Kim Dotcom: US Government Is Protecting An Outdated Monopolistic Business Model

http://torrentfreak.com/kim-dotcom-us-govt-is-protecting-an-outdated-monopolistic-business-model-120301/

by webandrew • 14 years ago

107 94 14 years ago

trevelyan2• 14 years ago

A question in case grellas or any other brilliant HN lawyers are reading this and care to comment -- assuming that Megaupload actually followed the DMCA as Kim claims and there was nothing illegal about their operations, what sort of remedies are available.

I mean... it seems the company is dead. Can they sue for damages? And if so who pays? Do the courts recognize things like growth potential when they value lost damages, and do they look at profits or just revenue? The reason I ask is because I'm curisou what would happen if this were a smaller startup that was strategically minimizing profits and perhaps even revenues in order to aim for growth.

anamax• 14 years ago

> Can they sue for damages? And if so who pays?

The entity that they sue pays, if they win.

So, who do you think that they can sue and on what grounds?

The MPAA didn't shut down their company or arrest them and doesn't have the power to decide whether someone else will do those things, so it will be extremely difficult to hold them liable.

Prosecutors and police are almost never liable.

rprasad• 14 years ago

Assuming that the actually followed the DMCA, they would have recourse in tort law primarily for interference in contract, and malicious prosecution. There are other torts, none of which they would be likely to succeed in pursuing.

In such case, the government would pay (but not the individual prosecutors, as they are acting merely as agents of the government). Damages would be based on economic harm actually proved, i.e., lost business from cancelled customer contracts, lost ad revenue, etc. Future growth potential is not taken into account for damages purposes.

However, note that MegaUpload did not follow the DMCA. Its entire business plan was based on committing illegal activities, and was designed from the outset to maximize the revenue generated by such activities over the revenue generated by the potential legitimate uses of its services.

If you want a role model to follow in the media distribution market, look to BitTorrent.

trevelyan2• 14 years ago

Thanks for the reply rprasad.

J3L24042• 14 years ago

From the article comments:

"This is the bottom line. Whether or not the business model is out-dated or not has absolutely no effect on whether what Kim was doing was either immoral or illegal.

In the Governments eyes, what Kim was doing illegal. I can't just steal something from an Amish person's business because "their business model is out-dated." It doesn't matter.

Unless Kim can prove that MegaUpload was actively taking down downloads as requested my DMCA takedown requests, then he doesn't have much hope.

I'm a long time Torrent-Freak reader, and it hurts me to say this. Torrentfreak has become a breeding ground extremists dedicated to the theft of music and movies under the guise of a "moral" obligation/right to do them. File-Sharing, such as giving my friend a CD I burned, is not file sharing in the same sense as Torrenting something which is also being torrented by 400 other people. Think about if they DID buy that CD. That's $2,000 to the artist. "

hnhg• 14 years ago

Not to the artist. There's the vendor and then the publisher first.

jonhendry13• 14 years ago

Self-published artists, with their own labels, don't exactly catch a break. Filesharers don't care about anything but their own entertainment.

Zirro• 14 years ago

"I can't just steal something from an Amish person's business because "their business model is out-dated." It doesn't matter."

It doesn't justify piracy, but it is a way for the media industry to solve the "piracy-issue" themselves. In short: Give the people what they want and they will pay you.

pyre2• 14 years ago

More like: "The correct business decision is not to moan/groan/complain to the government, but to adapt to your situation." Adapting to the situation is apparently too much for the suits at the major labels to stomach though.

huggyface• 14 years ago

In short: Give the people what they want and they will pay you.

If only it were so simple. Today you can buy virtually any media electronically. Services like Netflix, Rdio, Spotify, iTunes and others allow for enormous content enjoyment at a very reasonable price, with a couple of mouse clicks. Steam and Origin, App Stores and Android Markets exist with countless software options for incredibly low prices.

Yet piracy is still absolutely rampant. We're being lectured to by thieves who made millions on the other side of the law.

There are some people who are simply selfish and greedy. Who are willing to ignore the law -- if not even twisting reality -- to suit their own selfish desires. Such transparent arguments usually drown out any rational discussions on sites like Reddit, Slashdot, and sadly now HN.

I've spoken against piracy many times (and it is stealing, and arguments to the contrary are baseless. I spend thousands per year on games, movies and music. I have well-paid peers who spend $0, enjoy all the same content, but will still give you the tired "it isn't stealing, no one was deprived" nonsense argument), but it's an argument that just isn't worth having on many online venues. There are simply too many people who contort rationale to defend what gives them the most for the least, everything else be damned.

- at least in the short term. Then, of course, those movies, music and games stop being produced.

Schmidt• 14 years ago

2000 / 400 = 5

Are you kidding me, no artists gets $5 per sold record. If you sell a lot and have a really good deal you get around $2 (britney spears kinda big).

The records my fathers band have recorded give them about $.5 for all of them (six members). They barely cover their production costs with that...

patrickk• 14 years ago

http://www.salon.com/2000/06/14/love_7/

This link always gets mentioned in relation to artists/labels and who gets what, so here it is.

mayanksinghal• 14 years ago

"File-Sharing, such as giving my friend a CD I burned, is not file sharing in the same sense as Torrenting something which is also being torrented by 400 other people."

Actually, I think that the underlying moral principle would be the same for the two. If you are stealing something - it doesn't matter whether it is $5 or $2000; it is still a theft. The scale of it should only govern the punishment if that is the intent was different - which I believe is not. I do not think that one can justify sharing one copy vs sharing 50 copies _morally_; the justification will be economic.

nextparadigms• 14 years ago

But those 400 wouldn't buy a CD. Maybe 40 of them would. People consume a lot more content when it's free/unlimited. Proof of that is the average content consumption on Spotify vs iTunes, and why some artists complain that they make a lot less "per play" from Spotify than they would on iTunes, but they are looking at this in a very wrong way.

When people have access to a lot more content for the same price or lower, they will consume a lot more content. That doesn't mean they would be willing to pay for each piece of content as much as they would with the old model.

VMG2• 14 years ago

> Maybe 40 of them would.

The point still stands then.

toyg2• 14 years ago

"In the Governments eyes, what Kim was doing illegal."

Actually, there's "illegal" and there's illegal.

New Zealand authorities sent a special anti-terrorism group, armed to the teeth, to arrest one fat Finnish programmer; that is disproportionate to the alleged crime. Was it just to impress their American friends with some random cowboy action, or were NZ authorities briefed that Dotcom was a dangerous terrorist?

Extradition treaties have clauses; we'll see if Dotcom's actions do actually fall under those clauses or not. The fact that he's been bailed (and his bail was later upheld against the wishes of US authorities) make me think that it won't be a walk in the park. It might even turn out that some overzealous officer or politician, anxious to appease US counterparts for one reason or another, overstepped his authority and launched an unjustified operation. It would be funny to see them with egg in their face, should the judge throw out the case.

wisty2• 14 years ago

Dude, it's New Zealand. Their couter-terrorist police have to do except deal with a few Maori separatists, and the French Intelligence.

Well, NZ has a fairly low crime rate. And Kim was armed, and had security. And he was a little ... odd. Better safe than sorry.

VMG2• 14 years ago

(he's German not Finnish)

haberman• 14 years ago

I'm of two minds on this. One part of me agrees with you 100%; artists shouldn't have to "compete" with illegal trafficking of their own content. That's not even fair competition, because it didn't cost the file-sharer anything to create the content. You're trying to "compete" with someone who had no up-front expenses.

The other part of me thinks that there needs to be some force to counter the insane overreach that copyright holders increasingly take in the digital age. For example: 10 minutes of previews that can't be skipped on a DVD/Blu-Ray that you legally bought, DRM that makes it uncertain whether you will continue to have access to your legally-purchased content, or arbitrary restrictions on what devices/software you can use to view your own content. The natural market forces that should work in favor of consumers are greatly diminished by the fact that a single entity has control over every sales channel for a given work. And the DMCA gives legal teeth to whatever technological measures content producers use to implement these arbitrary restrictions and controls.

There are other cases where the government intervenes to restrict this lopsided distribution of power. For example, "compulsory licensing" requires copyright or patent owners to grant licenses for certain uses of a work at predetermined rates that are set by the government. For example, this allows musicians to record "covers" of existing songs without having to get permission from the original song's author (though a royalty has to be paid).

jkn3• 14 years ago

"I can't just steal something from an Amish person's business because "their business model is out-dated.""

For a correct analogy, make the Amish a billionaire who makes money by exercising a monopoly. The monopoly is legal, it was even expanded by congress thanks to his lobbying efforts, and the government actually spends taxpayer money to enforce it. And I'm not stealing from the Amish, I just found a more efficient way to distribute copies of his products, copies made at my own cost. And users find my service not only cheaper, but much more convenient: it is not riddled by silly restrictions, and I have a much larger selection. Somehow I make tons of money with it, and all this money would go to the Amish, if he could adapt his business model, because he has a natural advantage to provide the best service: he gets the products first, and with the best quality.

Considering that the monopoly is harmful to cultural exchange, freedom of speech and other essential rights, I see moral value in any contributions to bring it down or transform it into something more morally acceptable and less expensive for society.

jonhendry13• 14 years ago

"For a correct analogy, make the Amish a billionaire who makes money by exercising a monopoly."

Nonsense. People sharing files don't take the status of the content provider into account. It's a pleasant story to tell yourself, that you're just sticking it to the man, but it doesn't reflect the reality of file sharing.

sophacles4• 14 years ago

1. It is not stealing. This is well established. Stop using hyperbolic language to hysterically whine and force your moralistic crap down our throats.

2. Your Amish analogy is a strawman.

3. Whether Kim is breaking a law or not is not the point of this dicussion (another strawman here): the discussion is does the (il)leagailty of it make sense? Laws are not permanent nor are they absolute. We theoretically live in a society that is based on the will of the people, so lets talk about what make sense to our society.

4. Amazing improbable thinking does not grant one rights to someone else's pocketbook. Much like people should pay for stuff, by the same token, saying they should then suing them for actions they didn't and may never have taken is absurd. I should get paid $1 per read of this comment, there HN readers owe me a few $K.

5. Wow, I really fed this troll didn't I?

DrJokepu• 14 years ago

From http://ycombinator.com/newsguidelines.html (Hacker News Guidelines):

When disagreeing, please reply to the argument instead of calling names. E.g. "That is an idiotic thing to say; 1 + 1 is 2, not 3" can be shortened to "1 + 1 is 2, not 3."

jonhendry13• 14 years ago

"Stop using hyperbolic language"

The main perpetrators of hyperbolic language on this topic are the people who act as if there is some necessity and moral right behind downloading some crap CD or movie or TV show, as if that was the same as stealing bread to feed a family.

Guess what, you won't perish if you don't watch that TV show everyone is talking about, or if you have to wait six months for that new movie to show up on Netflix. The "harm" of doing without entertainment is no harm at all.

batista7• 14 years ago

It is not stealing. This is well established. Stop using hyperbolic language to hysterically whine and force your moralistic crap down our throats

1) Hyperbolic 2) hysterically 3) whine 4)force 5) crap 6) down our throats.

All because he used a common word, that laymen use all the time with respect to copyright infringement, and that even lawyers and judges are known to use occasionally.

Who is hysterical, again?

Not only is the term used extensibly, including by the FBI ( http://www.fbi.gov/about-us/investigate/cyber/ipr/ipr ), but also in the US legal code, "Criminal infringement of a copyright" is a subcategory of "Chapter 113: Stolen property" ( http://codes.lp.findlaw.com/uscode/18/I/113 ). So, your pedantic distinction only matters inside a court room, and under very rigid circumstances (for example, lawyers argue all the time using the word "theft" for the issue). Outside of the court room, anyone can use any word he damn pleases, and lots of people choose to use stealing to describe C.I. Moreover, this is not an American issue only, and other languages and legislations make no such distinction against "copyright infringement" and "stealing".

3. Whether Kim is breaking a law or not is not the point of this dicussion (another strawman here): the discussion is does the (il)leagailty of it make sense?

And who exactly are you to define what the exact "point of this discussion" is? The point of the discussion is whatever is relevant to the issue, and both questions are relevant, as are many more.

If you made your comment available only on a per pay basis, on your own platform, you absolutely should. But since you don't control HN and neither it's a pay site, so you don't have the option to do so.

5. Wow, I really fed this troll didn't I?

No, you trolled on your own.

vibrunazo2• 14 years ago

Please separate illegal from immoral. And try to consider both sides of the argument, instead of assuming it's either good or bad because there is some good our some bad in it. There's both pros and cons to piracy, so w have to measure both instead of blindly ignoring one side.

While it's really sad that many lost their jobs breeding horses when automobiles were invented, it was a total net positive to humanity. You can't ignore one of the sides.

While it's sad that some artists may lose their jobs when their cd is pirated. While is true that some potential artists may not have enough incentive to create. You cannot ignore that art will never cease to exist simply because of piracy. You can't ignore that sharing, remixing and freedom to fork and improve the work of others, do have a positive impact in the quality of arts. you cannot deny that better, drm free distribution models are many times a better experience for consumers.

So is it a net benefit at the end of the day? Ill save my opinion, but please do consider both sides of the coin, instead of blindly citing a few of the arguments for one side while ignoring the other.

jonhendry13• 14 years ago

"Please separate illegal from immoral."

It does someone no harm to do without watching Transformers 3 for a year. There's no moral high ground in lacking discipline. Therefore, it's immoral and illegal.

Get a new hobby, and some perspective.

benologist• 14 years ago

And HN gets sucked in to torrentfreak again on this week's episode of Guy Says Something You Like To Hear.

Karunamon• 14 years ago

And on today's episode of Prelude to a Downvote: How to be snarky and add nothing to the discussion!

pyre2• 14 years ago

The actual interview was already on HN last night, so this is a 'sorta' dupe. In any case, what he has to say is interesting because of the situation that he is in. It perhaps gives us some sort of idea of how he will pursue his defense against these charges.

bryanlarsen• 14 years ago

Downvoted not because I disagree with you but because you failed the "meaningful contribution" test.

radu_floricica• 14 years ago

The issue I see so rarely raised is who exactly is law designed to protect.

We can imagine a world where copyright is enforced they way content producers want and everybody is a proper citizen and pays for music and movies.

We can also imagine a world where only commercial copyright is enforced (and preferably for a limited time), and people are free to share music and movies.

The basic question is, "Which world do we want to live in?". It's a choice... there is nothing fundamentally "right" or "wrong" about either. The discussions about stealing and morality are completely besides the point. It's all about consequences. Will expanding copyright make for a better world, or is it just a reaction of the incumbent industry trying to protect its profits? Will cutting copyright protection (definitely not destroying it) make things easier for the little guy, protect human rights (like free speech and privacy) and ultimately increase creativity, or will it cause a collapse of the entertainment industry and lessen the available content?

We should be free to make this choice, vote on it and suffer the consequences.

Hyena• 14 years ago

Even if that's correct, that doesn't mean that what Kim did wasn't illegal or wrong. Kim wasn't simply engaged in "file sharing" he ran a multimillion dollar parallel distribution system. He wasn't sharing, he was basically using file sharers as a Mechanical Turk to scrape the Internet for content which he then monetized at a large scale.

If you think Kim was in the right, then why not Amazon? your cable company? Why does Valve even bother paying Bethesda a share? Etc. File sharing is highly tolerable as a small enterprise, even if it is aggregately large; it's not tolerable as a highly profitable business model.

kiba3• 14 years ago

What he did was illegal, but not necessary wrong.

I see it as increasing efficiency, but others see it as stealing.

jonhendry13• 14 years ago

"What he did was illegal, but not necessary wrong."

He wasn't stealing food to give it to the starving poor, he was helping immature people get access to entertainment when waiting or doing without would do them no harm at all. There's no moral high ground there. What he did was illegal, and wrong.

alan_cx• 14 years ago

What I perceive from over here in the UK is that when the US government protects failing business with money, its called "socialist" and evil. However, when it protects failing business with law, that's just fine. Despite the fact that these laws also cost a lot of money.

I would like to see the cost of policing and enforcing these laws over time, compared to bailing out, say, General Motors. In fact, wont GM have to pay that money back over time?

Personally, I find it odd that a US government will protect certain business from natural competition. Isn't that anti-American? Anti-capitalism? Anti-competition? Protectionist?

VonGuard• 14 years ago

If even a small portion of the US' population had any idea what socialism actually was, maybe we wouldn't all be going bankrupt from our asinine health care system....

This country....

wisty2• 14 years ago

Yeah, McCarthyism has a lot to answer for.

kiba3• 14 years ago

If even a small portion of the US' population had any idea what socialism actually was, maybe we wouldn't all be going bankrupt from our asinine health care system....

It's all about framing. "Safety net" versus "Wealth redistribution".

For the record, I prefer that the American adapt the McDonald business model to medical care for increased safety and economy of scale. Copy what the Indian did with eye surgery and heart surgery, not what the European did.

betterth• 14 years ago

Yes, it is anti-capitalistic. But that presumes that America is a 100% capitalist state, which we are not and have never been.

America practices what's known as a mixed-model economy, combining social and capital elements. http://en.wikipedia.org/wiki/Mixed_economy

makaio• 14 years ago

Perhaps the difference is that one of the founding principles of the US is that the government should be a strong defender of property rights. This is probably a good thing in the long run. On the other hand the US government does not have a history of ownership or investment in private companies. In the long run this, too, is probably a good thing as it seems that these actions tend to lead to cronyism and corruption.

The reason this system seems to be working so poorly now might be that its increasingly difficult to define just what "property" is nowadays.

batista7• 14 years ago

Actually, when the government protects failing business with money or laws, or when the government gives advantages to businesses with money or laws, it's all OK by republicans etc --despite breaking all the supposed "free market" rules.

It's only when the government protects citizens with money or laws, that's it's called "socialism" and evil.

Personally, I find it odd that a US government will protect certain business from natural competition. Isn't that anti-American? Anti-capitalism? Anti-competition? Protectionist?

It was never about a real free market, that's just what it's taught at school. It has always been the case that who has the money makes the rules, and has the government do what he wants, including crushing smaller competition.

blhack• 14 years ago

What is most bizarre about this is that the US Government is going after a German national who is currently living in New Zealand on behalf of a private company [or group of them].

That's...kindof terrifying.

batista7• 14 years ago

A government protects two things: itself (the bureaucrats and politicians) and their backers, bribers and friends (the private mega corporations).

In order to protect itself, though, it has to balance the demands of the second, with what its' voters, the general public, wants.

That's why:

a) government is problematic

b) but it's still better than no/much-less government = big corporations rule directly with their clout

carsongross• 14 years ago

Another alternative: lots of small, independent governments.

For some reason, the big government schools and the big company media never talk about that one.

chrisbennet• 14 years ago

Couldn't damages be gauged by comparing the injured party's income stream before and after MegaUpload was shut down? If the parties suing are really losing 13 billion in a 20 billion dollar industry, they should see an obvious upward spike in profits now that that MegaUpload is shut down.

calloc• 14 years ago

It will be very interesting to see whether or not there is an upward spike in media purchased. Although I have a feeling that there will be none or close to none and that any "spike" will be considered statistical noise.

Kim Dotcom: US Government Is Protecting An Outdated Monopolistic Business Model

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