Mega Consults Legal Team Over New Piracy Report

A new Hollywood commission report investigating the revenue sources of more than 600 supposedly infringing sites has controversially included file-hosting site Mega. The listing marks the second time in a matter of months that the cloud-storage service has been accused of online piracy via an industry-connected report. Yet again, the report's authors are refusing to comment.

In September 2014, NetNames published a report titled Behind The Cyberlocker Door: A Report How Shadowy Cyberlockers Use Credit Card Companies to Make Millions.

While the report was informative in many respects, NetNames made the questionable decision to include cloud-hosting service Mega.co.nz. Granted, Mega’s Kim Dotcom connections might paint the site in an unfavorable light in some eyes, but the fact remains that Mega.co.nz covers all the bases when it comes to copyright law.

And let’s face it – the site has had no other choice. As the most scrutinized file-hosting startup in history, any breach (even of the overseas DMCA) would prove absolutely catastrophic. Nevertheless and largely thanks to the NetNames report, payment processors including Visa, Mastercard and PayPal recently pulled the plug on the company.

Then this week, just eight months after the NetNames report, came another turn of the screw. Titled The Revenue Sources for Websites Making Available Copyright Content Without Consent in the EU, a new MPA-commissioned report published by Incopro examined the money-making techniques of more than 600 ‘unauthorized’ sites in the file-sharing space.

The study’s overarching tone is that the sites surveyed are criminal enterprises run by shady individuals aiming to get rich on the backs of the entertainment industries. In respect of many sites on the list it is difficult to argue with the assertion. But, yet again, Mega.co.nz finds itself on the list alongside the likes of The Pirate Bay and other similarly copyright-hostile domains.

Just as we did following the NetNames report, TorrentFreak contacted the report’s authors and asked why Mega, a company with robust copyright protection mechanisms, had been included in the report. We received no response to what shouldn’t have been a particularly difficult question.

It’s worth pointing out, however, that Incopro do list the factors that get hosting sites on the list. They say the factors “are drawn from case law” and are “typically used by courts” to “determine the status” of a site. They’re listed in bold below:

Users are not charged for storage of files, instead revenue is accrued from subscription fees permitting download; per-download charges; and/or advertising

While the above could indeed describe an infringing site if bad intent was present, it also describes the business model of YouTube. It seems unlikely that a court would find a site illegal on this basis alone.

Anonymity for Users: The use of the service can be enjoyed in complete anonymity

Allowing users to be anonymous is no indication of criminality, unless a service intentionally encourages its users to commit a crime. For the record, Mega users are not anonymous – the service logs user IP addresses to counter abuse.

Anonymity for the Operators: Quite often the operators of the site will also be anonymous or based in jurisdictions where enforcement of the rule of law is quite difficult. Such sites tend to move less frequently, but will do so in response to perceived threats of legal action.

While anonymity for operators can be an indication that facing the law isn’t a key priority, it is blatantly clear that Mega.co.nz is going nowhere. The company and its directors are registered in New Zealand, are public faces, and are currently pursuing a stock market listing. The Pirate Bay this most certainly isn’t.

Inducement/Reward Scheme: Rewards for uploaders of large and popular files (with a particular emphasis on file size, i.e. additional rewards for popular files of over 200 megabytes, which are consistent with long-form copyright-protected audiovisual content).

It is well known that some of the most shadowy file-hosting services use these kinds of affiliate schemes to attract uploaders of pirated content, but their presence alone is not an indicator of criminality. Again, YouTube is happy to share revenues with uploaders of popular files. In any event, Mega offers no such scheme.

Ability to share files in the following formats (all consistent with long-form copyright-protected AV content): .rar, .zip, .avi, .wmv, .mpg, .mhv, .mp4, .divx, .xvid, .flv, .mov and .mpeg.

That the hosting of these filetypes can result in a site being labeled as infringing is beyond ridiculous and doesn’t even warrant a detailed rebuttal.

Free access for stored files is limited (in an attempt to encourage the purchase of premium membership) by methods such as increased wait times, bandwidth throttling, caps on the number of downloads freely accessed and online advertising.

Again, many of these techniques are indeed employed by some of the most notorious file-hosters but on their own they are not indications of criminality. However, the important thing here is that none apply to Mega.

Enabling Sharing of Links: Provision of ‘forum codes’ and ‘URL codes’ to facilitate the incorporation of links on third party indexing and linking sites.

Providing a URL to stored content indicates that a site is pirate? Watch out Dropbox!

The most important factors, the ones that really matter

Although not listed directly for hosting sites, Incopro does note that other factors can determine whether a site is likely infringing or not for the purposes of its report. This is where the meat of their claims against Mega and any other site should really hold up.

The clear (and often stated) purpose of the sites is copyright infringement and facilitation of copyright infringement.

The sites are highly structured and the content is referenced, categorized, curated and moderated.

The operators are believed to exercise control over the content on the website.

The sites provide guidance and deploy a variety of means of encouragement to
users in accessing and making available content and advertise the availability of content on third party sites.

The sites either don’t operate a takedown policy at all or such policies are mere window-dressing or even a sham.

To even the most casual observer it must be clear Mega does not fit into any of these categories. Most importantly the company has a robust DMCA-style policy that has even seen it remove its own founder’s music following a bogus DMCA complaint.

Conclusion

When a site fails to meet any of the criteria for inclusion in a piracy report yet still finds itself included, one needs to ask why. Sadly (and like NetNames before them) the creators of this otherwise enlightening report refuse to answer that simple question.

So why then have two big reports, both of which are likely to shape policy in the coming months and years, branded a legitimate file-hosting site a piracy haven?

If it’s because Mega is breaking the law, the aggrieved parties should step up to the plate and say so. Better still, those funding the report (the MPA) should have their lawyers do something about it.

If, however, it’s because Kim Dotcom founded Mega and everything he touches must now be destroyed at all costs, people should have the nerve to admit it. As noted earlier, both reports have their merits, but when suspicions of hidden agendas become apparent, their value is only diminished.

Mega informs TorrentFreak it is analyzing the report with its lawyers.