And otherwise they'd get sued for hosting copyrighted content, which will result in hefty fines and jail( didn't the US want to get Kim Dotcom from NZ precisely for that?)
Go dig up a copy of the indictment. It includes a bunch of internal emails from Dotcom and other running his site where they talk about all this stuff. It was basically a site whose intent and business model was hosting pirated movies. That you could also use it to host your own photos or whatever was there to try to provide cover.