Rethinking Kim Dotcom

A recent segment on 60 Minutes put the prime time spotlight back on Kim Dotcom, the eccentric millionaire who, until January 2012, ran Megaupload, the largest cyberlocker service of the time.

The 60 Minutes report didn’t really introduce anything new. In fact, much of the information in the reporting was out of date, in particular since the release of some of the evidence against Kim Dotcom and Megaupload. However, that is understandable because, most likely, the segment was produced or at least nearly finished before that document was released.

Still, the reappearance of Kim Dotcom on primetime television gave myself, and others, pause to think about Kim Dotcom, Megaupload and what transpired almost two years ago and what has changed since then.

While I’ve been reluctant to talk about Kim Dotcom directly, instead focusing on the more technical aspects of Megaupload, I realized as I watched the segment that it was going to be unavoidable. Dotcom, through his ceaseless public relations campaign and notoriety, has made himself the focal point of the conversation, rather than his site or his business.

But even if Kim Dotcom really is a sideshow to the bigger issues, he’s should still be addressed, especially as the two-year anniversary of the closure of Megaupload approaches. Simply, if he’s going to be a part of the copyright conversation, we should have a frank conversation about him and that, in turn, is what I hope to do today.

Kim Dotcom’s History

Kim Dotcom’s pre-Megaupload past is both checkered and well-documented. Formerly Kim Schmitz, in 1998 he was convicted of trading stolen credit card numbers and and in 2001 he was convicted of insider trading, both in his native Germany.

He was already wealthy when he founded Megaupload in 2005 but the new site became easily his most successful venture, raising his net worth to an estimated $200 million and feeding a lavish playboy lifestyle. A lifestyle that Dotcom himself says was inspired by Bond villains.

Megaupload was what is called a cyberlocker service, meaning a “locker” where people place files, generally files too large to email, for themselves or others to download. Megaupload made its money through advertisements and paid accounts and it attracted visitors by providing incentives for those who uploaded popular files, offering cash rewards for highly-downloaded content.

Dotcom claims that he, nor his company, were responsible for what users uploaded to the service. The U.S. government and copyright holders argue that the incentive system induced and rewarded infringement since the most popular files, almost without exception, were infringing.

However, the evidence released seems to favor the idea that Megaupload was both aware of the infringement and knowingly profiting from it. To make matters worse, there’s evidence that Megaupload committed direct infringement through its sister site, MegaVideo, a YouTube-like video site. The site, according to the unsealed evidence, attempted to scrape the top 1,000 popular videos on YouTube for rehosting on Megavideo, all without the permission of creators.

After Megaupload was shut down, Kim Dotcom found himself in something of a legal no man’s land. The United States wanted to extradite him for charges of criminal copyright infringement, racketeering and money laundering. That extradition process, however, has dragged on with a hearing now scheduled for April of this year, more than two years after the initial arrest.

Meanwhile, Dotcom’s money remains frozen and his travel restricted. However, as the 60 Minutes segment showed, he still gets to live in his 60-acre mansion, after spending less than a month in jail.

My Issue with Kim Dotcom

There are many people on matters of copyright that I disagree with strongly and sharply, but still have great respect for. While I do not agree with their opinions, I respect their honesty and sincerity.

Kim Dotcom, however, is not one of those people.

Since the closure of Megaupload, Kim Dotcom has positioned himself as martyr, saying the video that he was targeted because of his eccentric lifestyle and nothing more.

That completely ignores the fact that Megaupload, prior to its closure, accounted for four percent of all traffic on the Internet, most of it infringing, and was by far the most popular source for infringing files, easily more popular than The Pirate Bay.

Kim Dotcom, at least in his public persona, seems to put himself at the center of everything. Everything happens either to him or because of him and he is the one who matters.

Whether his ego is a public face or a genuine trait, it seems to have leaked into his business practices. Kim Dotcom’s businesses successes have usually come at the expense of others and not competitors he legitimately beat. Whether it was the insider trading, stolen credit cards or Megaupload, the money he’s made had to be taken, directly or indirectly from someone else.

Dotcom is not a fool and the documents show that. He and his company were aware of what was going on with their servers and that they could not be in business if they seriously clamped down on piracy. Though he might have conceived of Megaupload with genuine intentions, he didn’t turn the ship when he knew it was sailing into rocky waters either.

Though Dotcom is now trying to position himself as a leader against tyranny and a fighter for a free and open Internet, the unsealed documents also show that he was anything but a freedom fighter when running Megaupload, ratting out his competitors and trying to get their funding cut, even as they were doing the same things Megaupload was engaged in.

But what I find most disturbing about Kim Dotcom is not his actions to date, but rather, what he’s said he plans on doing in the near future.

Music and Ad Hijacking

Dotcom has long been planning to launch a new music service, tentatively entitled Baboom, though formerly known as Megabox, which aims to give a way free music, both for streaming and downloading, with an unusual revenue source.

The service, as of last envisioning, would require users to install a browser plugin. That plugin would then replace some ads on the Web with ones supplied by Baboom and earn the user credit to download free music.

The problem with this system is pretty simple, though the musicians and Baboom will be paid, other content creators will have a portion of their revenue siphoned off and into Kim Dotcom’s pocket. This will disproportionately affect bloggers, news sites, forums, photographers and many video sites. In short, it’s smaller content creators, many of whom are already struggling, that will feel the biggest pinch.

Where one could argue that Megaupload was started with the best of intentions and was misused by users, Baboom is being started with the worst of intentions: To take a portion of revenue away from one group of content creators to pay another (as well as themselves). The adage of robbing Peter to pay Paul is fitting.

But more importantly, how does this fit in with Kim Dotcom’s closing line on 60 Minutes about wanting to “be friends” artists? Why is it acceptable to take revenue from bloggers, journalists and photographers to pay musicians?

It doesn’t and, in truth, it never will.

Bottom Line

To borrow a phrase from Green Day, Kim Dotcom is a walking contradiction.

He’s an Internet freedom fighter who actively worked to shut down his competitors. With the launch of Mega, he’s a privacy buff who boasts and was convicted for selling credit card numbers. Finally, he’s a friend of the artists who is actively planning to launch a service to deprive many artists of valuable revenue.

There are many people who I disagree with on copyright that I have the utmost respect for. Though I disagree with with their beliefs, I feel strongly that their beliefs are genuine and honest.

While I have no doubt Dotcom is a great showman and that he is certainly no rube, his beliefs seem to change with the wind, blowing in whatever way favors him.

Maybe I’m wrong and Dotcom is truly trying to be a friend of the artists and a freedom fighter at the same time. But if he is, he’s misguided.

If he wants to truly support artists and the Internet, he would be best off using his skills, resources and name to create a real service that benefits all content creators (or at least doesn’t hurt any).

It would take a great deal of time, money and energy to do that, which is why so few such services exist now.

But nothing worth doing in this area is going to be easy and, as Kim Dotcom shows, there are no shortcuts. After all, shortcuts he has taken to date have gone right through the livelihood of artists all over the world.