Megaupload’s Exclusive Kim Dotcom Interview With 3News

Megaupload’s founder and CEO, Kim Dotcom was finally granted bail on February 21st 2012 after being imprisoned for over a month on charges relating to piracy. His fellow associates, Mathias Ortmann, Bran van der Kolk and Finn Batato were bailed earlier in the month.

The Federal Bureau of Investigation is seeking to extradite them to the United States to face charges of conspiring to commit racketeering, conspiring to commit money laundering, copyright infringement, and aiding and abetting copyright infringement over the internet through the website Megaupload.

Now, just over a week later, 3News were able to have exclusive access to Kim Dotcom to interview him at his house in New Zealand. 3News released a transcript of the interview a few hours after the initial video interview was broadcast on their site. I have saved that transcript as a PDF and embedded below, so readers can also read it, or download it (in either pdf or text form) to view offline. I made no alteration whatsoever to the text, except that I included some additional information above it for the purpose of the reader. The original can be read here.

It was a fascinating interview and gave a great deal of insight to the charges, the internet, Megaupload and how much control the corporation were actually given by Megaupload to remove infringing content whenever they wished.

Video of the interview:

I would personally like to thank 3News and John Campbell for their unbiased and great coverage of the whole Megaupload case as it has evolved. I would also like to mention Torrent Freak as well with their extensive continual coverage as well.

I have highlighted a few questions and answers from that interview below that really stood out for me.

John Campbell: Kim, you say it was unexpected. Was it totally and absolutely unexpected, did you never, ever
think that this would happen somewhere in the world at some time?

KD: Well, the business is seven years old. We have been sued only once, never by any, you know, movie
company or big content company and we have spent millions of dollars on legal advice over the last few years
and our legal advisers have always told us that we are secure and that we are protected by the DMCA which is a
law in the US that is protecting online service providers of liability for the actions of their users, so it came
completely unexpected.

JC: What did your lawyers tell you about what you were doing? As we understand Megaupload, in its simplest
terms, it’s a giant kind of exchange system in the sky, right? So you upload something, someone else downloads
something, you’re sharing files, those files could be anything, right? How do you protect yourself against
breaches of copyright by the people using Megaupload?

KD: Well supposedly, and that’s what everyone believed, is that the law is protecting us. We can’t be liable for
actions of third parties, you know? As long as we follow a regime of taking things down that are reported to us,
which we have done over all these years, we are protected, according to the law and, you know, I find it very
surprising that this is happening because like I said we had legal advice all these years telling us that we are an
online service provider and we are not liable for the actions of third parties.

This is true, under US law, he is indeed protected by DMCA laws protecting him against how users of the services use his company.

JC: Where does Megaupload come from? What was the idea behind it? It was your idea, right, why?

KD: Well, you know, one day I was sending a file to a friend via email and I got a message back saying, you
know, the file’s too large and the mail server has refused to send it so I thought, you know, what can I come up
with, what can I do to solve that? So I basically created a server where I could upload a file and got a unique link
and then I would just email that link to my friend and he would then get the file and that’s how Megaupload was
started, it was just a solution to a problem that still exists today.

With the shutting down of Megaupload by the FBI and especially in the way the operation was carried out it has had an effect on a lot of the other big file hosting providers, including some of them shutting down completely to severely restricting the users. If the internet thought that the ability to host files online with a simple and easy way to share them was an issue before, this case just made that 10 times worse. He provided a business model that did not exist at the time, and one that was used by millions of people.

JC: Kevin Suh, the Senior Vice President of Content Protection at the Motion Picture Association of America
said, and I quote, “You are the biggest copyright infringer in the world”. Are you?

KD: Absolutely not. I’m no copyright infringer. I mean, you have to look at Megaupload in its sheer size. We are
talking about a network that was running on 1.5 terabytes of bandwidth.

JC: Explain that to me, how big is that?

KD: That is about 800 file transfers completing every second. We are a relatively small company; you can’t
expect us to police that kind of traffic.

JC: So 800 file transfers occurring every second.

KD: Yes.

JC: 24 hours of the day, every day of the year.

KD: Yes.

JC: Every second.

KD: Yes.

JC: And you know what’s in those file transfers? You’re able to look at those 800 file transfers a second and
say…

KD: Well there are other laws that protect users and those are privacy laws. For example in the US it’s the
Electronic Communication Privacy Act which prohibits us from looking into the accounts of users proactively and
look for things. It’s like mail, it’s private, we cannot just go in there and police what these users are uploading. But
that’s why we have our own terms of service in which we tell our users, “You cannot upload anything that is
infringing on anybody’s rights, you can only upload things that belong to you and before any user uploads any file
to Megaupload they have to click on a little box that says “I accept the terms of service”. So we have a legally
binding agreement with these users that they are not supposed to upload anything that doesn’t belong to them.

JC: Of course, that is a romantic notion though, isn’t it, that just because we tick the box accepting the terms of
service that we’re going to behave ourselves when we’re in there, right? That, I mean, you must have known that
people were doing whatever they wanted once they’d gone through the front door. They were exchanging any
kind of files that they wanted to exchange. What opportunity did you have to police that?

KD: Well, of course everybody knows that the internet is being used for legitimate and illegitimate uses. I think
every online service provider has the same challenges that we have. YouTube, Google, everybody is in the same
boat. So what you need to understand here is that we provided the content owners with an opportunity to remove
links that were infringing on their rights. So, not only did they have an online form where they could take down
infringing links, they had direct delete access to our servers so they could access our system and remove any
link that they would find anywhere on the internet without us being involved. They had full access and we’re
talking about 180 partners, including every major movie studio, including Microsoft and all big content producers
and they have used that system heavily and you need to understand that that system was not even something
that was even required by the law. We provided that voluntarily and they have removed over 15 million links.

JC: So every member of the Motion Picture Association, every film studio who is a member of the Motion Picture
Association of America had direct delete access to Megaupload.com to take out copyright-infringing material – is
that the case?

KD: Absolutely.

So the MPAA along with 180 partner organisations including every major movie studio, Microsoft, content providers were given not only the normal DMCA takedown request notice forms, but they were given direct access to the servers themselves so that they could remove the offending files. How can they argue that Megaupload didn’t bend over backwards to assist the corporations and content providers in removing copyrighted materials. This is precisely the kind of information that the media tends to leave out when reporting on this case, as after all, who do you thinks runs the news services?

JC: And yet the FBI indictment against you alleges, and I quote, “Copyright infringement on a massive scale with
estimated harm to copyright holders well in excess of 500 million US dollars”.

KD: Well that’s complete nonsense. If you read the indictment and if you hear what the Prosecution has said in
court, it’s at least $500 million of damage were just music files and just within a two-week time period. So they
are actually talking about $13 billion US damage within a year just for music downloads. The entire US music
industry is less than $20 billion. So how can one website be, you know, responsible for this amount of damage,
it’s completely mind-boggling and unrealistic.

What is it with the MPAA and their ilk with inflated numbers that have no independent proof of validity? This is a tactic that they have used again and again to create a media sensation to stir law makers and the public in to doing their will and creating their laws, which unfortunately some have already passed.

JC: Can you give me a name? Just name…can you give me a couple of names?

KD: Many sites. Mediafire. It’s based in the US, offers exactly the same service like us.

JC: File-sharing opportunities?

KD: Yeah. Rapidshare, Fileserve, Filesonic. Microsoft has their own service called Skydrive. Google is launching
a new service called Drive. Everyone is in this cloud arena, in the same business, has the same problems that
we had battling piracy. But we are not responsible for the problem and this is, I think, what everyone needs to
understand. Where does piracy come from? Piracy comes from, you know, people, let’s say, in Europe who do
not have access to movies at the same time that they are released in the US. This is a problem that has been
born within this licensing model and the old business model that Hollywood has where they release something
first in one country but they show trailers to everyone around the world pitching that new movie but then the 14-
year-old kid in France or Germany can’t watch it for another six months, you know? If the business model would
be one where everyone has access to this content at the same time, you know, you wouldn’t have a piracy
problem. So it’s really, in my opinion, the government of the United States protecting an outdated monopolistic
business model that doesn’t work anymore in the age of the internet and that’s what it all boils down to. I’m no
piracy king, I offered online storage and bandwidth to users and that’s it.

KD: When you create something that is popular, when you create a solution, you’re an innovator and you solve
problems for people and they like what you have to offer, of course you automatically make money. If you have a
product that is popular you make money. I had a product that was very popular.

JC: Why was it popular?

KD: Because people could surpass a lot of limitations. It saved people a lot of money, you know, you don’t need
to buy a server to store your files, you can use us to distribute your files. Legal files, you know. You can use us to
make a backup online of all your files. There are so many countless, legitimate uses for Megaupload that the
piracy element is really just one that is minute and shouldn’t even be the primary focus.

JC: CNET, in an article that looked pretty well researched to me and well sourced said, and I quote, “among the
copyright owners who’ve accused Megaupload of piracy, including software and video game companies none of
them presented the FBI with more, quote, significant evidence, end quote, about Megaupload than the
MPAA. Did any members of the MPAA come to you and say “we have concerns, Kim, about what’s going on in
Megaupload”.

KD: Never. And I gotta tell you this – if you are a company that is hurt so much by what we are doing, billions of
dollars of damage, you don’t wait and sit and do nothing. You call your lawyers and you try and sue us and try to
stop us from what we are doing.

Kim points to one of the biggest reasons for piracy here, and that is of the current outdated licensing, distribution and business models that are being used at the moment by the content industries and that is preventing users from being able to access the media that they want, when they want and how they want it (see The Hargreaves report). Sony’s CEO Edgar Berger recently said in an interview that YouTube censor ship is costing them millions in revenue due to restrictive copyright enforcement by music rights collecting agencies.

JC: So a cease and desist of some form or other. Did you ever receive any letters from members of the MPAA
saying “the latest James Bond film is being exchanged, ad infinitum, through Megaupload, you must stop it”? Did
you ever receive…

KD: Absolutely not. No legal document has ever reached us from any of these studios. The only thing that we get
is Takedown Notices and them using the direct delete access on our website. So, isn’t it surprising to you that
when I’m the pirate king and I’m causing all this damage that none of them has ever even attempted to sue us, to
sue us for damages, you know? If you would run a business that loses billions of dollars because of me, you
wouldn’t just sit there and do nothing. I mean, this investigation was ongoing for over two years, you know, the
company was live for over seven years, the MPAA has always thrown names at us and called us all kinds of
things but they’ve never actually done anything to you know, take us to court and for the very simple reason that
there is a law in the US that protects us which is the Digital Millennium Copyright Act that protects online service
providers from actions of their users and this is the same law that allowed Google to still exist, that allowed
YouTube to still exist. You know that Viacom sued YouTube and YouTube claimed that they were protected by
the DMCA and they won. And if you look at the YouTube case files, the emails that were exchanged internally we
are a lamb compared to what was going on at YouTube at the time but these guys got away. They won their
lawsuit and I’m sitting in jail, my house is being raided, all my assets are frozen without a trial, without a
hearing. This is completely insane, is what it is.

You can read the rest of the interview via the links provided above, or via the embedded PDF version below. I’d be very interested to hear from reader regarding the interview and your thoughts, both positive or negative about it.

Transcript of the interview:

How Copyright Industries Con Congress by Julian Sanchez

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