MediaFire: We're not pirates like Megaupload

Closing Megaupload for piracy made an impact. Some file sharing services are retreating, but MediaFire says they have nothing to worry about.

That's the news from MediaFire CEO Derek Labian in an interview in VentureBeat. "We don't have a business built on copyright infringement," says Labian. He also slammed Megaupload for "making a ridiculous amount of money with ridiculously bad service," noting the closed file sharing provider allowed people to upload free but charged for large downloads, and paid pirates for content.

[ Free download: 6 things every IT person should know ]

Yet the news of MediaFire's denouncing Megaupload for promoting piracy, while claiming themselves to be "a legitimate business targeting professionals," caught many by surprise. Also surprising to users? That Labian announced MediaFire how closely he works with the feds, including, "Homeland Security, ICE, and the FBI." This could just be part of complying with various official requests to remove content challenged by copyright holders, but many worry the cooperation goes further.

Yeah, right

I always thought Mediafire would've been the first to go, honestly.
Erik Ziedses Des Plantes on prefixmag.com

lol. Who's this guy trying kid here? While they don't have an incentive for users pirating crap, the service is clearly used for it.
StupidPeopleShouldntBreed on venturebeat.com

About a year ago I filed DMCA takedown notices to just about every one of these sites on behalf of an artist I represented. MediaFire was the *only* website to ignore that request, and the pirated files are still there.
tunelab.com on venturebeat.com

Pirates bein' pirates

thank god it looks like they'll be safe. I need to get episode downloads SOMEWHERE!
laurenhowes on livejournal.com

MegaUpload's loss is MediaFire's gain?
Dave Park on prefixmag.com

i was in the middle of getting the whole BBC shakespeare collection and then fileserve died ughhhhhhhhhhhh
xhoney_bee on livejournal.com

This is the file storage business

People use Ford trucks to haul illicit substances around - should Ford be quaking in their boots?
dave on venturebeat.com

So let me ask you, if 80% of all Ford Trucks are used destroy others property, does it makes sense to question the legitimate use of Ford Trucks?
Steven Noyes on venturebeat.com

Just because they don't see themselves in the same space as Megaupload doesn't mean the Justice Department feels the same way. Move those servers!
ani_di_franco on livejournal.com

Can any file hosting service that offers free space really be sure of their user's intentions?

MediaFire CEO: Unlike Megaupload, our business model isn’t built on piracy

As the strange case of file-sharing site Megaupload continues to unfold, many wonder if the federal government will begin to clamp down on similar sites that function like Megaupload, with easy sharing and hosting of copyrighted files.

Already, two well-known file-sharing services, Uploaded.to and Filesonic have disabled several features of their sites this weekend because of the Megaupload scandal. Others are sure to follow.

But Derek Labian, CEO of popular cloud-based file-hosting site MediaFire, told VentureBeat in an interview today that he isn’t too concerned about the government going after his company because, unlike Megaupload, MediaFire doesn’t incentivize piracy.

“We don’t have a business built on copyright infringement.” Labain said. “Like many other cloud-based sharing services like Box.net and Dropbox, we’re a legitimate business targeting professionals.”

When it comes to Megaupload, Labian described Kim Dotcom and his organization as “shady” and said the $175 million in revenues the company made should give people pause. He noted that Megaupload’s structure gave users monetary rewards for uploading pirated content. Users of the service could upload without a cap but users who want to download a large file (or download it faster) would have to pay for it. Those who uploaded the best files would be given free account upgrades or even cash.

“Megaupload was making a ridiculous amount of money with a ridiculously bad service,” Labian said. “We frankly don’t see ourselves in the same space.”

A little more background on MediaFire: The privately funded company out of Woodlands, Tex. was founded in 2006 and has steadily offered better ways to host and share large files. Because it offers an incredibly easy to way to share 200MB files for free with other people, the company has attracted employees at 86 percent of the Fortune 500 for sending files that are too large for e-mail. It offers unlimited downloads and file storage, and if you want to upload larger files with long-term storage, you can pay $9 a month for a Pro account or $49 a month for a Business account.

But the company’s free file-sharing solution can also be used easily for sharing copyrighted files, especially music, with friends, relatives or anyone on the web. A Google search for a song name, an artist name and “MediaFire,” for example, will likely bring you to a copy of that file that can easily be downloaded from a MediaFire page.

When asked about the Googling issue, Labian said that MediaFire is a “private service” and the only reason Google indexes a MediaFire page is when it has been shared by a user on a third-party site. He said MediaFire isn’t at fault for this and said Google should look into the issue.

“We try to steer clear of things that would attract scrutiny,” Labian said. “If people are pirating on our service, we don’t want those people to use it.”

Another reason Labian said he wasn’t worried about the government stepping in is because the company maintains a “good relationship” with various government bodies, including “Homeland Security, ICE, and the FBI.” Following DMCA protocols, whenever MediaFire is notified of a copyrighted file being shared inappropriately, the company immediately takes it down.

As for the future, MediaFire is optimistic about what’s to come. Labian said the company has been working for a year on its next set of products, which will emphasize collaboration and focus on business users. He teased what was coming by saying that cloud storage providers Box.net and Dropbox significantly disrupted the cloud storage space, but MediaFire would do it next.

“This is a tough market to be in, but we’re constantly looking to innovate,” Labian said. “Sharing will always be important, but it’s not the only important aspect for our customers.”

Anonymous Denies Links to MegaUpload Clone

With MegaUpload.com now out of the picture, people claiming to be connected to the hacktivist group Anonymous are claiming that they will launch an online locker site of their own called AnonyUpload.com.

The news came just after file sharing site Filesonic has disabled its function and MegaUpload was taken down. The website, which is not fully-functional at this time, only has Paypal and social networking buttons working. When you visit the site, you will be greeted with a landing page that requests for funding. The site’s builders posted a statement, saying that they are hoping it to be online by January 25 if they have the proper funding.

AnonyUpload promises to offer users the same services as of that of MegaUpload, enabling users to share files by uploading them to the site.

Anonymous, the hack-attack group famous for its distributed denial of service (DDoS) attacks on corporate websites and its activism regarding freedom of speech, posted a tweet denying any link to the website.

“FYI – We have NO affiliation with this site, and by the looks of it, this is a SCAM – anonyupload.com,” tweeted @YourAnonNews.

Computer security experts said that whether or not Anonymous truly created the AnonyUpload website, it should be avoided. “My advice would be to avoid the AnonyUpload site, and certainly not donate any money,” writes Sophos’ Graham Cluley. “You don’t know whose pockets you might be lining, and as AnonyUpload’s own blurb makes clear there are ‘many reasons’ why their service is ‘not good.’”

Google cut off Megaupload's ad money voluntarily back in 2007

The federal government's 72-page indictment of file hosting site Megaupload is stuffed with odd bits of information. Take page 34, for instance, which features a single paragraph about Google's AdSense program. It reads:

On or about May 17, 2007, a representative from Google AdSense, an Internet advertising company, send an e-mail to [Megaupload founder Kim] DOTCOM entitled "Google AdSense Account Status.” In the e-mail, the representative stated that “[d]uring our most recent review of your site,” Google AdSense specialists found “numerous pages” with links to, among other things, “copyrighted content,” and therefore Google AdSense “will no longer be able to work with you.” The e-mail contains links to specific examples of offending content located on Megaupload.com. DOTCOM and his conspirators have continued to operate and financially profit from the Megaupload.com website after receiving this notice.

Sometime later, Megaupload launched an internal advertising agency so that it collect even higher amounts of cash from placing ads on its download pages.

But the paragraph is more interesting for what it tells us about Google. Policy wonks may remember that the company has been absolutely vilified in recent months for taking advertising money from pirates, counterfeiters, and other unsavory characters. The implication—and sometimes it's far more than an implication—is that Google opposed recent legislation like the Stop Online Piracy Act (SOPA) only because it couldn't pass up the sweet nectar of forbidden cash.

Dirty pirates

Such criticism doesn't come simply from copyright holders; it goes all the way to the top. At a remarkably one-sided anti-Google hearing on SOPA last year, the chairman of the House Judiciary Committee eviscerated Google in his opening statement, contrasting it with “responsible companies." Take it away, Lamar Smith (R-TX):

Another one of the companies represented here today has sought to obstruct the Committee’s consideration of bipartisan legislation. Perhaps this should come as no surprise given that Google just settled a federal criminal investigation into the company’s active promotion of rogue websites that pushed illegal prescription and counterfeit drugs on American consumers....

The company also disregarded requests to block advertisements from rogue pharmacies, screen such sites from searches and provide warnings about buying drugs over the Internet... Given Google’s record, their objection to authorizing a court to order a search engine to not steer consumers to foreign rogue sites is more easily understood.

Hollywood has been beating the same drum ever since. The Directors Guild of America, the Teamsters, and others authored a recent letter supporting SOPA. In it, they wrote:

We are well aware that opposition voices, funded and encouraged by a few enormous Internet companies like Google that stand to lose billions in illicit profit (as shown by Google’s willingness to pay a $500 million fine for knowingly placing ads on illegal pharmaceutical sites), if the bills are allowed to become law, have grown louder and shriller in an effort to sway public opinion and derail the political process. They have successfully diverted support from the bills by blanketing the Internet with mistruths and lies and using fear tactics and blacklists to overwhelm and intimidate those who should stand up for protecting American creativity and American workers.

Just yesterday, MPAA boss Chris Dodd talked about how "hurt" he was about SOPA criticism in an interview with the Hollywood Reporter. But it wasn't long before he was taking whacks at Google's finances.

Obviously what happened is those—particularly Google—who are opposed to the legislation, they don’t want [the law] to happen because [search related to piracy is] a major revenue raiser for them, not because of freedom of speech or breaking the Internet. They make a lot of money off that and I understand they don’t want to be hurt economically.

Google responds

Google policy counsel Katherine Oyama tried to fight back against this perception at the hearing, saying that Google spent more than $60 million in 2010 alone to police bad ads, and that the company voluntarily took action against 12,000 sites in 2010 and another 12,000 in 2011 for violating its ad policies on infringement.

The Megaupload indictment appears to show that Google proactively took measures against the site as far back as 2007—even though the account must have been generating quite a bit of money. (While most of the $175 million in alleged Megaupload revenues came from subscriptions, $25 million came from ads.)

This isn't to say that Google is some sainted company. Critics rightly point to the fact that it agreed to forfeit $500 million to the government over advertising it accepted for illicit online pharmacies. It ditched its hardcore net neutrality allies to do a deal with Verizon. And its "don't be evil" motto has been violated time and time and time again.

But some of the criticism has turned into Google Derangement Syndrome; as the government's own indictment shows, Google has for years made (yes, sometimes inconsistent) efforts to address infringement and counterfeiting using its ad programs. Trying to pretend that this debate is solely about Google's piratical cash hoard, or that Google is the only entity that opposed SOPA, is exactly the kind of hyperbole that SOPA backers now say they want SOPA opponents to abandon.

Beware of Fake Megaupload Sites

The people behind Megaupload might be working hard to get the site back up, but so are scammers.

Sites were popping up on Friday claiming to be the reincarnation of Megaupload, the popular website taken down by U.S. federal authorities on Thursday. But most of the imitators so far look like phishing sites, said Don Bowman, CTO for Sandvine, an Internet traffic equipment vendor.

One site has only an IP address for its locator, rather than a website name people can remember, but claims to be the location for the new Megaupload. "We are working to be back full again," the site says.

It's unlikely, however, that a site as popular as Megaupload would use only an IP address. For one thing, everyone visiting the site would be hitting the same server. Before it was shut down, Megaupload accounted for nearly 1 percent of traffic in North America, putting it in league with Facebook, Bowman said.

Spelling errors, such as one that warns people to beware of "pishers," are another sign that a page is likely to be fake, Bowman said. One way to test a site is to use a fake password when logging in, he said. If the site accepts the wrong password, it means phishers are running it in hopes of capturing real user names and passwords.

A lawyer for Megaupload told Reuters Friday that the company hopes to get the site back online. Megaupload's servers were likely distributed around the world. Depending on the site's backup policies, if one or two jurisdictions didn't participate in the raid, the site could come back online soon, Bowman said.

But reviving the site also depends on who is available and willing to take the risk involved, Bowman noted. "It depends on whether they're more interested in maintaining that revenue or remaining at large," he said. Authorities on Thursday said they'd arrested four people affiliated with the site, which they say illegally distributes copyrighted content, and had warrants out on three more people.

One of the people behind Megaupload could try to sell the site and content to "some other nefarious character that might buy the assets and keep it running," Bowman said. "That's what happened with the Pirate Bay."
Eager to Have Megaupload Back

Some people are eager to see the site come back, not to illegally access copyrighted content but for legitimate reasons.

Kyle Goodwin runs OhioSportsNet, a site that plays video he records of high school sports games in Cleveland. His videographers film games and upload them to MegaUpload as an easy way to transfer the video to Goodwin, who edits and posts them on his website. He was storing video on MegaUpload as well as on an external hard drive, but last week his hard drive died.

"The thing that really makes me mad is that I didn't see any type of warning, otherwise I would've hustled to download what was there," he said. "As of now, my videos are totally gone."

Legitimate users like Goodwin aren't the only ones who lost out. "Somebody out there is out probably tens of millions a year in hosting and bandwidth fees," said Bowman.

As the minutes tick by, the chances of Megaupload regaining its former position diminish, according to Bowman. "Either they get it back online shortly or everyone forgets about it and moves on," he said.

Megaupload latest target of US anti-piracy campaign

File-sharing website Megaupload is the most high-profile target yet of a US campaign which has seen the seizure of hundreds of sites accused of offering pirated music or movies or counterfeit goods.
The US authorities have seized more than 350 website domain names since launching an anti-online piracy campaign dubbed "Operation In Our Sites" more than 18 months ago.

A US Immigration and Customs Enforcement (ICE) agency spokesman said Friday the shutdown of Megaupload was an operation led by the Federal Bureau of Investigation (FBI) and not formally part of "Operation In Our Sites."

But the ICE spokesman said it was in line with the campaign against online piracy which began in June 2010 with the closure of 10 sites offering pirated movies, some within hours of their release in theaters.

A founder of NinjaVideo.net, one of the websites snared in the first phase of "Operation In Our Sites," was sentenced to 14 months in prison Friday for allowing illegal downloads of copyright-protected movies and TV programs.

Matthew David Howard Smith, 24, of North Carolina, was one of four people facing prison terms in connection with NinjaVideo.net, which reaped $500,000 during its two-and-a-half years of operation, according to US officials.

Megaupload, however, operated on a different scale entirely, according to the US Justice Department and FBI, generating more than $175 million in criminal proceeds and causing more than $500 million in harm to copyright owners.

"Operation In Our Sites" has targeted websites offering not only pirated movies like NinjaVideo.net but also music, software, clothes, electronics, games and counterfeit pharmaceuticals.

In the largest single seizure to date, in November 2011, the US authorities closed down 150 sites found to be selling counterfeit merchandise.

A November 2010 operation targeted 82 websites selling mostly Chinese-made counterfeit goods, including golf clubs, Walt Disney movies, handbags, scarves, shoes, sunglasses and other items.

Among the sites whose domain names have been seized are cheapscarfshop.com, Burberryoutletshop.com, louisvuitton-bags-forcheap.com, dvdcollectionsale.com, handbagcom.com and mydreamwatches.com.

A visitor to the sites is met with a message reading: "This site has been seized by ICE -- Homeland Security Investigations, pursuant to a seizure warrant issued by a United States District Court."

It informs visitors that copyright infringement is a federal crime carrying a penalty of five years in prison and a $250,000 fine, while trafficking in counterfeit goods carries a 10-year sentence and a $2 million fine.

According to US officials, of the 350 domain names seized since June 2010, 116 have been forfeited to the US government following a legal process which allows for the owner of a seized domain to petition the move in federal court.

If no petition is forthcoming, the domain becomes US government property.

As part of their investigation, US agents purchase goods from the sites to determine whether they are counterfeit and obtain seizure orders for the domain names from US magistrate judges, according to US officials.

Corynne McSherry, intellectual property director at the Electronic Frontier Foundation (EFF), said "Operation In Our Sites" and the Megaupload.com shutdown raise free speech and other issues.

"What about the users?" McSherry asked. "I don't think there was any question that there was at least some, perhaps a lot, I don't know, of perfectly lawful content on the Megaupload site.

"And if I'm your average user and I just lost my vacation photos I'd be pretty upset," McSherry said.

"I have lot of concerns about the US government seizing sites in general but one of them is the collateral damage for regular folks who are just trying to back up their CD collection," the lawyer for the San Francisco-based EFF said.

"It seems to me that whether or not there was due process for Megaupload or not, there certainly wasn't due process for all of Megaupload's users," she said.

McSherry also welcomed a decision Friday by leaders of the US Congress, in the face of online protests, to put on hold legislation that would have given increased powers to US law enforcement to combat online piracy.

"I hope that Congress is really going to take note, not just postponing but hopefully killing these bills," she said.

Leaders of the Senate and the House of Representatives said Friday they would delay consideration of the bills which Google, Wikipedia and other Web giants have denounced as a threat to Internet freedom.

Megaupload Returns Online After Department of Justice Seizes Defendants' Property

In the latest development in the fast-breaking Megaupload case, the Department of Justice is reporting that it has seized a huge stash of expensive items from defendants facing charges of criminal file-sharing. Goods include a fleet of cars: 15 Mercedes Benz vehicles, a Rolls-Royce, a Maserati and a rare Lamborghini. The DOJ also seized bank accounts and PayPal accounts, 60 computer servers and a slew of large-screen TVs, among many other items.

Especially noteworthy are the license plates the DOJ says the defendants used on the cars. The plate on the Rolls reads "GOD," while other cars have license plates such as "GOOD," "EVIL," "STONED," "GUILTY," "MAFIA" and "HACKER."

The popular file-sharing site was shut down this week by federal prosecutors in Virginia, who accused the defendants of causing more than $500 million in damages for copyright holders of pirated music, movies, video games and other content. Hip-hop producer Swizz Beatz was revealed as a silent partner and the company's CEO, though he was not included on an initial list of seven defendants. Four of the seven were arrested Friday morning in New Zealand, after a standoff at Dotcom Mansion – named for the site's alleged founder, who goes by the name Kim Dotcom (born Kim Schmitz). The other three defendants reportedly remain at large.

In response to the DOJ takedown, the hacker group Anonymous has taken credit for cyberattacks yesterday that disabled the websites of the DOJ, the RIAA, Universal Music Group and others. Meanwhile, Megaupload is attempting to go back online, using an IP address while awaiting a new domain name. In a week marked by Web-based protests of the proposed legislation known as the Stop Online Piracy Act (SOPA), the move raises questions about the potential success of such efforts to eliminate content piracy.

Anonymous Takes Down Federal and Music Industry Websites in Retaliation Against Megaupload Bust

It took hours for the Internet to strike back. Yesterday, the Anonymous hacker-activist collective accepted credit for taking down the websites of several government agencies, music trade groups and major record labels. By the end of Thursday, the online hubs of the Department of Justice, the FBI, the Copyrights Office, the MPAA, the RIAA, BMI, Universal Music and Warner Music were all taken offline.

The cyber strike began shortly after the Department of Justice shut down the file-sharing site Megaupload and arrested four senior employees, including founder Kim Schmitz, in New Zealand. During the global indictment of Megaupload executives, the CEO of the site was revealed to be hip-hop producer Swizz Beatz. This music connection at least explains the bizarre, celebrity-laden endorsement video featuring Kanye West, Will.I.Am, Snoop Dogg, Chris Brown and Ciara that surfaced last month.

Anonymous spokesperson Barrett Brown confirmed that yesterday's coordinated attacks were in retaliation to the Megaupload shutdown by the federal government and intended to "damage campaign raising abilities of remaining Democrats who support SOPA."

The pressure imposed by the MPAA to wipe out digital piracy has been at an all-time high recently with SOPA and PIPA circulating in Congress. Silicon Valley's protest against the legislations culminated this Wednesday with Wikipedia's 24-hour blackout. That day, Google, Tumblr and Reddit also encouraged users to sign petitions opposing the two bills.

"Let's just say, for #SOPA supporters their #SOPAblackout is today," the official Anonymous Twitter account boasted in reference to the website take-downs and alluding to the Wikipedia blackout that occurred the day before.

Thursday's strike on government and entertainment sites was the largest Anonymous operation to date, with 5,635 computers running distributed attack software. Similarly, in 2010, Anonymous shut down the PayPal, Visa and MasterCard websites after they decided to freeze all donation transactions to Wikileaks.

5 Questions, Answers About The Megaupload Case

The arrests of four executives of Megaupload, a major Internet file-sharing site, have triggered an online backlash, and raised fresh questions about electronic piracy and copyright violations. What's behind the controversy? NPR asked two experts to help clarify the facts behind the arrests.

Some background: The four were arrested in New Zealand for alleged online piracy-related activities in the United States. A federal indictment accuses the site of costing content creators at least $500 million in lost revenue. In a statement, Megaupload officials said the figure was "grotesquely overblown."

The arrests came at a particularly sensitive time in the debate about online piracy, coming just a day after websites such as Wikipedia had led protests against bills in Congress known as the Stop Online Piracy Act, or SOPA, and the Protect IP Act, or PIPA.

NPR posed questions to Barrett Lyon, an ex-hacker and founder of 3Crowd, an Internet services company; and Nicolas Christin, associate director at Carnegie Mellon University's Information Networking Institute.

Q: Is the timing of the Megaupload arrests, so close to the online protests over SOPA and PIPA, more than just a coincidence?

Lyon: I think it's more than a coincidence. ... The fact that they're going after Megaupload may be because they are trying to bolster piracy protection and give authorities more control over the situation instead of letting [SOPA/PIPA] protesters control the situation.

Christin: My guess is that it is just a coincidence. I think it usually takes quite a while for law enforcement to build enough of a case, especially where international jurisdictions are concerned, to be able to make an arrest.

Q: How important is the shutdown of Megaupload?

Christin: Megaupload and other large sharing sites are playing an increasing role on the Internet. What is interesting is that the Justice Department used the fact that Megaupload had servers in the U.S. to go after them. I think they wanted to make a statement that if you violate copyright laws and do any sort of business in the United States, we can go after you.

Lyon: The interesting thing about this is that this may create some sort of galvanized movement against the SOPA/PIPA movements, because it's taken a regional debate in the United States and put it on a world stage. Anonymous is not an American movement, it's global. So, now you've angered a global group of individuals who are interested in attacking U.S. properties because they don't like U.S. politics.

Q: Did the fact that celebrities have endorsed the Megaupload site raise its profile in the eyes of authorities?

Lyon: Megaupload had attracted the attention of some celebrities, and I think that may have put them on the radar a bit more than other file-sharing sites.

Christin: It's probably that it raised their profile more in the eyes of the motion picture industry. The entertainment industry has pushed quite hard for authorities to intervene in cases like this.

Q: If the U.S. authorities can nab these people with such ease halfway around the world, doesn't that undercut the rationale for SOPA?

Christin: It's a good question, and I don't have an answer. SOPA would not have made a difference in this particular case.

Lyon: It does show that [SOPA] isn't a necessity to enforce anti-piracy laws, doesn't it?

Q: How difficult is it for hackers to crash the Department of Justice and FBI websites with denial-of-service attacks?

Lyon: If you look at the attacks themselves, Anonymous is making it easier. All you have to do is go to a URL, and your computer instantly becomes part of the attack. If you look at the websites that were hit, it's not clear that the attacks had much impact. The U.S. government sites are still up and operating fine.

Christin: The scale of the attack is surprising. It is not difficult to carry out a denial-of-service attack, but it is fairly difficult to carry out a very successful one against sites that should be fairly well protected.

What Megaupload Teaches Us About the Cloud, SOPA and Backups

The raid and subsequent shutdown of file-sharing service Megaupload not only hacked off members of Anonymous, it also underscores one of the inherent vulnerabilities in storing data in the cloud.

Beyond just providing easy TV access to college students without cable, Megaupload and the other sites in its network helped encompass the largest digital locker service in the world. While we suspect that the majority of Megaupload users were not storing family photos and personal documents, the site was exceedingly popular with users.

Ars Technica reports that Megaupload consumed more bandwidth in corporate workplaces than cloud-storage and collaboration services like Dropbox and Box.net.

Since the Megaupload shutdown, users with non-infringing content served on Megaupload’s servers have expressed outrage at no longer having access to their content.

According to the federal indictment, the data center that housed Megaupload’s servers had more than 1,000 different computers and contained more than 25 petabytes (25 million gigabytes) of data storage. That’s a lot of data.

The fact that Megaupload stored so much information — and for so many potential users — got us thinking about the bigger implications of the cloud, online storage and the rights of law enforcement.

Could a Service Like Dropbox Get TKO’ed Megaupload Style?

Although cloud storage and backup services have existed in various forms for well over a decade, few companies have managed to make the concept easy to understand and use. Dropbox is one of the few companies that has managed to present a concept — and a service — that is easy to understand and invaluable to use.

I’m a Dropbox Pro user myself and I gladly pay $99 a year for 50 GB of storage. I use Dropbox with Mashable colleagues, friends and family members. I also use Dropbox as a way to back up my music and video libraries. In most cases, these are files that I have digitally purchased or ripped from a CD. Still, the nature of Dropbox and its ability to easily share files with others means that hypothetically, I could share my Amazon MP3 library with someone else.

That opens up the question: If the district court could shutdown charge Megaupload and its employees with “conspiracy to commit copyright infringement” (amongst other crimes) and shut down the service (including access to non-infringing files), could a much more legitimate service like Dropbox be next?

Right now, the answer is “no.” Megaupload’s problems go far beyond the content its users uploaded to the service. The government case against the company and its employees alleges money laundering, trafficking and a blatant disregard for copyright, even in the face of takedown notices. A court will make the final determination as to the validity of these charges, but suffice to say this isn’t just about copyright infringement.

Moreover, current safe harbor rules don’t hold Internet services accountable for the the actions of their customers. In other words, if I commit copyright infringement by using Dropbox to share music and movies with my friends, Dropbox as a service isn’t liable for my actions (provided it kicks me off when presented with my misdeeds).

One of the major problems with the SOPA and PIPA legislation was the restriction of these safe harbor legislations. Web services — and even websites including Mashable — could be held responsible for the actions of users, even if the services themselves were unaware of those actions.

While SOPA in its current form is dead — or at is on hiatus — it’s important to remember that if it or similar measures pass, what has happened to the (few) legitimate users of Megaupload could happen to other services as well.

The Cloud Isn’t Always Forever

As I’ve read accounts of users who actually used Megaupload for work or personal file storage, I’ve been struck by two things.

Why would you choose Megaupload over Skydrive, Dropbox or YouSendIt? I mean, really.
The cloud isn’t a panacea or a total replacement for off-site backups.

This isn’t the first time that a cloud service has gone offline and taken user files with them, and it won’t be the last. In the mid-2000s, a rush of online storage services raced on the scene, only to go belly-up a few years later.

Cloud storage and online backup is a wonderful thing, but it cannot — and should not — be the sole backup solution for a person’s most important files and documents.

Instead, I advocate a combination of backup policies that combines local backup (preferably on a RAID setup) and cloud backups. For truly important files, an offsite local backup (in a firesafe box or safe deposit box) is also a great idea.

Even if you pay a service money for backup and storage space, disasters do happen. Proper backups at multiple locations is the best way to protect yourself from the pain of losing important files.

Also — if you’re using a service that is best known as a pirates paradise to store and transfer work or personal files — it might be time to switch to a provider with a bit less heat.

How Megaupload Differs From Dropbox (And Why It Matters)

Federal prosecutors shut down the popular file-sharing website Megaupload on Thursday after having indicted the service earlier in the month for helping to pirate content that cost copyright holders “well in excess of $500 million,” but this decision raises concerns about which other sites may be targeted next.

Megaupload billed itself as being a “leading online storage and file delivery service,” and on the surface the site did have much in common with more reputable storage services like Dropbox, SugarSync and Box.net. Each allowed users to save and share media files in the cloud for little to no cost. Yet, there were several key differences between Megaupload and these other sites which will likely prevent prosecutors from targeting them.

“Though people can use these legitimate services to bypass copyright restrictions, they are not designed to make that easy to do,” says Frank Gillett, a senior analyst at Forrester Research who focuses on infrastructure technologies like cloud computing.

With Megaupload’s affiliate sites like Megavideo and Megaporn, users could search for copyrighted content uploaded to the site by anyone, which allowed these sites to function more like peer-to-peer file-sharing services. On the other hand, traditional cloud storage services like Dropbox do not let users perform a system-wide search on the site for content. Instead, users can only share files with themselves and the handful of friends and co-workers they may connect with on the site.

To be sure, that does leave the virtual door open for friends to share copyrighted songs or videos with one another, but search limitations (not to mention storage space limitations) necessarily prevent this from turning into a widespread online piracy ring. Indeed, at its worst, Dropbox effectively functions as a digital version of friends sharing mix tapes with one another.

What’s more, Gillett argues that the fundamental business strategy for the legitimate storage sites differs significantly from that of Megaupload. He points to a report from the Palo Alto Networks that distinguishes between storage services like Dropbox and Box.net that are used for productivity purposes (sharing Word documents and the like) and those like Megaupload that are used for entertainment purposes, based on the kind of content that appears on the site and amount of bandwidth it takes up.

The fact that Megaupload’s bread and butter was making copyrighted content incredibly easy to access and share, combined with the many explicit wrongdoings outlined in the Justice Department’s 72-page report on the company, make it less of a surprise that the site was ultimately shut down.

“Looking at the website, the warning signs were certainly there. You should always be asking yourself if it seems too good to be true,” Gillett says. “I don’t see it as posing a long-term issue for the other legitimate cloud services.”

Megaupload Saga Drives Painful Lesson of Cloud Storage Permanence

The by now globally famous shutdown of Megaupload by an FBI coordinated global operation, has raised questions about the ultimate security Cloud based services.

This is no small matter. As we begin to take our lives from our PCs and laptops to our phones and tablets we enter a truly digital existence where most of our activities are based in the Cloud. The picture of a conference I take using my Android, for instance, is uploaded automatically to my Google profile from where I can share it with my social network (if I so wish) or use it in my Google equivalent of PowerPoint to create the files necessary for my next presentation, which will be available for me to show next time I go to a conference (now in another country) and connect my laptop to their wi-fi.

The point is that I take all this seamless integration for granted and so do countless millions of others. The speed at which we do things and the sheer accumulation of information makes it difficult to keep copies, make sure they are updated and back them up and keep the back ups current. So there is little surprise that we subconsciously see the cloud as our saviour in terms of time and consider it to be secure.

This out-of-sight-out-of-mind mentality however is now coming under the spotlight as Megaupload’s shutdown highlights the vulnerability of our data. Even when due diligence is done and we go for a service like Dropbox, Google’s extended storage service or Apple’s iCloud, there really is no telling what kind of security measures they have put in place to safeguard our data.

Because data is what, increasingly, defines our professional and personal lives and has come to practically define our existence, its sudden loss is more than just an accident which can easily be rectified. Solving this issue by providing greater guarantees, more transparency in their security procedures or some iron-clad, automated way of synching, perhaps, cloud data with a physical storage device we can have somewhere else (the equivalent of a digital safe deposit box for data if you like) will enable the uptake of cloud services faster and the speeding up of the cloud-based economy.

The caveat here is that should we fail to actually provide these proposed backups and fail-safes the future ahead will hide more stories of woe as the shutdown, crash, failure, corruption and even hacking of cloud services will lead to an ever increasing loss of data for many more millions of users. The victim then will not just be people but an entire industry that’s gearing up around cloud computing.

Police complete Dotcom search

Police and FBI agents have finished searching the home of a multi-millionaire New Zealand resident at the centre of an alleged global piracy and money laundering conspiracy, after seizing millions of dollars worth of luxury items.

Kim Dotcom, also known as Kim Schmitz, was arrested yesterday by police in the FBI-led raid on the $30 million mansion he lives in with his family in Coatesville, north of Auckland.

Police spent most of the day at the property, seizing assets such as luxury cars and artwork, as well as computers and documents as evidence.

The assets have been passed to the control of the Official Assignee, although police said some of the larger items remained at the property and would be removed in the coming days.

Police have also confirmed that they found two firearms at the property yesterday and a 55-year-old New Zealand man was charged with unlawful possession of a pistol, before being released on police bail.

The US led investigation into criminal copyright infringement, which also involved local police and Organised & Financial Crime Agency New Zealand (OFCANZ), finished its search at the Coatesville property shortly before midnight last night.

Detective Inspector Grant Wormald of OFCANZ said the team will continue working at the North Shore Policing Centre through the weekend.

"Our focus now is on completing all the documentation required by Crown Law ahead of the next court appearance on Monday.

He confirmed that the team of four FBI staff working on the searches would also continue to do so "for the next few days".

Nothing to hide

Yesterday, Dotcom - the founder of Megaupload, one of the largest file sharing sites on the internet - said he had "nothing to hide".

The American agents had been working with New Zealand police on the case since August last year. It is alleged that Dotcom and six others are part of a group called the "Mega Conspiracy", accused of reproducing and distributing infringing copies of copyrighted works - including movies, television programmes, music, software and books.

More than $100 million in assets has been seized worldwide.

In New Zealand, $6 million-worth of luxury cars - including 15 Mercedes Benz, a 1959 pink Cadillac and a Rolls-Royce Phantom - and $10 million held in several financial institutions have been seized.

The move against Megaupload sparked an immediate and furious reaction from hackers who shut down websites around the world, among them the US Department of Justice site.

Also arrested were Bram van der Kolk, 29, who is from the Netherlands but is a New Zealand resident, and Finn Batato, 38, and Mathias Ortmann, 40, both from Germany.

The FBI will now seek to extradite the men back 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.

In the North Shore District Court, Judge David McNaughton remanded the men in custody until Monday morning for a bail hearing.

Lawyers acting for the US Government are opposing bail.

Lawyers for the accused men tried to stop news media taking photographs of their clients in court.

But as Judge McNaughton was addressing the matter, Dotcom - who had been smiling and winking at a woman in the public gallery - interrupted him.

"We don't mind ... if people want to take photographs of us or cover this event because we've got nothing to hide."

Dotcom, a dual citizen of Finland and Germany, made $42 million in 2010 from the Megaupload site, according to the indictment laid by American authorities.

Last year, the Government blocked him from buying the sprawling Coatesville mansion because he did not meet the "good character" requirement applied to foreigners who want to buy New Zealand land.

The MegaUpload site was shut yesterday but previously contained endorsements from celebrities such as Kim Kardashian, Alicia Keys, Kanye West among others.

Nearly 80 police, including officers from the the Organised and Financial Crime Agency, raided 10 properties yesterday to make the arrests after a request from the FBI.

Yesterday, the Weekend Herald saw luxury cars with the licence plates KIMCOM, HACKER, STONED, GUILTY, MAFIA, GOD and POLICE loaded on to transporters.

According to the indictment on the US Justice Department website, the harm to copyright holders is put at more than US$500 million ($623.2).

It is alleged Megaupload generated more than US$175 million in criminal proceeds.

The indictment contains emails allegedly sent between the arrested men in which they respond to complaints from users.

An email purportedly sent by Dotcom in July 2010, claims he was worried by a crackdown on sites thought to contain pirated content.

He wrote: "This is a serious threat to our business. Please look into this and see how we can protect ourselfs [sic]. Should we move our domain to another country (Canada or even Hong Kong)."

The indictment claims the accused men knew the site contains unauthorised content.

In a February 2011 email, Ortmann sent Dotcom and Van der Kolk an article headed "how to stop domain names being seized by the US government."

Another email allegedly sent by , Ortmann said: "We're not pirates, we're just providing shipping services to pirates."

Detective Inspector Grant Wormald said Dotcom had put money into Government bonds, and expensive artworks had been found at the Coatesville mansion.

Mr Wormald said the raid of Dotcom's house went smoothly - despite problematic obstacles at the property including tight security, gating and a bodyguard.

A team of 76 police staff including armed offenders squad members went to the sprawling property at about 6.45am.

FBI officers, who have been in New Zealand for about five days, did not participate.

They were expected to stay here for another week or so.

"It's a huge property and we were aware that there were a number of people there," Mr Wormald said.

"Police arrived in two marked helicopters. Despite our staff clearly identifying themselves Mr Dotcom retreated into the house and activated a number of electronic locking mechanisms.

"While police neutralised these locks he then further barricaded himself into a safe room within the house which officers had to cut their way into.

"Once they gained entry into this room they found Mr Dotcom near a firearm which had the appearance of a shortened shotgun.

"It was definitely not as simple as knocking at the front door."

Hot properties

Among the movies allegedly made available on publicly accessibly websites, therefore infringing copyright, were:

1. Bad Teacher
2. Harry Potter and the Deathly Hallows Part 1
3. Lord of the Rings: Fellowship of the Ring
4. The Twilight saga: Breaking Dawn
5. The Green Hornet

Some of the movies were made accessible days after their release or before they were commercially released.

New Zealand police cut way into mansion in Internet fraud case

New Zealand police broke through electronic locks and cut their way into a mansion safe room to arrest the alleged kingpin of an international Internet copyright theft case and seize millions of dollars worth of cars, artwork and other goods.

German national Kim Dotcom, also known as Kim Schmitz, was one of four men arrested on Friday in an investigation of the Megaupload.com website led by the U.S. Federal Bureau of Investigation.

The group was accused of engaging in a scheme that took more than $500 million away from copyright holders and generated over $175 million in proceeds from subscriptions and advertising.

A police official said on Saturday that dozens of officers, backed by helicopters, forced their way into the mansion, nestled in lush farmland, after Dotcom refused them entry.

"Despite our staff clearly identifying themselves, Mr Dotcom retreated into the house and activated a number of electronic-locking mechanisms," said Detective Inspector Grant Wormald from the Organised & Financial Crime Agency New Zealand.

Officers broke the locks and Dotcom barricaded himself into a safe room which officers had to cut their way into, he said.

"Once they gained entry into this room, they found Mr Dotcom near a firearm which had the appearance of a shortened shotgun," he said. "It was definitely not as simple as knocking at the front door."

PINK CADILLAC

Two firearms were seized and a 55-year-old New Zealand man had been charged with illegal possession of a pistol. Computers and documents were also retrieved and more than NZ$10 million ($8 million) was seized from financial institutions.

Television footage showed vehicles, including a pink Cadillac and a Rolls-Royce Phantom Drophead Coupe, being removed from the property north of Auckland, New Zealand's largest city.

The arrests were made as the debate over online piracy reaches fever pitch in Washington where Congress is trying to craft tougher legislation.

Lawmakers stopped anti-piracy legislation on Friday, postponing a critical vote in a victory for Internet companies that staged a mass online protest against the fast-moving bills.

The movie and music industries want Congress to crack down on Internet piracy and content theft, but major Internet companies like Google and Facebook have complained that current drafts of the legislation would lead to censorship.

"Our focus now is on completing all the documentation required by crown law ahead of the next court appearance on Monday," Wormald said of the Auckland arrests.

"The team of four FBI staff will also remain working with us for the next few days."

Kim, who turns 38 on Saturday, and the other men made a brief court appearance on Friday will appear again on Monday. They face extradition and a trial in the United States.

On Friday, in a show of support, hackers attacked and temporarily disabled a number of government and entertainment company websites, including the U.S. Justice Department's website.

U.S. Justice Department officials have said that the estimate of $500 million in economic harm to copyright holders cited in a U.S. indictment was at the low end and could be significantly more.

The allegations included copyright infringement as well as conspiracy to commit copyright infringement, conspiracy to commit money laundering and conspiracy to commit racketeering. Two of the offences carry a maximum penalty of 20 years.

The companies charged, Megaupload Ltd and Vestor Ltd, were both registered in Hong Kong and owned either in large part or solely by Dotcom.

Megaupload has boasted of having more than 150 million registered users and 50 million daily visitors, according to the indictment. At one point, it was estimated to be the 13th most frequently visited website on the Internet.

Users could upload material to the company's sites which then would create a link that could be distributed. The sites, which included video, music and pornography, did not provide search capabilities but rather relied on others to publish the links, the U.S. indictment said.

Five Great Alternatives to MegaUpload

The FBI shuttered file-sharing web site MegaUpload yesterday; arrested its executives, and have called the site an “international organised criminal enterprise.” Even though there’s little doubt that MegaUpload was host to some copyrighted material, it was also a great way to upload and share large files, like photo archives and video, and send them to friends without worrying about hosting, Dropbox quotas, or overloaded inboxes. Now that it’s gone however, here are some other great sites that let you share large files effortlessly.

RapidShare



With MegaUpload down, RapidShare is your next natural alternative for a site that allows you to upload large files and send your friends a link to download them. You’ll need to sign up for an account to use RapidShare, but once you do, you can upload files as large as you like and keep them stored as long as you like. Once your files are uploaded, you’ll get a short URL you can send to friends so they can download the file from another computer, or that you can use to re-downlaod the file on a different system. If you’re willing to pay for a RapidPro membership (9.90 Euros per month to 99.90 Euros for two years), your uploaded files will never expire; your file storage and your file transfers are encrypted, and you never have to wait for downloads to start.

MediaFire



MediaFire promises to make file uploads and sharing dead simple, as in drag-and-drop simple. The service offers unlimited file storage, although you’re limited to uploading files no larger than 200MB at a time (with free accounts). Your files only stay active for a short time (usually 30 days), but even though it has its limitations, MediaFire doesn’t force you to queue up to download files, doesn’t require an account to upload or download files, and doesn’t keep you from downloading multiple files simultaneously. If you sign up for a MediaFire Pro account (£6/mo), you can upload files up to 2GB each; store them as long as you want without worrying they’ll expire; go ad-free, and even let other users drop files into your account for you to review later.

YouSendIt



YouSendIt has been around for a long time; having grown from offering users a fast way to send one another large files without killing each other’s inboxes to an enterprise tool where businesses let employees drop documents to securely share with people outside of their organisations. You can still sign up and use the service for free however—free users have to deal with ads, but they get 2GB of storage and can upload files no larger than 50MB. Once uploaded, you can share them with anyone, effectively “email” your files to other people by attaching the YouSendIt link in your email signature, upload or download files from mobile devices, and more. Shell out £6.50/mo for YouSendIt Pro, and your storage is bumped up to 5GB and uploads to 2GB each. Spend £10/mo for Pro Plus to get unlimited storage and unlimited upload sizes, as well as other advanced tracking and file management features.

Minus



Minus started off as an image sharing service, but quickly bloomed into a richly featured file sharing service. You can drag and drop any file to upload it to Minus, and send a short link to your friends so they can view it on the web, download it, or even open it and collaborate with you on it before sending it back. Sign up for an account and you get 50GB of storage, and you can upload files up to 2GB, share any of them, and keep them indefinitely without worrying they’ll be deleted. Minus users also get the benefit of mobile apps and browser extensions to make sharing and downloading easy.

Dropbox (and its alternatives)



While services like Dropbox, SugarSync, and Windows Live Mesh don’t have the same hands-off, “upload it and forget it” approach that MegaUpload and similar webapps have, they all offer some ability to sync a cloud storage account with a folder or set of files on your computer, and then quickly share those synchronised files with someone else. Dropbox lets you use your public folder to share files and your photos folder to share galleries, for example. While none of the services offer you unlimited file storage or uploads the way some webapps do, you can always follow this guide to maximising your Dropbox space to give it a boost.

In addition to these services, you can always upload your files to sites like Multiupload, Gazup, and previously mentioned Uploading.to, which send your file to multiple file sharing hosts and return a single link that you or a friend can use to download from one or any of them.

The future is unclear for MegaUpload, and while the people behind the service vow they’re innocent and that they’ll fight to come back, it’s likely that even if the site returns it’ll be the same MegaUpload we all know today. Thankfully there are plenty of alternatives if you need to move large files from one computer to another.

Before shutdown, Megaupload ate up more corporate bandwidth than Dropbox

Before being shut down by the feds today, the file-sharing site Megaupload was extraordinarily popular with home Internet users—so much so that the file downloading habit was spilling over into the workplace in a significant way.

The shutdown of the site—and the arrests of four of Megaupload's leaders today in New Zealand—are bound to have major consequences in the file sharing market. Although Megaupload's presence in the corporate world may not have matched its overall share of Internet usage, its consumption of bandwidth was outpacing Dropbox and numerous other business-focused file-sharing services, according to a new study. BitTorrent is also quite popular in the workplace, and some people are even installing Tor clients on their work machines to conceal details of their Internet usage, the study found.

The data comes from security vendor Palo Alto Networks, which used its technology to monitor a week's worth of traffic traversing the Internet gateway at 1,636 businesses around the world, mostly at medium to large businesses with at least 2,500 users. The eighth version of the resulting report, published every six months, came out this week.

"The key point is that this is real network traffic, it's not a survey. It's not speculation on anyone's part," said Matt Keil, Palo Alto senior research analyst.

We spoke with Palo Alto prior to today's news that Megaupload.com was taken down by the FBI, with the Justice Department unsealing an indictment that charges seven people associated with the site with "widespread online copyright infringement." We were planning to report on the data anyway—and today's news makes it even more interesting.

Megaupload usage was found on the networks of 57 percent of the 1,636 organizations in the study. That's quite a bit less than the 76 percent of networks with Dropbox traffic, and equal to the 57 percent of networks that have Box.net traffic. However, in terms of bandwidth, Megaupload accounted for 20,405 gigabytes, compared to 17,573 for Dropbox and just 86 gigabytes for the business-focused Box.net. The Dropbox numbers, indicating lots of traffic but a smaller average file size, suggest a mix of personal and work usage. Another consumer-oriented service accounting for a chunk of traffic was Filesonic, which appeared on 52 percent of networks and consumed 4,058 gigabytes.

Overall, Palo Alto tracked 76,225 gigabytes worth of traffic being used up by some 65 browser-based file sharing applications (including Dropbox, even though the Dropbox service can be used outside the browser). Counting only Web-based file-sharing, then, Megaupload accounted for more than a quarter of corporate traffic.

However, Web-based file sharing is still just a small part of overall Internet usage in corporations. Looking at all types of applications and use cases, Palo Alto found 10.9 million gigabytes of consumption across the 1,636 companies. In fact, the BitTorrent peer-to-peer service alone accounted for much more traffic than all browser-based file-sharing applications combined, with 177,513 gigabytes of bandwidth consumed, or less than 2 percent of all corporate Internet traffic.

Proportionally, BitTorrent and Megaupload likely have a much greater share of the Internet as a whole than they do in corporate networks. One previous study by Envisional pegged BitTorrent as taking up 13.5 percent of peak bandwidth usage in the US and 28.4 percent in Europe, and also said downloads from cyberlocker sites such as Megaupload, Rapidshare and HotFile take up 7 percent of all Internet traffic.

Still, when Palo Alto reports back to customers on the usage of Web-based file sharing, the reaction is usually "I knew I had some of these applications on my network, but I didn't realize I had so many," Keil said.

Although Dropbox seems to straddle the line between personal and business use, in most cases there's usually a clear distinction between "tools that help me get my job done and tools that help us stay entertained," with business-focused services usually transferring smaller files, Keil said. Yousendit, for example, is mostly used for productivity and was found in 51 percent of networks, but accounted for just 423 gigabaytes.

Megaupload clocks in with big numbers because of the types of files being shared. "Of the top-20 file downloads found on December 5th, 2011, six of the files were software applications, eight were games or game demos, and six were movie trailers," the Palo Alto report states.

Interestingly, Tor client software for encrypting a user's traffic was found on 13 percent of corporate networks. Palo Alto didn't detail this usage in its report because of how low it was, accounting for 0.077 percent of bandwidth. Companies with a Tor presence might have it on just one or two machines. But certainly, it's something any IT security pro will want to locate and get rid of.

Tor "is not really that trivial of a tool to use," said Wade Williamson, Palo Alto senior security analyst. "Tor is kind of a pre-requisite tool if you're going to be a hacker. If I'm going to attack someone's network i'm definitely going to use Tor or something like it so people can't follow my footsteps and see where they come from." Palo Alto's research didn't determine what exactly people were using Tor to do. "It's hard to say if they're hackers," Wade said. "Someone could have heard this is the best way to anonymize yourself. We're not saying all these are hackers, but there is definitely a security issue there."

It turns out that Tor's presence has remained steady in the 13 to 14 percent range in all of Palo Alto's previous reports, the company said. Megaupload traffic also hasn't changed much recently. But it will, if the site stays shut down for long.

Megaupload defendants’ property includes 15 Mercedes, a Lamborghini, a Maserati, and a Rolls

The Department of Justice has charged Megaupload with a “mega conspiracy” that, it alleges, netted the company’s executives a vast cache of money and luxury cars.

The indictment (see below for the full text in Scribd) refers to Megaupload’s offenses as the “Mega Conspiracy.” The company has been charged with five different counts concerning copyright infringement and money laundering. According to the indictment, Megaupload’s offenses include:

Running Megavideo.com, which streams copyright infringed television shows and movies
“Willfully reproduced and distributed” copyrighted content on its servers
Offering money as an incentive to upload infringing content between the dates of Septmeber 2005 and July 2011
Not terminating copyright offending accounts, as it states it can do in the Megaupload terms of service
“Made no significant effort to identify users” of the site, uploaders of copyrighted content, or the content itself

If found guilty, the defendants could spend up to 20 years in jail and might be liable for up to $175 million in fines.

“It’s really that inducement scenario that harkens back to the days of Napster,” said Owen Seitel of Idell & Sietel LLP, an entertainment and IP law firm. “I wouldn’t be surprised if the site totally shut down and never came back.”

By inducement, Seitel is referring to the action of offering financial compensation in exchange for uploading copyrighted content. On big sites like these, he explained, there is bound to be copyrighted material floating on the servers. But there are “safe harbors” that third-party content sites can take to protect themselves. One of these is complying with “notice and take down structures,” or flagging when copyrighted content comes into the system and then removing it. According to the indictment, Megaupload did not comply by flagging or removing content.

What’s really eye-opening about this indictment is the property that the Feds have seized from the defendants. It lists a number of bank accounts, PayPal accounts, 15 Mercedes-Benz vehicles, a Rolls-Royce with the license plate “GOD,” a rare Lamborghini and a Maserati. It seems the defendants had a number of vehicles with creative license plates including “HACKER,” “POLICE,” “STONED,” “GOOD,” “CEO,” and the ominous “GUILTY.” (See below for the full list.)

In addition, the indictment alleges the company or its associates spent a total of almost $8 million on yacht rentals in the Mediterranean from April to June 2011.

Seitel explained “indictments by their nature are overreaching” and that these allegations should be taken with a grain of salt.

Prior to being shut down by the DOJ, Megaupload released a statement calling the accusation of mass copyright-infringement “grotesquely overblown.” Indeed, a number of music celebrities have come out in support of Megaupload, prior to today’s events. The company’s new CEO, Swizz Beatz, is a musical artist himself and is married to singer Alicia Keys.

“It doesn’t surpise me to see celebrities on the side of the people when they’ve already been paid,” said Seitel, “It’s really not their content getting ripped off, it’s the studios’.”

In response to the indictment, hacker collective Anonymous took down the Department of Justice’s website, along with other music label sites. According to a tweet by @YourAnonNews, an impressive 5,635 Anonymous members contributed to the site attacks. It is rumored the group is planning to attack WhiteHouse.gov. The take down tactic being used is called LOIC, otherwise known as a low orbit ion cannon. LOIC is a public system that can be used to perform denial of service attacks.

The five different counts Megaupload faces include conspiracy to commit racketeering, conspiracy to commit copyright infringement, conspiracy to commit money laundering, criminal copyright infringement by distributing a copyrighted work being prepared for commercial distribution on a computer network & aiding and abetting of criminal copyright infringement, and criminal copyright infringement by electronic means & aiding and abetting of criminal copyright infringement.

Here’s the full list of seized goods, not counting bank accounts:

1. 2010 Maserati GranCabrio, VIN ZAMKM45B000051328, License Plate No. “M-FB 212” or “DH-GC 470”, registered to FINN BATATO;
2. 2009 Mercedes-Benz E500 Coupe, VIN WDD20737225019582, License Plate No. “FEG690”;
3. 2005 Mercedes-Benz CLK DTM, VIN WDB2093422F165517, License Plate No. “GOOD”;
4. 2004 Mercedes-Benz CLK DTM AMG 5.5L Kompressor, VIN WDB2093422F166073, License Plate No. “EVIL”;
5. 2010 Mercedes-Benz S65 AMG L, VIN WDD2211792A324354, License Plate No. “CEO”;
6. 2008 Rolls-Royce Phantom Drop Head Coupe, VIN SCA2D68096UH07049; License Plate No. “GOD”;
7. 2010 Mercedes-Benz E63 AMG, VIN WDD2120772A103834, License Plate No. “STONED”;
8. 2010 Mini Cooper S Coupe, VIN WMWZG32000TZ03651, License Plate No. “V”;
9. 2010 Mercedes-Benz ML63 AMG, VIN WDC1641772A608055, License Plate No. “GUILTY”;
10. 2007 Mercedes-Benz CL65 AMG, VIN WDD2163792A025130, License Plate No. “KIMCOM”;
11. 2009 Mercedes-Benz ML63 AMG, VIN WDC1641772A542449, License Plate No. “MAFIA”;
12. 2010 Toyota Vellfire, VIN 7AT0H65MX11041670, License Plate Nos. “WOW” or “7”;
13. 2011 Mercedes-Benz G55 AMG, VIN WDB4632702X193395, License Plate Nos. “POLICE” or “GDS672”;
14. 2011 Toyota Hilux, VIN MR0FZ29G001599926, License Plate No. “FSN455”;
15. Harley Davidson Motorcycle, VIN 1HD1HPH3XBC803936, License Plate No. “36YED”;
16. 2010 Mercedes-Benz CL63 AMG, VIN WDD2163742A026653, License Plate No. “HACKER”;
17. 2005 Mercedes-Benz A170, VIN WDD1690322J184595, License Plate No. “FUR252”;
18. 2005 Mercedes-Benz ML500, VIN WDC1641752A026107, License Plate No. DFF816;
19. Fiberglass sculpture, imported from the United Kingdom with Entry No. 83023712;
20. 1957 Cadillac El Dorado, VIN 5770137596;
21. 2010 Sea-Doo GTX Jet Ski, VIN YDV03103E010;
22. 1959 Cadillac Series 62 Convertible, VIN 59F115669;
23. Von Dutch Kustom Motor Bike, VIN 1H9S14955BB451257;
24. 2006 Mercedes-Benz CLK DTM, VIN WDB2094421T067269;
25. 2010 Mini Cooper S Coupe, VIN WMWZG32000TZ03648 License Plate No. “T”;
26. 1989 Lamborghini LM002, VIN ZA9LU45AXKLA12158, License Plate No. “FRP358”
27. 2011 Mercedes-Benz ML63, VIN 4JGBB7HB0BA666219;
28. Samsung 820DXN 82” LCD TV;
29. Samsung 820DXN 82” LCD TV;
30. Samsung 820DXN 82” LCD TV;
31. Devon Works LLC, Tread #1 time piece;
32. Artwork, In High Spirits, Olaf Mueller photos from The Cat Street Gallery;
33. Sharp 108” LCD Display TV;
34. Sharp 108” LCD Display TV;
35. Sony PMW-F3K Camera S/N 0200231;
36. Sony PMW-F3K Camera S/N 0200561;
37. Artwork, Predator Statue;
38. Artwork, Christian Colin;
39. Artwork, Anonymous Hooded Sculpture;
40. 2009 Mercedes-Benz ML350 CDI 4MATIC Off-Roader;
41. Sharp LC-65XS1M 65” LCD TV;
42. Sharp LC-65XS1M 65” LCD TV;
43. TVLogic 56” LUM56W TV;
44. Sixty (60) Dell R710 computer servers.

Check out the Megaupload indictment on Scribd

Hackers retaliate over Megaupload website shutdown

Hackers have targeted the US government and copyright organisations following the shutdown of the Megaupload file-sharing website.

The Department of Justice (DoJ), FBI and the Motion Picture Association of America (MPAA) among others have been bombarded with internet traffic.

Web links have been been distributed which, when clicked, make the user's computer part of the attack.

A statement attributed to Anonymous claimed responsibility.
Blackout protest

The DoJ announced on Thursday that it had taken action to force Megaupload and related domain names offline, and had charged the firm's co-founders and others with violating piracy laws.

Four of the employees have been arrested in Auckland, New Zealand, at the request of the US authorities.

They appeared in court on Friday. One of their lawyers initially objected to media requests for photographs, but the accused said that they did not mind "because we have nothing to hide".

Their Hong Kong-based site had around 150 million users and 50 million daily hits. It had received celebrity endorsements from the model Kim Kardashian and singers Alicia Keys and Kanye West among others, making it one of the net's most high-profile file sharing sites.

The business had said it had been diligent in responding to complaints about pirated material.

News of the arrests came the day after thousands of websites had taken part in a "blackout" to protest against proposed anti-piracy laws; however, the DoJ suggested the two matters were not related.

A statement from the department noted that a grand jury indictment against the Megaupload employees was issued on 5 January.
'Unwanted traffic'

Hours later a statement linked to the @AnonymousWiki twitter account announced: "We Anonymous are launching our largest attack ever on government and music industry sites. Lulz. The FBI didn't think they would get away with this did they? They should have expected us."

It said that 10 sites had been taken offline in response to the Megaupload shutdown including the FBI, Universal Music, RIAA (Recording Industry Association of America) and Hadopi - the French government agency responsible for "protecting creative works on the internet".

On Friday, Universal's webpage said: "This site is under maintenance. Please expect it to be back shortly."

Hadopi was also offline, reporting "technical problems". However, the other sites on the Anonymous list all loaded.

Security firm Sophos's blog said that the attacks were carried out by spreading links via Twitter and other parts of the internet which carried out distributed denial-of-service (DDoS) attacks.

"If you visit the webpage, and do not have Javascript disabled, you will instantly, without user interaction, begin to flood a website of Anonymous's choice with unwanted traffic, helping to perpetuate a DDoS attack," it said.

It noted that such attacks were illegal, meaning that users taking part in the action were breaking the law.

A tweet from one of the accounts associated with Anonymous suggested that efforts were also being made to resurrect Megaupload.

The attached link intermittently directed users to a site that resembled the shut down service.
Confusion

Analysts say that there is a risk that the Anonymous campaign could become confused with the broader campaign against the House of Representatives' Stop Online Piracy Act (Sopa) and the Senate's Protect Intellectual Property Act (Pipa).

"The action against the US bills was based on websites voluntarily censoring themselves in order to protest the restriction and damage to the internet that these laws would cause," Dr Joss Wright, a fellow at the Oxford Internet Institute, told the BBC.

"In one sense the actions of Anonymous are themselves, anonymously and unaccountably, censoring websites in response to positions with which they disagree.

"The goals of many Anonymous activists are a free and open internet, but the regular and blanket denial-of-service campaigns could easily be counter-productive if pro-Sopa and pro-Pipa advocates can portray these actions as representative of those who are against this legislation."
Piracy debate

Elsewhere, the inventor of the web, Sir Tim Berners-Lee, added his support to the campaign against Sopa.

He told the Inquirer the internet needed to be protected as an open space, adding that: "Folks in the UK should not be complacent. There are plenty of laws they should look at out for already on the books that also have issues."

His comment may be a reference to the UK's Digital Economy Act, passed in 2010 but not fully implemented, and the Anti-Counterfeiting Trade Agreement (ACTA) which has the backing of the EU's Council of Ministers but has yet to be ratified by the European Parliament.

Candidates for the Republican Party's presidential nomination also weighed in on the matter at a debate on Thursday night.

Newt Gingrich said: "The bill in its current form is written really badly and leads to a range of censorship that is totally unacceptable."

Mitt Romney added: "A very broad law which gives the government the power to start stepping in to the internet and saying who can pass what to whom - I think that's a mistake."

Ron Paul, who has long opposed the law, said he was pleased to see other Republicans support his stance.

"This bill is not going to pass, but watch out for the next one," he added.

Rick Santorum said he did not support the law in its current form, but said: "I'm for freedom, but I'm not for people abusing the law and that's what's happening right now."

The MPAA defends the legislation saying that the bills will "encourage innovation while preserving millions of jobs that depend on intellectual property protection".

Feds say 7 behind celeb-endorsed Megaupload.com ran massive, worldwide piracy ring

Federal prosecutors have shut down one of the world's largest file-sharing sites, Megaupload.com, on charges of violating piracy laws -- a day after a 24-hour blackout of popular websites such as Wikipedia drew national attention to the issue.

"This action is among the largest criminal copyright cases ever brought by the United States," the Justice department said in a statement about the indictment.

The indictment accuses seven individuals and two corporations -- Megaupload Limited and Vestor Limited -- of costing copyright holders more than $500 million in lost revenue from pirated films and other content. It was unsealed on Thursday, and claims that at one point Megaupload was the 13th most popular website in the world.

Megaupload was unique not only because of its massive size and the volume of downloaded content, but also because it had high-profile support from celebrities, musicians and other content producers who are most often the victims of copyright infringement and piracy. Before the website was taken down, it contained endorsements from Kim Kardashian, Alicia Keys and Kanye West, among others.

The Hong Kong-based company listed Swizz Beatz, a musician who married Keys in 2010, as its CEO. Beatz declined to comment through a representative.

The individuals in the criminal enterprise each faces a maximum penalty of 20 years in prison on racketeering charges, five years for conspiracy to commit copyright infringement, 20 years on money laundering charges and five years on related charges.

Megaupload was led by colorful Australian Kim Dotcom -- aka Kim Schmitz, or Kim Tim Jim Vestor. He is a a resident of both Hong Kong and New Zealand, and a dual citizen of Finland and Germany, who legally changed his last name to "Dotcom."

The website's founder and "chief innovation officer" was once convicted of a felony but has repeatedly denied engaging in piracy, according to CNET.com -- and he made more than $42 million from the conspiracy in 2010 alone, according to the indictment.



A promotional video for Megaupload.com added to YouTube in December 2011 features celebrity endorsements from Kim Kardashian, Kanye West, and other popular musicians.

The indictment comes the day after a 24-hour "blackout" of Wikipedia, a protest doodle on the homepage of Google, and numerous other protests across the Internet against proposed anti-piracy legislation that many leading websites -- including Reddit, Google, Facebook, Amazon and others -- contend will make it challenging if not impossible for them to operate.

The Protect Intellectual Property Act under consideration in the Senate and the Stop Online Piracy Act (SOPA) in the House are bills backed by the motion picture and recording industries intended to eliminate theft online once and for all. S. 968 and H.R. 3261 would require ISPs to block access to foreign websites that infringe on copyrights.

Online piracy from China and elsewhere is a massive problem for the media industry, one that costs as much as $250 billion per year and costs the industry 750,000 jobs, according to a 2008 statement by Patrick Leahy, D-Vt.

But how exactly the bills would counter piracy has many up in arms.

Megaupload file-sharing site shut down as founders are charged over piracy violations

THE founder and three employees of the Megaupload file-sharing website have appeared in court in New Zealand after being arrested in police raids.

New Zealand police also seized guns, artwork, more than £5 million in cash and luxury cars valued at nearly £3 million after serving 10 search warrants at several businesses and homes around the city of Auckland.

The Megaupload site was shut down yesterday over US accusations that it facilitated millions of illegal downloads of films, music and other content, costing copyright holders at least £300 million in lost revenue.

With 150 million registered users, about 50 million hits daily and endorsements from music superstars, Megaupload.com was among the world's biggest file-sharing sites.

Big enough, according to a US indictment, that it earned founder Kim Dotcom £27 million last year alone.

The company is based in Hong Kong and Dotcom was living in New Zealand, but some of the alleged pirated content was hosted on leased servers in Virginia, and that was enough for US prosecutors to act.

Today, the four defendants stood together in an Auckland courtroom in the first stage of extradition proceedings that could last a year or more.

Dotcom's lawyer raised objections to a media request to take photographs and video, but then Dotcom spoke out from the dock saying he did not mind photos or video "because we have nothing to hide".

The judge granted the media access, and ruled that the four would remain in custody until a second hearing on Monday.

Dotcom, Megaupload's former chief executive and current chief innovation officer, is a resident of Hong Kong and New Zealand and a dual citizen of Finland and Germany who had his name changed legally. The 37-year-old was previously known as Kim Schmitz and Kim Tim Jim Vestor.

The other defendants are two German citizens and one Dutch citizen, and three other defendants - another German, a Slovakian and an Estonian - remain at large.

The Electronic Frontier Foundation, which defends free speech and digital rights online, said in a statement that the arrests set "a terrifying precedent. If the United States can seize a Dutch citizen in New Zealand over a copyright claim, what is next?".

The indictment was unsealed one day after websites including Wikipedia and Craigslist shut down in protest against two congressional proposals intended to make it easier for authorities to go after sites with pirated material, especially those with overseas headquarters and servers.

Before Megaupload was taken down, the company posted a statement saying allegations that it facilitated massive breaches of copyright laws were "grotesquely overblown".

"The fact is that the vast majority of Mega's internet traffic is legitimate, and we are here to stay. If the content industry would like to take advantage of our popularity, we are happy to enter into a dialogue. We have some good ideas. Please get in touch," the statement said.

Several sister sites were also shut down, including one dedicated to sharing pornography files.

The seized £5 million in cash had been invested in various New Zealand financial institutions, and has been placed in a trust pending the outcome of the cases.

Police spokesman Grant Ogilvie said the seized cars include a Rolls-Royce Phantom Drophead Coupe worth £260,000. Two short-barrelled shotguns and a number of valuable artworks were also confiscated.

According to the indictment, Megaupload was estimated at one point to be the 13th most frequently visited website on the internet. Current estimates by companies that monitor web traffic place it in the top 100.

Megaupload is considered a "cyberlocker", in which users can upload and transfer files that are too large to send by email.

Such sites can have legitimate uses. But the Motion Picture Association of America, which has campaigned for a crackdown on piracy, estimated that the vast majority of content being shared on Megaupload was in violation of copyright laws.

The website allowed users to download some content for free, but made money by charging subscriptions to people who wanted access to faster download speeds or extra content. The website also sold advertising.

Megaupload was unique, not only because of its massive size and the volume of downloaded content, but also because it had high-profile support from celebrities, musicians and other content producers who are most often the victims of copyright infringement and piracy.

Before the website was taken down, it contained endorsements from Kim Kardashian, Alicia Keys and Kanye West, among others.

The company listed Swizz Beatz, a musician who married Keys in 2010, as its chief executive. He was not named in the indictment and declined to comment.

The five-count indictment, which alleges copyright infringement as well as conspiracy to commit money-laundering and racketeering, described a site designed specifically to reward users who uploaded pirated content for sharing, and turned a blind eye to requests from copyright holders to remove copyright-protected files.

For instance, users received cash bonuses if they uploaded content popular enough to generate massive numbers of downloads, according to the indictment. Such content was almost always copyright-protected, the indictment said.

The US justice department said it was illegal for anyone to download pirated content, but its investigation focused on the leaders of the company, not end-users who may have downloaded a few movies for personal viewing.

News of the shutdown seemed to bring retaliation from hackers who claimed credit for attacking the US justice department's website. American officials confirmed the site was down for hours yesterday evening and the disruption was being "treated as a malicious act".

The site appeared to be working again late last night.