Sunday, January 22, 2012


I'm in Europe and enjoy an internet connection much faster than most Americans and have profited from a very competitive Internet market. I get ADSL, Internet Telephone and a TV hookup for about 25 US Dollars a month. Believe it or not, there are a few providers out there who want to sell me cheaper service. More so, I live in an extremely rural location....we are in the hinterlands as far as Digital TV is digital signal has to compete with the strange interference waves generated by the DC cow electrical wire security systems which I self administer electro shock therapy to myself with occasionally. So, internet is my link to the rest of the world. I go to the big city to see movies, but I have discovered the joy of streaming films. I don't do it often, but there are so many possibilities. I watched the new J Edgar film a few weeks ago and then realized that it hadn't even been released here in France yet. 
Yes, I have a few moral reservations about the strict morality of viewing films free on line. I have many friends involved in the film industry. I worked on the fringes of the legitimate film industry for many years...But, I believe in the future and the evolution of internet technology and the entertainment industry. One hand washes the other. 
I totally support internet freedom. I followed the MegaUpload case from its inception in the USA. After the defeat of the SOPA/PIPA legislation due to the massive education of the public and the active participation by most of the internet last week, it was very interesting to see the US Justice Department take down of MegaUpload.
 Putting aside whether Megaupload is truly dangerous and a pirate haven or not, it didn't cause the global economic collapse.  Yet it was shut down last week, while the barons of Wall Street remain unscathed.
Megaupload had nothing to do with the ugly unemployment numbers that are likely to stick around for years. It had nothing to do with families being thrown out of their homes. It had nothing to do with retirement accounts being slashed in half. It had nothing to do with the rapidly increasing divide between the middle class and the super-rich. It had nothing to do a lousy economy that is going to hang around for many more years. How is it possible that the feds can organize a global program to hunt down the owners of a Web site and shut it down (protecting the 1%) when they can't even be bothered to prosecute Wall Street for ruining the economy (again protecting the 1%)?
Outside of the movie and music industry, few give a damn about Megaupload - but everyone still cares a lot about the crisis that Wall Street brought down on our heads and pocketbooks. We also continue to be upset that Wall Street bonuses - even though they are being reduced - will still be considerably more than most Americans can expect to get for years to come. Even people working in industries with similar experience and backgrounds don't make the crazy money that is still being offered on Wall Street. As a rough analogy, since antipiracy crusaders are fond of equating filesharing with shoplifting: suppose the CEO of Wal-Mart came to Congress demanding a $50 million program to deploy FBI agents to frisk suspicious-looking teens in towns near Wal-Marts. A lawmaker might, without for one instant doubting that shoplifiting is a bad thing, question whether this is really the optimal use of federal law enforcement resources. The CEO indignantly points out that shoplifting kills one million adorable towheaded orphans each year. The proof is right here in this study by the Wal-Mart Institute for Anti-Shoplifting Studies. The study sources this dramatic claim to a newspaper article, which quotes the CEO of Wal-Mart asserting (on the basis of private data you can't see) that shoplifting kills hundreds of orphans annually. 
It was also very interesting to see the immediate action by Anonymous in taking our the US Department of Justice and the RIAA websites. As far as I am concerned, the action by Anonymous was the equivalent of a playful warning shot over the bow of a little schooner. The real message was, you fuck with us, you enact PIPA/SOPA, you take out the internet and rebuild it, and a few months later you'll have to it again and again. You cannot afford to fuck with us.
But MegaUploads had to go. They were a real time criminal enterprise and living too large. They weren't just selling movies illegally, they were laundering money on a massive scale. 
 There are plenty of players in the no-questions-asked online storage game: HulkShare, MediaFire, YouSendIt. They're all staples of web sharing—and they're all still up and running today. Partly because they're smaller than Megaupload, partly because they're smarter, but mostly because they're don't operate like sloppy drug kingpins.

The Justice Department's whopping 72-page indictment against Megaupload—or as it's tellingly referred to in the document, the "Mega Conspiracy"—illuminates a cavalier operation of opulence, carelessness, and tons of money. The Mega Conspiracy crew—which spanned continents, and was lead by flamboyant fatboy millionaire conman Kim Dotcom—was openly, wittingly rich off of copyrighted music. They were flagrant about their intentions to squeeze cash out of Simpsons episodes and 50 Cent albums, rewarding their most piracy-pushing users, laundering money through the site, and spending the cash in the most conspicuous ways imaginable.

And the feds have records of all of it.

Of all the brushes that painted a giant target on Megaupload's back, the most obvious one is size. Megaupload ain't no misnomer; the megasite consumed a staggering 4 percent of all traffic on the internet with 50 million daily visitors. There were other places to throw the dart, but Megaupload was a glowing bullseye the size of a dinner plate, they earned millions on their own through ad revenue, and allegedly cost copyright owners an estimated $500 million (the MPAA reportedly provided highly inflated financial damage estimates to the DoJ in advance of the crackdown). The Mega Conspiracy was too good for its own good.

The sheer volume alone was enough to attract the attention of the Justice Department's Intellectual Property Task Force; from there, it wasn't hard for the feds to start getting very suspicious, very quickly. Because Megaupload wasn't just big; it was brazen. The site didn't have blinking text that said SHARE YOUR PIRATED STUFF HERE, but the motive was clear. According to the indictment, the site wanted good pirated gems uploaded and spread far and wide. The document goes on to state that Mega knew it had infringing videos and songs on its servers, and wanted it downloaded as much as possible for maximum ad money. So they bribed users to do it for them, says the indictment:

The Mega Conspiracy did provide financial incentives for premium users to post links on linking sites through the "Uploader Rewards" program, which ensured widespread distribution of links throughout the Internet and an inventory of popular content on the MegaConspiracy's computer servers.

The rewards took the form of premium account upgrades, which allowing for faster downloads, or in some cases, straight cash.

The sprawling indictment goes on to describe cash that was spread around Megaupload's international presence, with million dollar transfers flying between Hong Kong, Virginia, and Georgia, courtesy of a coding team that spanned US, Europe, and New Zealand. Some of this money went back into beefing up Megaupload, or was paid out to its super users. The Mega money bin also served as a handy way to launder money, the feds claim:

Members of the Enterprise and their associates committed money laundering, attempted to commit money laundering, and conspired to commit money laundering to facilitate and expand the Enterprise's criminal operations.

Pretty cut and dry. And on top of all that, plenty of the dough was just pocketed: in 2010 alone, Kim Dotcom, the site's Dr. Robotnik-meets-Larry Flynt founder, hauled in $42 million. His taste for women, expensive things, and surfeit is well documented. Last fall, while attempting to bribe New Zealand into residency and a $30 million mansion, he bought a $500,000 fireworks show for the city of Auckland. Just because he could. In the Feds' eyes, he was a known crook who lived too large. And if you're itching for a piracy conviction, why go after boring Jimmy HulkShare when you can hit the guy laundering money around the planet and buying his own fireworks shows? 

Bottom line...good for every one. This proved that we don't need nop steenkin PIPA or SOPA to police the internet. We do a pretty good job of it ourselves and if governments think they can regulate the internet by trying to control it, we 'll just build a bigger and better one.

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