inevitability of running a user-generated content site.

Faking compliance with DMCA requests, on the other hand, is likely to land you in trouble-and is the only thing you list that should land you in trouble. I haven't seen anything about that though, could you please provide your source for that?

Re:Yes

[kelemvor4]

As long as the government is able to shut your business down BEFORE going to trial, every business should worry. Especially businesses in the same industry as megaupload.

Re:Yes

[Jane Q. Public]

At last a voice of reason.

When will the average American (or, perhaps more importantly, politicians) learn to distinguish punishment for illegal activity from prior restraint?

Hint: in general terms, it is not permissible in this country to prevent people from performing a certain act simply because some of them might commit a crime.

Laws exist to punish actual criminals, not to prevent people from committing innocent acts just because their neighbor might be a criminal. The former represents justice, the latter unconstitutional government oppression.

"Faking compliance with DMCA requests, on the other hand..."

Even the DMCA goes too far, however, by forcing acts based on mere accusations, before there can be any "due process".

Re:Yes

[Dan East]

The MegaUpload guys, through their actions, have been nailed fair and square. This is their choice. They took the lucrative, but risky, path, of actively courting piracy. Their business model is wholly different than that of DropBox.

What blows my mind is that this Kim Dotcom guy could be THAT greedy. Obviously he has some minimal amount of required intelligence to get the infrastructure and technology in place to operate at the massive scale that MU was at. However, it seems to me that anyone in their right mind would bail from something so risky after reaping a few tens of millions of dollars. He could have stopped a year or two ago, after putting away millions of dollars, and claimed that although he tried to run a legitimate, legal online business, too many people were taking advantage of his site in ways he didn't intend or condone, but it would require too many resources to try and police all the uploaded files. So his only recourse was to shut down the sites and close up shop. He'd have almost certainly escaped any legal problems once everything was shut down, and he could've just quietly taken his money and lived high off the hog for the rest of his life.

But no, this guy was greedy. REALLY greedy. $4.9 million in cars alone at his main residence. $24 million dollar estate. $12,000 PER DAY rent for their office headquarters in Hong Kong. Money was his downfall, that's for sure.

http://newsfeed.time.com/2012/01/21/megaupload-founder-kim-dotcom-by-the-numbers/?iid=biz-main-mostpop2

Re:Yes

[Thing 1]

What blows my mind is that this Kim Dotcom guy could be THAT greedy.

Exactly, he should have taken a lesson from the 1% and stopped at ... destruction of society?

Re:Yes

[paiute]

...Toshiba, Seagate, Samsung, Hitachi and Western Digital are profiting from Pirating because people store illegally acquired content on their hard drives.

Somewhere a lawyer smiled in his sleep and kicked his feet like a puppy after a bunny rabbit.

Re:Yes

[Anonymous Coward]

Who doesn't benefit from copyright infringement? Think about this: how many people would pay $50 or so for high speed internet every month if they couldn't download whatever they wanted? If you were restricted to only going to public domain sites, previewing one tenth of a song only before buying it, not allowed to download a movie and see it pixellated before going to theaters or buying the DVD, or couldn't download an ebook of a book to flip through before buying it, how much would that influence whether you even decided to keep an internet connection or not? Imagine if any of these actions which could lead to purchases resulted in an immediate arrest with no possibility of not getting caught (imagine a rigid system for this hypothetical situation). Would you still use the internet that much? What would the internet then become? A giant outlet for shopping, wikis, and social networks, and that's it?

A good question is what percentage of the internet relies on piracy -- both services like Wordpress and paid storage like GoDaddy hosting? Are subscriptions to high speed internet contingent upon users being able to pirate every now and then even if it's not to a really huge degree? How much would 4Mbps versus 1Mbps matter if you literally couldn't download DVDs, MP3s, pdfs, etc. without knowing you'd get caught? If you were restricted to mostly non-media-rich sites, how much would you need those extra Mbps?

Then what about the recording industries? How many people would buy songs happily if they could only legally hear it on the radio or listen to a :30 second preview before buying it? How much buyers regret would be there? What about films? How many people were introduced to their favorite films by seeing them online through some pirated means? And after that, how many bits of merchandise did they buy? And books, how many people bought new books after downloading a .pdf and loving it?

The problem with piracy isn't that they simply lose money, it's that piracy both stimulates and hurts their profits and there's a happy medium that needs to be reached in order to keep both the industries and the users feeling satisfied. They can't happily say to pirate and yet if they got rid of all of it, imagine how fewer tv series, movies, books, and songs you'd be exposed to if you couldn't first experience some crappy version of it online before opting to buy it as well as merchandise from the company that released it.

Another issue is the fact that they're spending ridiculous amounts of money on combating piracy but not in a way that doesn't adversely affect the harmless user. Encryption that doesn't play well with every platform and causes the average user issues, DRM that's harmful or debilitating, lawsuit after lawsuit, them trying to infringe upon our digital freedoms, despirately grasping onto a few dollars. After seeing the RIAA's profit listings on their website pdfs, I'd put good money on the fact that they're losing insanely more money creating DRM and paying for lobbyists and lawyers to sue some kid in the boondocks for downloading a DVD because the economy is too dead for anyone to afford one than they'd actually lose if they didn't despirately grasp so hard at every last dollar. Meanwhile, there are a lot of users they don't think about who use piracy to expose themselves to new products that they then purchase...

Perhaps if they "unclench" a little and just accept losing a little money (who isn't doing terribly besides the gas companies in this economy), they'd have more profits than in their kicking-and-screaming method that's currently making them more enemies than friends... Think, now that they've DRMed us to death, sued a bunch of kids across the country who now have their lives and futures ruined from a non-violent crime (serious, serious shame), and spent more money on lobbying than most of us make in a few years just to pass laws that infringe upon our freedoms, how much do you want to buy a CD or DVD from them now? Or is this bad publicity just making people more cautious but resulting in the masses wanting to vindictively ream them a hell of a lot harder now...?

They need to reassess their strategy...it sucks.

Re:Yes

[penguinbrat]

Those internal communication mean nothing - and here lies one of the core problems with all this.. The **IAA wants to pass the the buck and have the providers police their users. The only problem with that, is that any sys admin/tech support employee is *not* a lawyer (most likely), and if they want to keep their customer(s) - just because they find an mp3/divx/avi/iso file, they need to make sure that 1) it is copyrighted and 2) MORE importantly, that the customer does *not* have the right to re-distribute the given material and that is impossible to tell unless your an expert in the area. If employee X does not have that information and just because they see an mp3 file with the name Brittany Spears in it they suspend the entire account - they could be loosing a customer very quickly if it was legit and not to mention a potential law suit, as in think "slamming Brittany Spears" or something.

I work for a fairly large web hosting company, and we used to police our selves - if during any routine investigation (as in if someone reported a problem with their account) and we found anything suspicious we would suspend if it was "seemingly" obvious, although two specific incidents changed our policy on that relatively quickly. The first had to do with a Microsoft Development edition of some sort - it turned out the customer was a reseller and had the full right to have that on his site for purchase/download. The second was with a small record label out of the UK, iirc, selling/offering their own goods. Both incidents highlighted the fact that we were not qualified to tell whether something was illegal or not - so we essentially backed completely off, and unless we get a DMCA notice or one sent to the customer - all we do IF we see something very, very suspicious and they are somehow in violation of our RUP/TOS - then we only send them a ticket, if they dont respond with in a given amount of time that is something else entirely.

The point being, is that just because something seems to be illegal - doesn't mean it is, you/we have NO idea if the customer in question has some kind of weird contract with the copyright holder and if they are in violation of it or not - THAT is up to a judge and/or contract attorney to decide, no one else. We see stuff all the time across our large fleet of servers, and the fact that internal communications between employees reflect this is only pointing out something interesting is all. Whether something is actually illegal or not, is a point of contract law - not mere speculation of someone NOT well versed in this.

The flip side of this issue is that the Internet is a VERY large place, and it's simply next to impossible to check every nook and cranny for your various IP'd material - which where logically the rights holders would try and force the providers to police them self, which as noted above is impossible as well.

Conclusion - simply trying to fit a square block (brick and mortar business model) into a round hole (cyber space) just does not fit :-P

It depends

[Anonymous Coward]

Rapidshare, yes. Dropbox, no.

Re:It depends

[FreeCoder]

But Dropbox doesn't try to profit from allowing users to download copyrighted material. Nor do they pay out to affiliates to upload popular content which almost always is pirated files. There's a major difference. And intent *does* count in court.

Re:It depends

[larry bagina]

Court doesn't matter when the government decides to shut down a web site.

Re:It depends

[finkployd]

Now you are getting it. The media conglomerates have long been going after the ability to take down websites regardless of copyright content (they took down megaupload's youtube video despite not having any copyright claim on it, they have that agreement with google and want it elsewhere).

Re:It depends

[betterunixthanunix]

Which I would say is part of a general strategy to turn the Internet into a fancy cable TV system. Taking down websites because of disputes about copyrights? Sounds an awful lot like cable channels going off the air because of disputes about licensing rights.

Media companies like cable and satellite TV systems because they are easy to deal with -- industrial operations (which is what copyright was intended to deal with) with legal teams, shareholders, and investments to protect. Individual computer users are impossible for a media company's legal team to deal with, and there is no way that they are going to negotiate contracts. Yet the Internet allows individual users to use their computers to effectively broadcast copyrighted entertainment -- not good news for an industry that carefully developed strategies for cable TV networks.

All the SOPA/PIPA/etc. lobbying is about attacking the P2P philosophy of the Internet, which the media companies hate. They want computers to be like set top boxes, just passive consumption devices that herd users into consumption-only lifestyles. General purpose computers should be industrial equipment in their world, only used by businesses that negotiate contracts with each other and focus on turning profits. The idea that individuals can have computers and that they can connect their computers to others is antithetical to the world that the MPAA/etc. want.

Probably not

[Zeikcied]

Not unless they're paying users for posting popular pirated content like Megaupload was.

Paying pirates for pirating stuff is illegal, and it left MU without the excuse of "We didn't know." At least the other sites, as long as they don't reward pirates, can claim they're doing all they can to keep the site clean.

Re:Probably not

[ThatsMyNick]

I agree. Evidence collected for megaupload include emails that specifically mentioned paying users that uploaded the most popular movie. Note it was not a "file", but specifically a "movie". Rapidshare and dropbox are safe as long as they dont explicitly support piracy (unlike megaupload). If all they care about are files and even if they pay users for uploading most popular files, the would get a free pass. Atleast under current laws.

Re:Probably not

[X.25]

I believe even rapidshare pays you for popular downloads (I believe most websites do it). The difference is the intent and the wording. Emails between megaupload staff/executives state that they were paying for most popular movies at that time. It means they acknowledge and explicitly supporting piracy, and failed to remove content that they knew were pirated. If they had worded it as most popular files, they would have been safe.

You are missing the most important (and most complex) point.

How can anyone know that account which uploaded the video does not actually hold copyright on it? Yes, question sounds silly, but it is extremely complex. Unless someone else claims the copyright ownership, you can only assume that whoever uploaded it is the copyright owner. Keep in mind, labels never provided Megaupload with any kind of tools/database that would make it easier to automate 'illegal content detection', like what YouTube does (and YouTube is worth much much more than Megaupload, and has much much more resources).

I also don't own copyright on any song that I purchased on a CD, but I do have a right to have a backup of it. And if I then share that backup with the rest of the world, it was me who actually did the wrong thing, not the service where I store the song. Or you think it was service provider's fault?

Biggest question of all is - are service providers expected to look at every single file in order to determine whether it is pirated or not (answer is 'no', just in case you wondered)? Yes, of course they were aware about piracy on the site, but what can you realistically do about that except taking down files when they appear in DMCA notice?

I also saw people complaining how Megaupload didn't take down some files, even if someone reported them as pirated content. However, only copyright owner is able to fill a proper DMCA notice. You can not, as a random citizen, submit a DMCA notice and expect the file to be taken down. Let alone just reporting a 'pirated file' via email.

There are so many things that need to be properly tested in court, this will certainly be a massive one.

At least on dropbox

[Anonymous Coward]

if they close it I've still got my files locally

Re:At least on dropbox

[eldorel]

if they close it I've still got my files locally

Are you certain of that?
If I delete a file from my dropbox folder on my laptop, it gets removed on my desktop.

What happens is someone with access to the dropbox server deletes a file?

Online "backup" services ARE NOT A VALID REPLACEMENT LOCAL BACKUP PROCEDURES.

They are for convenience and additional protection only.

Re:At least on dropbox

[Canazza]

It's not a backup solution. It's a Sync tool. Like SVN. If they took the servers down tomorrow drop box wouldn't get the latest list of files and wouldn't change the data on your pc.

Re:At least on dropbox

[eldorel]

While both you and I are aware of that, there are many people who are mislead into believing that dropbox is a backup service.

Heck, go look at their sales pitch.

"Dropbox - Secure backup, sync and sharing made easy"

This is plastered all over their web site, advertising, and over a million linked sites

And you are probably correct, if they took the server down no data would be deleted.
That would be why I specifically asked about the data being deleted.

However, consider what would happen if someone disconnected the front end web farm from the storage system during a federal seizure. Also, what about catastrophic failure at the datacenter?

Are we certain that the dropbox servers wouldn't assume that there was no data for a little while?
I haven't seen the code, so we can only hope that the system is properly designed.

Or, we can do exactly what I said in the original post, and KEEP LOCAL BACKUPS.

Re:At least on dropbox

[nahdude812]

It does maintain old copies of files. For 30 days, files you delete can be restored, and you can revert files to earlier versions. For a fee (an add-on called PackRat), they will keep old versions and deleted files indefinitely.

Doubt it

[clarkkent09]

Megaupload was the very blatant in it's disregard for copyright. I wonder why pirates don't post their stolen movies on youtube? Perhaps because Google is extremely diligent in removing copyrighted material and banning users who post it. If Megaupload did the same it would still be up.

Re:No?

[Doctor_Jest]

Find three copies of Vanilla Ice's Song "Ice Ice Baby" on the site, and someone, somewhere will find a way to call that "willfiull infringement".... and have Dropbox shutdown. Why? Because the *AA's are criminal organizations, and copyright is and never will be a property right, but since we don't have the money to enforce the Constitution (we being the normal people)... corporations will assfuck us while the government holds us down.

Fuck 'em all. I don't give a shit about copyright anymore. I hate it all.

Re:SOPA lovers would love to take them down.

[cgenman]

I support the core idea of SOPA while opposing the bill, and I suspect many others do too. If you don't read the damned thing, SOPA sounds like "let's reduce the rampant unchecked piracy online." Sure, that's great. There are many reasons why people should have to really look if they want a pirated copy of The Hangover 2.

BUT: it's all the details that make SOPA / ProIP terrible ideas. Taking down sites on suspicion without a proper day in court is a TERRIBLE idea. We already have examples of legitimate sites caught in the crossfire, who never had due process before being destroyed. Breaking our DNS is a TERRIBLE idea. Giving law enforcement powers to US Companies is a TERRIBLE idea. And all of this is to take power away from our courts, bypassing what they can already do anyway. Oh, let's not forget that the distinction between a "US" site and a "foreign" site is ill-defined.

I'm sure there are many intelligent people who support the idea of reducing online piracy. I just wish they had read the bill.

Re:Safe Harbour

[Anonymous Coward]

Since when is it a crime to do the absolute minimum you can to comply with a law? Accountants get rich advising their wealthy clients and corporations on how to do exactly this.

Re:Safe Harbour

[Alan Shutko]

They had more than a thousand servers in the US, they collected money through US-based paypal from US customers for premium accounts, they made money through US-based ad networks, and they paid money to top up loaders in the US. In other words, they were doing substantial business in the US and therefore come under US law.

Ars Technica goes into it in more detail.

Re:Safe Harbour

[zippthorne]

It's not. But it might be a crime to do the absolute minimum you can to appear to be in compliance with the law, while actually failing to meet the minimum required to actually comply...

uploaded.to already pulled

[Anonymous Coward]

I use uploaded.to to serve my 100% legal firmware files, and yesterday when I checked my account the service is now not offered in the USA. I'm guessing most of the other similar file sharing services will follow suit soon.

Re:Doubt it + Obligatory Reddit link

[coryking]

Here's the full list of Reddit comments relating to that topic:
http://www.reddit.com/r/technology/comments/onplj/feds_shut_down_megaupload/

God help us when people cite reddit as a source of truth.

Re:All that matters is that I worry.

[Qzukk]

when the excuse was always "child porn"? You don't hear it as much recently because they have the magic word "terrorist" to brut about now

Nah, they just shout loudly about terrorism to distract you while they quietly pass the "think of the children" laws like the "Protecting Children From Internet Pornographers Act of 2011"