The case against Kim Dotcom, finally revealed | Hacker News Reader

The case against Kim Dotcom, finally revealed

arstechnica.com

170 pointsshawndumas136 comments

What's interesting to me about all of this is that there's this caricature of movie pirates as not wanting to pay for anything and just being general freeloaders. Yet this makes it clear that people were willing to pay for this stuff. The entertainment industry has just never really been able to get their heads around how to best develop a new, sustainable business model when it's so easy to replicate content.

The way monetization of MU content worked, is they would send the average internet user to a page that mostly hid the download link and tricked that person into clicking on the 'sign-up to download it fast' area, selling them access.

This was not a business model that proved something noble about pirates, it was a criminal enterprise that for the most part, took someone else work, and sold it pennies on the dollar.

The download-link trickery was probably relatively ineffective, since most people only needed one download to figure out how it worked. There were a lot of people who paid for premium Megaupload accounts so they could download stuff faster and without limits. It was like the Amazon Prime of bootlegged content in some circles.

There are billions of impressions being sold daily for advertising from hijacked users. Big $$$.

Advertising revenue was secondary to premium memberships, but now paypal, visa/mc are shutting down file lockers payment processing and they are more reliant on ad revenue.

Legit sites try to trick visitors like that too.

This is the problem right here.

It's a business model that works..if you don't have to spend $100 million dollars creating it.

I'm not arguing that they weren't a criminal enterprise or that movie pirates are all closet consumerists waiting to be parted with their money. However, the article says that the vast majority of mega's money came from "premium subscriptions". The subscription part is interesting to me because it implies that a not insignificant number of people were paying regularly for this "service". They can't all have been dupes who never checked their credit card statements.

As to your statement about them reselling this stuff for "pennies on the dollar", I do have a major problem with creators not being compensated for their work. However, I'm also not really sure what movies and TV shows are actually worth anymore. The pricing seems totally crazy between Netflix, physical media, and iTunes. It's anyone's guess what an episode of "Breaking Bad" actually is worth. The answer is increasingly, "it depends".

Sounds almost like GoDaddy … although GoDaddy is of course not considered a criminal enterprise. In the old days, shareware sites had similar business models as far as I remember.

The biggest problem with this straw man argument is that copying software is not zero sum. The movie studios do not lose exactly X dollars because there were Y downloads from Megaupload, or from any other copyright infringing site for that matter. Copying data is not the same as theft because there is no transaction cost and you haven't "deprived" anyone of any good. There is no way to prove that an infringer would have consumed that data if it hadn't been free.

Sure, having users pay full price for a movie (or CD or video game, etc.) is always the most desirable outcome. What's far worse than having someone infringe upon your copyright is for your media property to be completely unwatched or unused. When you're in the entertainment business, there's absolutely nothing worse than no one caring about what you're producing. A lot of people in the are starting to figure this out; look at how successful bands like Iron Maiden (on HN today) have been.

With that said, yeah, MU is pretty sleazy, but I'm not sure I would go so far as call them "criminal". They really were fulfilling a need which wasn't being delivered by the various media companies. I have no idea why movie studios can't figure out how to properly segment their market and charge different prices for different types of content delivery. The hyperbole about calling copyright infringers "pirates" and calling what they do "theft" has to stop, along with the lobbying government for draconian laws which stop reverse engineering. Provide better ways for your customers to not be copyright infringers and you'll have happier customers and more revenue.

> straw man argument

In what way is it a straw man argument?

> copying software is not zero sum.

This doesn't seem to contradict the parent post, nor affect its argument.

> "The entertainment industry has just never really been able to get their heads around how to best develop a new, sustainable business model"

It's because when a new technology emerge, it often means cheaper way to do things, which means less profits. That's the part they have a problem with: less profits.

I'm sure they're not happy about 'less profits', but it seems fair that what little money there is at least goes to the people who did the work to create the content, which was not happening in this case.

Ordinarily, technology makes it cheaper to produce a good, allowing new producers to come on the market and undercut the entrenched companies. If we were talking about new media companies producing movies people want to watch for much lower prices using new technology, then that narrative would be applicable. But it's wholly inapplicable here, where the only thing the technology is enabling is entities like Megaupload to rip off the work of the actual producers. It's disingenuous to play the "technology reduces costs" card in this circumstance.

Just replace "less profit" with "snaller unitary profit". It's not even rare that the low profit options create markets that are hudreds of times larger than the original, increasing the total profits by orders of magnitude.

In any business, if you can leverage technology to steal something and sell it for less, you will do well.

It's not just movies or music. It's anything. If I can steal laptops with no repercussions and sell it for 90% off, and its just as good as the original, I am going to do really well.

The whole "replication" angle is a total red-herring brought up by apologists for movie pirates. People are entitled to sell their work for the price that they can get for it, irrespective of the marginal cost of production, and should not be required to compete with entities that do not produce their own products, but simply free-ride on the work of others, being able to "sell" to consumers for the cost of distribution because they don't bear the cost of actually creating that work.

Apologists for movie pirates try to paint the situation as stodgy old businesses not being able to keep up with technology. That might be the case if we were talking about Hollywood being displaced by guys with GoPro cams and a Youtube page. But that's not what's happening. The relevant technological shift isn't that it's become easier to produce content that people want. The shift has simply allowed entities like Megaupload to make money by ripping off the people who actually make the content.

Absolutely agree with you on the point that people are free to sell their work at whatever the market is willing to pay. I would not count myself as a piracy apologist. But I don't think you can overlook the point that changes in technology have made it hard to restrict the free movement of digital information. The ideal state for the movie industry was when you could only see things in the theaters. That was the original "software as a service" model in a sense. But the marketplace demanded to have things at home with the advent of the VCR. This created problems for controlling content that have never been fully resolved.

I think it's interesting that Hollywood and the music industry have been struggling with piracy, while at the same time, the software industry (which used to suffer mightily at the hands of pirates in the early days) has developed a multitude of countermeasures. In theory, the Internet could have crushed the shrink-wrapped software market, but now we have alternatives like: - SaaS - ad-supported websites - open source software (pay for support and training)

Even video games, which have always been the most heavily pirated content have developed new strategies with services that require sign-up.

<i>The whole "replication" angle is a total red-herring brought up by apologists for movie pirates. People are entitled to sell their work for the price that they can get for it, irrespective of the marginal cost of production, and should not be required to compete with entities that do not produce their own products, but simply free-ride on the work of others, being able to "sell" to consumers for the cost of distribution because they don't bear the cost of actually creating that work.</i>

Megaupload and pirates in general don't steal content from anyone. They create their own copies of publicly available content. I don't understand why digital data should be treated differently then physical objects. It's like calling a carpenter, who creates a copy of some furniture that he likes and sell it, a thief. On the other hand, proponents of copyright are seriously hampering the right of everyone to use publicly available information around us for our creative efforts. This seriously limits our creative potential because it's not like creative works are created out of thin air, they are always derived from our past experiences which influenced us in some way. The proponents of copyright are standing on the shoulders of giants but they don't want anyone to further build upon their work. p.s.: before someone accuses me that i don't want creators to be paid fairly for their work - i think that some regulation is necessary which would ensure promotion of fine arts but this regulation cannot be based on artificial limits on distribution of public knowledge/culture.

Like pg said, Netflix and Megaupload are publishers. I dislike your carpenter analogy because it conflates the creative aspect of the film industry (music, et al) with the distributive aspect.

Traditional publishers deserve to die if films can be distributed for free. So I wouldn't begrudge pirate sites as long the film's creators were compensated. But as I understand, pirate sites never pay the creators a dime. I think this is an important problem since royalties are what motivate creators to make stuff in the first place.

Every time this point comes up I feel compelled to mention http://en.wikipedia.org/wiki/Hollywood_accounting Not to say the the pirates aren't that bad, but more to remind that the studios and distributors aren't much better.

Yeah. I know a guy who takes the same stance. It's tough being an artist.

> Pirating isn't that radical since studios pay artists scraps anyway. If you really like an artist, you attend their gigs and buy the merch. That's where the artists really make their money.

The rest of your comment is equally baseless (and wrong) opinion.

All property is a government granted monopoly.

Things covered by copyright aren't property. Hence the need for laws beyond the traditional property ones. Even if you do buy into "Intellectual" Property, the Public Domain disproves all property is ggm.

There exists real property (international waters, federal and state parks, roads) that aren't monopolies. Many other examples exist

I agree that property ownership is not an inherent, natural right. It is a construct of law and all law derives from government. That's not saying anything more than orange is a color.

> People are entitled to sell their work for the price that they can get for it,

Yes, but being entitled to get the protection of the police to enforce an impossible-to-enfore monopoly is another story.

The idea that you can publish copies of your music in the nature and expect people not to duplicate it is artificial. Besides, what's the reasonable cost the collectivity is willing to pay to enforce it? What if we charged the price of investigating and punishing pirates to the people whose content is protected?

There's a lot of innovation (both technologies and business models) to come from a world where copy is not punished by law, as seen in the other comments of this thread.

Heck, how did the software industry managed the ability to copy software? Is the BSA our unique tool? No. We created SAAS. Some companies sell one-year upgrades. Some do better: They sell happiness, beer and knowledge, and binaries are a side-effect. Patrick McKenzie insists enough: "The customer doesn't want your software, they want the built-in knowledge."

Criminilazing piracy is the worst thing for innovation.

> Yes, but being entitled to get the protection of the police to enforce an impossible-to-enfore monopoly is another story.

Sure, but copyright isn't impossible to enforce. I agree it's futile to try and enforce it aggressively at the level of individuals, but I'd guess that copyright owners accrue most of the benefit of copyright so long as it is enforced against large organizations. And I also agree that we shouldn't require society to take on a disproportionate share of the cost of policing copyright.

> No. We created SAAS. Some companies sell one-year upgrades.

I think the decline of "pay per copy" in the software industry has been for the negative. I'd rather pay for a copy of MS Office than use some crappy web-based equivalent, or worse some advertising-based equivalent.

Agreed — and, budget permitting, I do generally buy upgrades to software I use on a regular basis. What I'd like to see is more companies (1) offering maintenance plans that include perpetually licensed upgrades and/or (2) adopting Apple's model for products like Logic and Final Cut (minus the "hardware discount", of course), namely, reducing or eliminating upgrade/educational/volume discounts and unbundling ancillary tools in exchange for significantly reduced single unit retail pricing.

> The relevant technological shift isn't that it's become easier to produce content that people want.

Isn't it though? The studios are now having to compete for viewer attention with everything from lolcats to Open Courseware lectures to porn. It isn't that there is nothing on YouTube worth watching, it's that in order to find the videos worth watching you have to wade through an ocean of diarrhea. Those are two quite separate things, and a proper solution to the second would probably put Hollywood out of business.

And your two markets (content creation and distribution) are not so unrelated. The copyright monopoly only applies to the work, not to fungible replacement works in the market for e.g. two hours of video entertainment. In a competitive market we would expect low profits because high profits would encourage new entrants until competition reduces profits to only just cover costs. The studios have historically claimed much higher profits than this primarily by cartelizing content distribution. It didn't matter in 1985 if you and your buddies could make a better movie with a camcorder than Disney had in theaters, it was still Disney's movies that would appear on the screens.

Which is the real trouble from Hollywood's perspective about a service like MegaUpload: They're distributing Hollywood content in the same channels as content made by the proles. If Hollywood came to MegaUpload and said "you are distributing our content on your site, kindly raise prices a bit and cut us in," the result would be for everyone involved to make a lot of money. But Hollywood won't have any of that anywhere -- there are no lolcats permitted on Hulu or Netflix, and far be it for the latest blockbuster or TV episode to be available on YouTube. Because they're trying to preserve their control over the distribution channels as much as possible for as long as possible.

In the end it's going to bite them too. What they need is an open distribution system that will prevent someone from doing to them what Apple did to the recording industry. A free market for video content, where the market itself is (like the internet) not owned or controlled by anybody in particular and anybody can show up with content to sell and anybody can buy it for any device. The only difference between that and the collection of "piracy sites" the likes of MegaUpload -- the only difference you actually want -- is for people who download to pay money to the creators of the things they downloaded. But Hollywood won't allow that sort of competition in content distribution, because it requires giving up the attempt to monopolize distribution for themselves, the exclusive contracts with specific distributors, etc.

Yes. And it was a very crappy system at that.

Trying to trick you to sign up for premium accounts, audio constantly out of sink with video, nagging you to sign up after 70 minutes to sign up.

Not to mention there was no ability to search the site.

Yet people were still using it.

If the entertainment industry tried only a little to address the new market that was developing on the internet they could have blown mega upload out of the water but they would rater limit peoples access and not offer legit alternatives.

> The entertainment industry has just never really been able to get their heads around how to best develop a new, sustainable business model

The entertainment industry seems to be doing better than ever. Did piracy actually reverse growth at any point in their history?

Today you can buy new-release movies from your PC, smartphone, tablet, set-top box or smart TV and either download or stream them instantly. You can buy combo-packs in store that come with both physical discs you own and a digital download license. The download-only rights for new releases cost substantially less than discs; charging the same was a common complaint of pirates on messages boards for years (e.g. today you can buy Elysium on Amazon at $3.99 to rent, $12.99 for digital purchase, $19.99 for DVD or $27.99 for BR+Download). The digital versions are available as soon as, or even earlier than, the disc versions. Tens of thousands of movies that few would want to purchase are available on a dozen streaming services for less dollars a month than buying a single movie outright.

Almost every objection to legal purchases made by pirates over the years has been answered; the studios gave us what we asked for. Their content is available at reasonable prices virtually wherever and whenever you want it, at least within their own countries (international licensing is still a mess). BitTorrent's share of US internet traffic went from 33% in 2006 to 21% in 2011 to less than 7% in 2013. I don't think that's coincidental.

A large amount of content is available, but it's mostly the second string. Movies I actually want to watch are unavailable on Netflix and Amazon because the studios won't license them for streaming.

Earlier analysis of this phenomenon on HN explained it by saying that once something is on Netflix, all hopes of making money on DVD sales are gone. Hollywood wants to sell physical media because that is what it knows how to do and has always done.

Therefore, movies will only be released to Netflix, Amazon, etc. if the studio is particularly forward-leaning or (more likely) evidence suggests that it's made all the money it's going to make in physical media distribution so there's no harm in offering it up for streaming.

If I recall correctly, Netflix's catalog improved substantially for a good while, but then large portions of it were retracted. That's another thing that has to stop before legitimate digital distribution is "good enough" - studios need to stop pulling movies every time they feel like it. It pretty clearly demonstrates an attitude that digital distribution channels are toys to be put away at any time rather than a core component of their business.

Virtually all "first-string" content is available on Amazon/iTunes/Play/VOD for purchase or rental. Wanting new releases to be available on $8/month streaming services is just not a realistic expectation. What major studio is refusing to sell digital copies?

All of them.

Try watching A Knight's Tale on Netflix streaming. It is an average movie from over a decade ago.

There are a ton of average movies from 3+ years ago that I cannot get streaming, that was just the first one that came to mind. So please, please stop using such arguments when 25% of the time I can't find the movie streaming when I look for it.

EDIT: I probably should add they also revoke access [e.g. the Disney Christmas movie story from a week ago] to stuff that was specifically purchased, not merely bundled with a streaming service. So, as a group, they are pretty uncooperative because they don't want to have to follow the radio model of pricing/licensing which is what they should be doing [especially for movies over a decade old!]

You're mixing up "streaming" and "Netflix streaming". Pretty much any modern movie is available to stream.

A Knight's Tale can be streamed on:

* HitBliss

* XFINITY Streampix

It's available for digital rental on:

* Amazon

* iTunes

* Google Play

* YouTube

* Sony Entertainment Network

* HitBliss

It's available for digital purchase on:

* Amazon

* iTunes

* Google Play

* Vudu

* Redbox Instant

It's available On-Demand with an Encore subscription.

There's no ethical reason to pirate this movie in the US. "Cannot watch it now without paying for it" is NOT the same as "cannot get streaming".

It sounds like your idea of content is "things on Netflix or free on Amazon". No, you will not get new releases there and in my opinion it is unreasonable to expect that.

I was honestly surprised at how quickly The Avengers found its way to Netflix streaming. I figured there was still enough money to be made off iTunes/Amazon/etc rentals and purchases to preclude giving it away that cheaply.

Maybe they made plenty off of it, and wanted to promote their other movies (hint: Thor 2). I personally contributed $20 in movie tickets to the Avengers (saw it twice). I also went and saw Thor 2.

That's because Disney is trying to ingrain their brands into pop culture. Modern Marvel movies can't stand on their own merits so Disney has to give them away in hopes of getting people to see future movies in the franchise. It's manipulative bullshit marketing to cover up the poor writing, bad cinematography, overused CGI and post production added 3D effects. Since Disney bought Marvel in 2010 that's what has been produced. There is no vision beyond maximizing their ROI (selling made in China toys and clothes to children, etc.) and setting up future installments in the franchise. It is dishonest and I hope they fail miserably.

Do you want to see a real super hero film? Go watch Nolan's Batman series.

Fans of The Avengers fans are probably the ones most likely to pirate the movie after a minute's worth of inconvenience.

Meanwhile, Disney can take away a purchased movie from Amazon because the parents probably (a) already have the Disney channel, and (b) are willing to pay for it. https://news.ycombinator.com/item?id=6911944

I find it extremely disturbing that I haven't been able to find a single major news outlet covering this. Hopefully I'm just failing at searching.

It's a non-story to the mainstream media. Amazon said it was a temporary issue unrelated to Disney's request to stop selling it. Those who had purchased the movie and lost access had their access restored.

That's odd considering the response Amazon originally gave in the post.

I'm not talking about new releases, I'm talking about 86% of AFI's top 100 since 1907.

The Avengers is Joss Whedon. Modern, progressive filmmakers are pretty good about getting their content onto streaming services, but there are still enormous gaps in the catalogs.

I just went through the first 30 titles in the AFI top 100. Out of those 30, only four are not available in the iTunes Store: Sunset Blvd., Some Like it Hot, Star Wars, and The Grapes of Wrath. The other 26 are available and cost $3.99 to rent – all those are also available to buy, for $6-15.

I don’t have the time to search for the rest of the 70 titles in the iTunes Store, but from a few blind tests I did, I’d say the vast majority is available there.

Do you remember how new releases were $5 at Blockbuster? In the 1990s? I don't see why you expect unlimited new releases to now stream to you for $8/month. If you want to stream a new movie, you have to pay for it. The physical DVD wasn't the expensive part of the $5, it was the content.

Netflix already has my credit card, why not Netflix "on demand" for U$ 5 for new releases?

I can't believe they're not trying to secure this already.

Near the end, Blockbuster was getting the new release DVDs literally for free from the studios in return for a piece of the revenue.

New Release rentals became another line item in a movie's total income.

If you want to stream a new movie, you have to pay for it.

How exactly do I do that?

To take this further... Why are we stuck in this business model?

By paying more for it than all you can eat for $8/month on Netflix. Want a brand new movie that just came out on DVD via streaming tonight? Pony up and pay $15 to buy it digitally, or $8 to rent it via on demand etc.

IE: Brand new content is more expensive and always will be.

He didn't say why, he said how. Do you know somewhere I can pay $15 to download or stream new release movies?

http://xfinitytv.comcast.net/ondemand

http://www.dish.com/entertainment/vod/

http://www.directv.com/technology/on_demand

http://www.amazon.com/s?rh=n%3A2858905011%2Cp_drm_rights%3AR...

http://support.xbox.com/en-US/xbox-360/xbox-video/buying-and...

http://us.playstation.com/playstation-store/moviestv/

http://www.apple.com/itunes/charts/movies/

I just looked at a random new release DVD - "We're The Millers" - in iTunes in Australia (the only one of the above options that seems available to us downunder) and the buy price (HD movie) of $29.99 is more expensive than the physical disc from a local retailer: http://www.jbhifionline.com.au/dvd/newreleasedvd.htm ($24.98)

$6.99 rent price is substantially cheaper if you only want to watch it once though I guess.

Not sure if GP meant "new release movie" as in still in cinemas as opposed to "new release DVD"

if i can watch action movies on a 20 feet screen with a $100k audio system for $8 to $12 at my local theater, why would i want to watch it on choppy netflix on my cheap tv a lame stereo?

people who download that don't care much about the movie. they would be watching commercials on cable tv and be likely entertained. there is no sale lost to the studios there.

the lost sales are people looking for classics or hard to find titles. and those are hard to find in pirate sites, and nowhere to be found on netflix, amazon.

edit: the comment from ChuckMcM bellow describe why that happens.

Because you might be married with kids?

Spending $100 on a night out after hiring a baby-sitter vs an evening after the kid's 8PM bed-time spending $5 to $10 at home in front of my nice speakers and 60" TV? When I've got to wake up at 6AM in the morning to get the kids to day-care?

Maybe you'd look down on it, but yeah, Married With Children is a big market, and a legit reason not to want to spend several times the price going out to a theatre where there's a good chance other obnoxious viewers will sour the experience anyways. I never have to worry about that at home.

Also, I can pause the movie, not miss anything, and take a bathroom break. Or let the dog out. Or get a drink.

Reading the rest of your comment I'm not really sure what you're trying to argue for/against.

I don't have access to streaming movies, but I imagine it has to do with the fact that the movie going experience has deteriorated over the years. I for one really like the big screen as well, but the projection quality in theaters is not seldom poor. I can also see that people are fed up with the smell of nachos and fake-butter popcorn in the theater, with overpriced drinks, with others making phone calls during the movie, or spoil your experience in other ways.

Now, luckily, this doesn't happen every single time, and the movies I like usually have a more adult crowd. But I do fancy the testosterone-ridden braindead Hollywood blockbuster every now and then too, and then I can see why some people would enjoy watching a movie in the privacy of their home more than in the theater.

Plus, you can pause when you have to go to the fridge :-)

Of the AFI's top 100 movies of the last 100 years, only 14 are on Netflix. It's not the new releases I'm worried about.

I can't find a list cross-referenced with Amazon's catalog and I'm not going to do it myself right now, but I suspect the success rate is similar. I'd love to see data on this.

It used to be complete overlap [1], I don't think it's that way anymore but Amazon is still worse by a lot.

[1] Circa Sep 2012: http://2.bp.blogspot.com/-YEwtLdSs6cc/UFUeVg1WMiI/AAAAAAAAAA...

Blockbuster did that price with brick and mortar stores and a limited number of my physical copies of a movie. Netflix has lower operating costs and an unlimited number of downloads it can make available to customers, so they don't need to buy in 100 copies of a film which will be next to useless after 2 weeks.

Amazon allows you to purchase recent movies individually for both "buying" and "renting."

That was due to the Starz agreement.

Now you can find them at obscure websites like:

http://www.starzplay.com

http://instant.warnerarchive.com/

etc.

All not exactly well-crafted and promoted as a new source of revenue.

Meanwhile Netflix beats on and is hitting all-time highs in the stock market.

yeah, as the grandparent post said, they still have their heads up their %%%

lets see: pirate sites = i can watch the movie anywhere. cost some time.

netflix, amazon, hulu = i can watch on windows, android, ios, wii, xbox, several set top boxes such as roku, smart tvs. cost 10 to 200 per month.

that aberration you linked = i only get a single image telling me to download the ios app. im not even sure how much it costs or what they have available.

>Today you can buy new-release movies from your PC, smartphone, tablet, set-top box or smart TV and either download or stream them instantly.

Yes, you can if you live in US or UK. Try that in 80% of other countries in the world... It is extremely frustrating to go to my home country(Poland) for Christmas and not being able to use Netflix, not being able to buy any films and practically only have TPB and Usenet as a source of content as if it was 1999 again.

Same in Turkey. Nobody heard of Netflix outside of the tech circle. There is only a handful of movies on iTunes store, not to mention we were finally able to access iTunes store last year. And, there is no way, yes no way, to legally watch T.V. series online. You can buy box sets, when they finally arrive to local stores. Or you can buy them online, but than there is the limitation at customs for only 5 items allowed, per person, per year. I'm tired of shouting 'Shut up and take my money!', but it seems distributors don't care.

Indeed, I've spent most of the last year and a half in Armenia (and some time in Germany), and have had to come up with elaborate VPN + NAT (for Netflix) / Squid proxy (for Hulu+) setups through the US to get the content I already pay for, with my American Visa, from my American bank, homed to my American address.

> The entertainment industry seems to be doing better than ever. Did piracy actually reverse growth at any point in their history?

The shift to digital absolutely did reverse growth in the music industry (part of the entertainment industry) for about a decade. Exactly how much of that can be attributed to "piracy" in particular is a question that's difficult to answer, because it was a combination of not being able to easily buy music in the way people wanted combined with piracy that created a situation in which it was considerably easier to pirate/share music than to buy it.

"...the studios gave us what we asked for..."

Not quite. I still can't take a movie I purchased using Xbox Video and play it in Windows Media Player. I can't play it on an Android device, an iPhone, iPad, Lunix, OSX... In fact I can't play it anywhere that isn't a Windows Phone 8, Windows Metro or an Xbox. And even then only once I've signed in with a Microsoft ID.

If you had chosen to buy that movie from Amazon or Google Play instead, you could play it on all of those devices (yes, Google purchases can be watched on iOS devices). Amazon even gives you a WMV file for your Windows Media Player in addition to the streaming rights. The studios didn't force you to choose a more restrictive seller. You can't play a DVD from Wal-Mart on your phone either, but making more choices available to you is not a bad thing.

Piracy still has a much better product to offer. No restrictions at all.

Except for the long-term downside you're conveniently ignoring, where the producers of the content don't get paid?

Also tens of thousands of dollars in fines plus possible jail time.

i think you missed his point completely.

there is a industry with a lousy product, that can make a much better offering instantly with very little effort, but they are to afraid to do so.

the consumer who opt for piracy is not actively choosing to harm the content creators. but the ecosystem that preys on those content creators is killing itself by preventing people from even buying their products with comfort, and in doing so is harming the content creators.

think about all the bands that started to distribute their own music. nin is way better off. as well as their fans. the only casuality is the record labels and others that used to prey on the band, who used to provide a benefit for the fans when distribution was physical. now, all they do is screw the content creators and fans in a vain attempt to remain relevant and siphoning dollars as they are used to.

NIN's latest album was published by Columbia Records.

Wait a minute. I see what you did there. Corporations get to think like the parent article (i.e. offshore programmers and call centers are cheaper, and plenty of outright abuses of labor and customers). Why don't regular consumers? Consumers have to account for morality, but corporations don't? That sounds fishy.

Piracy:

- free

- watch on any device you want, keep the file(s)

- no advertisements

- content producer does not get your money

- excellent content selection

- no regional restrictions

- not instant (must download first, then watch) - but: easy to automate auto downloads, can watch offline

Streaming:

- not free, but cheap

- extremely limited selection

- requires proprietary software (OK if you are Windows/Mac/Android/iOS user; not acceptable for Linux/BSD user)

- instant, no need to wait for download

- content creator gets paid

- regional restrictions

- other arbitrary restrictions (i.e. can't watch on Hulu Xbox app, can watch on Hulu in browser, wat do?)

- advertisements on some services

- network connection necessary for viewing

Piracy is a better deal for the consumer. If you do not care about the entertainment industry's profits, it is hard to justify paying for something inferior to the free option.

edit, formatting.

not instant (must download first, then watch) - but: easy to automate auto downloads, can watch offline

Not really. It depends on the format you desire and can fine. There are plenty of flash streaming sites out there that will instantly stream content to you, sometimes in HD (depends on what's been uploaded).

I didn't know this about Google Play. Is there a chart where I can see what each service sells? Like columns for MP4 | WMV | bitrate | HD? | and so forth. Or does each movie/show have different characteristics? I only use Linux so I definitely don't want WMV ;-)

http://www.canistream.it/

That tells you where you can stream or purchase it in various formats. Check what formats Amazon, Apple, Google, Vudu, etc allow you to view the movie in, and you're set.

I don't use Google products, so Android isn't an option for me. In other words, having choice limits my choice. To me this means that the model is broken.

For now I continue to download pirated versions of all the legit versions I own. My goodwill got me burnt by DRM before, but not again.

What about the objection that they corrupt our political and legal systems by buying themselves laws like copyright extensions, DMCA and SOPA? They're not going to stop doing that? Well fuck them, they won't get a penny from me. But I'm still going to enjoy the fruits of our creative culture. Deal with it.

I haven't pirated anything for probably 8 years or so. I always generally preferred to pay for stuff.

That said, you're making a pretty weak assertion. iTunes often lags other distribution channels, oftentimes by months it seems. These oh-so-convenient alternative distribution channels are also DRMed up to the nines. I've bought all the kid's movies on my iPad through iTunes. Can I play them in my minivan through an HDMI to Composite adapter? Only for about 10 seconds. Then the screen goes black and the iPad says "this is not an approved playback device".

You don't have freedom and choice today. Unless I want to have random purchases over three or four services I need to consolidate my purchases for convenience. If I buy an Android phone I can't view the Google Play content at home (without yet another device and HDCP hookup). When HDCP dies the death it deserves, even with DRM still present, life for the honest consumer will get a lot better. Until then... yeah, no, the "industry" is far from giving me what I want.

It's not just movies.

I like the TV show Downton Abbey, it airs in the UK in the fall, but not in the US until after the new year - I'm willing to pay money, but cannot until they decide to release it here.

I'm also a fan of old TV shows, most of which I cant buy at any price because they are unwilling to release them at any price.

I'm perfectly content to pay for any of this stuff - but often its not available for purchase, only for pirating.

Same goes for movies - I can buy the DVD for 20 dollars or 'buy' an online copy for 12 dollars (sometimes its the same price as the DVD) - but it's DRM encumbered and I don't get a physical file I can watch anywhere I want - How is that a better value?

What I've found and seen in a handful of studies - is the majority will only turn to pirating after exhausting the legal options to buy a media product, thats been my experience. I'd rather pay a blanket license on my internet bill (say 10%) and be able to download whatever I want from wherever I want, whenever I want. Region Licensing, DRM, strange pricing oddities and the like will keep pirating around for the foreseeable future.

> Almost every objection to legal purchases made by pirates over the years has been answered

How about the big one: content available in a timely fashion? For example, TV shows still don't show up on iTunes until typically the next day. Movies don't show up on Netflix for a long time. Movies also take a while to show up on iTunes, and even then they're often restricted to purchase-only for a few weeks.

An an Australian, I wish I knew what a "Netflix" was.

The thing about companies that complain about piracy is that they do the math based on lost sales. So as long as piracy exists, they can always do their math and show how much sales they've lost. If the amount is significant, they can still complain.

The unfortunate thing is that they can't prove that if piracy was impossible, that the resulting sales numbers would instantaneously match their forecasted numbers. You'd never for example see poor people in a poor country be willing to cough up money for Windows and Office licenses if piracy for Microsoft products suddenly stopped. Likewise for entertainment products like movies. And yet, those companies continue to wave around their calculations as gospel truth.

The business model is so simple it makes me want to cry. Get together with the other major networks, and charge people $8 a month for unlimited DRM-free downloads. Now you get $8 a month that people were going to use to pay for pirated copies. Put an ad or two in there, if you must. (But really, do the annoyance ads cause make up for the revenue they generate? Who pauses their TV show to go buy what you just advertised?)

If $8 a month isn't enough money, then skip the part where you get together with the other networks, and make your own site. Let's say you're AMC. Everyone wants to watch Breaking Bad, and you charge $1 an episode everywhere else. So make your own site that is $8 a month, and most people will get $4 (one episode a week) worth of content, and maybe check out your less popular shows and tell their friends. What's not to like?

(I think what's not to like is that sales people always want the big deals. It's much easier to get Time Warner Cable to pay you XX million than to appeal to each and every consumer. But the problem is, the people you're not serving are not going to subscribe to cable to get your show, they're going to pirate it, going further and further underground each time you try to stop it.)

Perhaps a deeper issue is that it's easier to find sales people to negotiate deals than it is to find engineers to code up a website that handles video downloads. If only there were already video download sites! If only there was some sort of "mega upload". If only there was some sort of "net flix". SIGH.

Personally, I'm resigned to just buying the season at the end on something like Google Play. It works on my tablet and TV, and I'm only going to watch it once. But really, the DRM leaves a bad taste in my mouth. Why am I punished for being a paying customer, when the pirates can play it on whatever device they want? It boggles my mind.

</rant>

This is fundamentally the problem. It redefines and limits what a piece of video is "worth" going forward. That is where the push back is coming from. Disney can pull a film made in the 70's out of the vault, dust it off, and re-show it a few times to pull in a few million$ to the bottom line. But they can't do that if the movie has been available that whole time on a video streaming service. Looking at the two scenarios.

a) You have a movie that has not been available to buy or watch of 10 years, but was popular at the time, you bring it out again and poof get a bit of a revenue kick.

b) You have a movie that has been available on streaming services for the last 10 years, you re-issue the buyable version and get no uptake at all. Certainly not enough to justify a couple hundred thousand on a advertising it.

The issue here is information economics, you can only 'add' value to a movie by making it unavailable.

We probably need to bring copyright periods back to something reasonable, too. 10 years?

People will gladly spend $10 for unlimited access to all content ever created. Sadly that's not reasonable. Shocking I know.

I don't get it. If the evidence is so overwhelming (emails, chat logs, skype logs) why in the world didn't the US use all this to take them down? Why the drama? The breaking of international rules and the violence?

This is a PR move, it has nothing to do with a trial.

This is a better coverage: http://www.hollywoodreporter.com/thr-esq/justice-department-... (and shame on your ars, for not bothering to link to or quote the source material for your article)

That's what has happened. Someone ordered this material released to try to counter the massive pressure the NZ government is under locally not to do comply with US requests for extradition.

    "This sounds like 191 pages of a meritless criminal theory,” Rothken said.
    "The notion that they keep piling on more evidence to bolster civil claims of 
    secondary copyright infringement, to us look like they’re desperately trying 
    to mislead the public.”

Exactly.

I'm not arguing that he (.com) was (and almost certainly still is) a Bad Guy who deliberately built his business on selling other peoples work, but this... is just PR posturing to try to counter the thus-far terribly terribly botched efforts of the justice department.

>This is a PR move, it has nothing to do with a trial.

I am not sure about your reading comprehension, it sounds like a slam dunk to me.

Like Saddam's WMDs?

Perhaps, but breaking laws to get evidence usually results in it being inadmissible. And wow did they break laws, all the way up to the PM. And they still are with the tracking and bugging that is going on.

Yes. NZ's incompetence may save his dumb ass.

If he is a bad guy it feels weird rooting for a bad guy. I feel like my perceptions about this entire thing are all backwards. If DotKom so bad why are they so bad at making him look bad. DotKom comes out looking like the martyr he wants to be seen as. Law enforcement look like they're private security for the entertainment industry. And yet it's clear this guy is possibly the worst kind of copyright infringer. He's not the individual who downloaded a song and is being sued for life and limb, this guy got unbelievable wealth of the work of others and still the whole thing feels wrong. Maybe we should be cheering law enforcement to bring this guy to justice but I can't help but root for the other side. The thing to blame is probably the decade of going after individuals and making them suffer has turned out to be such a huge public relations disaster that will last a generation. I just want the entertainment industry to fail and for copyright laws to fail as well.

There can be more than one bad guy. Bad guys can also be mistreated. The world is not a movie with clearly delineated goodies and baddies.

> If DotKom so bad why are they so bad at making him look bad.

To make Kim Dotcom look bad, just spell his surname with a K instead of a C in the middle. It evokes images of the German and Russian languages, rather than the French, and hence Nazi and Soviet undertones rather than romance and the Riviera. Imagery has more impact on public opinion than informed discussions.

That's because this notion of "bad guys" and "good guys" doesn't work in real life. It works in police and military situations where you take action against a declared enemy, but it's not a good tool for reasoning in a civilian setting. What you get there are not only different shades of bad, but also entirely different kinds of bad.

To point, there is really no question that Dotcom is generally not a good guy. He is a shady business man at best. It just happens that many people consider his brand of evil to be absolutely dwarfed by the motives and tactics of his government adversaries.

It's not clear to me, are you saying this was bitched by the US justice department? From the perspective of a New Zealander, I'd say it was well played. The dirty work was carried out over here by willing participants. The only down side has been that a few politicians who could not be more America friendly, mainly Banks and Key, have come out looking a touch dirty.

If you had read the article you would know that much of the evidence was captured during the raid, which, contrary to popular belief, was carried out by NZ police, not the NSA.

The NSA does not raid people, even in the US. It is not a law enforcement agency. However, the raid was conducted at the behest of the US DOJ.

I did read the article. I should articulate myself better: would it not have been easy for the us to use it's (nsa) powers to gather email and chatlogs?

Because the NSA would rather use the data for more important things, like terrorism, war, and espionage of foreign governments. Even if just for public perception, I don't think anybody, NSA included, really wants the NSA to use its dragnet surveillance to prevent people from downloading DVD rips of Avatar.

True, but this went all the way up to the vice-president. I don't think anybody, NSA included, really want the vice-president to use his powers to prevent people from downloading DVD rips of Avatar...

Federal agencies are limited by the scope of their mission. The scope of the NSA's mission is defense, not criminal investigation and prosecution.

And even if the NSA did collect the info, it's not clear that they could do so in a way that would allow it to be admissible in a federal court--making it effectively useless.

Parallel construction?

Is it legally possible to FOI / subpoena / sue the NSA for records the NSA has? That could be a good weapon in the copyright infringement cases they like to throw out - probably a lot stronger link than just IP.

Except hasn't the NSA provided information to bust very small levels of drug dealing via parallel construction? Why wouldn't they help out in taking down someone who is causing a problem for a multi billion dollar industry?

In all likelihood, that's exactly what happened: The FBI, or some other US agency illegally obtained information from the MU servers without a warrant. They ordered the raid to seize information that could be used to prove the crime after the fact.

Why bother when New Zealand's pathetic politicians, police and spy apparatus are more than happy to try and impress with Hollywood theatrics. Even the PM is involved is the bs that happened. Just the idea that the US might like an arrest or some data gets the current crop excited enough to break several laws.

Was Megaupload registered in US, too? Otherwise I think they have a very bogus case of "jurisdiction".

Just having the data pass through US servers doesn't or shouldn't count, the way the Internet works, and how it's supposed to decentralize the data to keep it more localized. Otherwise you could argue that just by the nature of people using Megaupload from US would also give the US government the right to prosecute Megaupload. If that's the case, then Google could be prosecuted in countries where it doesn't have headquarters, too.

Megaupload was not just being used from the U.S., but it had servers in Virginia, was actively targeting U.S. customers, and dealt largely in the infringement of U.S. copyrights.

Again, unless it was registered as a company in US, then I don't see the problem.

If a foreign citizen commits a crime in the U.S., does the U.S. not have the ability to prosecute him just because he's not a U.S. citizen (= "registered as a company in the U.S.")?

> If a foreign citizen commits a crime in the U.S., does the U.S. not have the ability to prosecute him just because he's not a U.S. citizen

If a foreign citizen commits a crime in a foreign country, the US can still prosecute him (and can even have him forcibly abducted outside of the existing extradition treaty of his country, violating the laws of that country, to bring him to court without reducing its ability to prosecute him.)

To that effect, many countries can prosecute a foreign citizen committing a crime in a foreign country. For example, genocide.

Just as an FYI, Google and Google execs have been prosecuted in other countries.

That's just because Google had local branches there.

Please, oh please, let me get a copy of one of the larger movie publishers email server. How easy it would be to find a few incriminating sounding emails. I could take things out of context, and say "look, conspiracy to commit crime right there!". Or a police stations email server. Or any larger organization what so ever.

I don't need six written lines from the most honest man. Just a few hundred thousands emails. Maybe ten millions to be sure. Surely, no content provider has anything wrong doing hinted in theirs?

So for a short promotion, I would recommend anyone who runs a email server to have disk encryption ON. It doesn't matter if you are running a puppy hospital for orphans.

It doesn't sound like this stuff has "finally been revealed", since the highlights Ars points out were in the indictment, which has been public for most of the year.

Just shows how flawed the laws are with respect to copyright holders. I doubt he is the only one setting up international businesses, to skirt the law for profit, and then claim the US doesn't have jurisdiction.

The laws in Europe are very loose as well. Not only do you have people setting up businesses to profit off piracy, but you also have secondary businesses forming to monetize and indirectly profit.

Browse over to thePiratebay and go look at the ads, what the products are, and who is serving those ads. These players know exactly what's going on, and how that traffic is derived and they will do anything for a "buck" - from install toolbars and hijack browsing experiences down. But technically, its all "legal", specifically if you aren't in the US.

That shouldn't be the case imo and the book should get thrown at all these people, because when the copyright laws change eventually and people say the new ones stifle innovation, these are the guys that will be the reason for it, and rightfully so.

What's flawed is the whole concept of copyright holder.

It's possible to build a business 100% built on piracy internationally, and still be "technically" legal or have no real recourse.

You can DMCA them, but they are given a "reasonable" time to take it down, and per the article, they never even removed the actual content, but created duplicate URLs over and over again.

You can build a wall of plausible deniability, even though you know what you are doing the whole way, and potentially even get away with it.

>You can DMCA them, but they are given a "reasonable" time to take it down, and per the article, they never even removed the actual content, but created duplicate URLs over and over again.

The article is failing to mention the actual reasoning behind that. The 'duplicate URLs' were people taking a file and making their own completely independent upload-instance, with an assertion that they had permission under copyright regardless of the first uploader.

So megaupload argued, reasonably I think, that just because X file by Alice was a violation, that doesn't mean X file by Bob is a violation, so they only deleted Alice's copy.

Indeed, but when don't limit how much people can upload, but then you limit how many DMCA take downs you will comply with, it is physically impossible to keep up. They've created a one -way street basically, however, they can then go and argue in front of a judge "we've implemented a 'reasonable' DMCA take down policy." - the word "reasonable" is very much up for interpretation, so Mega will argue they are complying with the law, but in reality, they are opening the floodgates to piracy, and they basically know exactly what they are doing.

Really, the bottom line is this: People know what his sites were used for. They didn't blow up to immense popularity because of the non-pirated material. He hides behind DMCA, he says his service is for legitimate purposes only and the illegitimate is just a side effect. There are legitimate services that are big, like 'YouSendIt', and those services aren't known for piracy the way his services were. It's not random, unlucky, undeserved, etc.

He's a criminal, operating internationally, trying to exploit loopholes in the law for his own financial gain. He is not a good guy, he is not noble. He is a risk-taker who tried exploiting loopholes between the law and technology. For every action there is a reaction.

His action was to use unfairness in the law to exploit it for his own financial gain. What the big companies did was use their unfair advantage with politics to pull some strings and do things that are arguably legal or illegal? What is the one takeaway? The laws are unfair. What Kim Dotcom did should not be legal, and there should be effective tools to have him comply or actually give a shit about the piracy on his websites, without "stifling innovation" around the rest of the internet for actual legitimate services that aren't built on piracy.

From what I understand they didn't limit DMCA compliance, which would be an obvious violation. They limited the use of a custom takedown tool.

> People know what his sites were used for.

Yeah, but how do you decide responsibility? Outside of a minority of incidents he's only providing infrastructure. Trying to enforce legality there is a can of worms. How many steps away do you go? What about his ISP? Surely they noticed the huge amount of traffic, and have some idea what the site is for. What about the people that sold him servers? They're contributing even more than the ISP to the ability of the site to run.

>His action was to use unfairness in the law to exploit it for his own financial gain. What the big companies did was use their unfair advantage with politics to pull some strings and do things that are arguably legal or illegal?

In my mind, unaccountable political manipulation is worse than exploiting a loophole in a law. It's much easier to fix a law.

>piracy internationally

This phrase makes no sense. Copyright is a temporary* artificial monopoly invented by the state to encourage the useful arts. If your state creates no such monopoly for a given work, then definitionally no copyright infringement ("piracy") can occur.

*the USA's original default copyright term was 14 years. Remarkably, this coincides with the modern economically optimal copyright term. Since the modern term exceeds that length, copyright results in a net transfer of economic value from the public to copyright holders (to the detriment of the overall economy).

http://arstechnica.com/uncategorized/2007/07/research-optima...

The US isn't the only law-maker, each country has their own set of laws.

We should respect other country's laws, instead of forcing out own beliefs down their throats.

I cannot believe the folks at MegaUpload were so dumb as to commit this sort of stuff to an email. Here's some advice: if you're doing something illegal, don't write about it.

As Stringer Bell so astutely put it on The Wire: "[Are] you taking notes on a criminal fucking conspiracy?"

Due to intellectual property bullshit, we'll never see legal avenues of consuming IP keep up with the ability to disseminate data/information. We have the ability to create the biggest and most far reaching library man has even envisioned. A digital Alexandria that would be both the greatest and cheapest wonder the world has seen. And yet it will never exist and we will squabble amoungst ourselves to ensure the right middlemen get paid and fruitlessly try to enforce an artificial reality where information is a private good instead of a public ocean where all may splash in child-like wonder if only it were allowed.

And one day we will be asked to answer for this barbarism. How could we allow so many of us to go without when they could have it all for free? How could we deny all to billions just to create an artificial marketplace for a few million? How could we possibly stand at beginnings of a profound shared global consciousness with all the tools and technology required to summit the mountain and breath in the glorious horizon and choose to instead stubbornly burrow our heads in the sand. History will ask us these questions and we will be found wanting.

Don't worry. People in the future will be doing stupid crap too.

PDF of evidence here:

http://www.nbr.co.nz/sites/default/files/images/Mega%20Evide...

From the local rag a few days ago. http://m.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=...

The main thing that keeps occurring to me is 'This is why you burn the evidence before you get arrested.' ^^;

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