Tag Archives: New Zealand

Kim Dotcom Circles the Drain (But Still Has More Than He Deserves)

It’s goodbye grand mansion and hello to plain old penthouse living for Kim Dotcom, the piracy magnate of Megaupload infamy, who is currently holed up in New Zealand.

On the run from US authorities since his piracy site was shuttered in 2012, times are clearly getting tough for the self-styled “online entrepreneur,” as he fights extradition to face charges in the United States and racks up legal costs believed to be in the millions of dollars. That makes the $1 million a year mansion near Auckland an unjustifiable expense, evidently, although it would be fair to say that any luxury is unjustifiable for a man who made his fortune by exploiting original works without the permission of their creators.

For those misdeeds, Kim Dotcom’s day of reckoning seems to be much closer as we close the year than it did when 2015 began.

Back in September, Dotcom attended an extradition hearing in Auckland that  accused him and his site of “simple fraud,” making millions of dollars by ignoring copyright and Megaupload’s responsibility to compensate creators for the intellectual property shared via the company’s servers.

Worse still, Dotcom and his cohorts encouraged this behavior by rewarding those who shared the most content, putting the site high on the FBI’s piracy hit list.

At September’s hearing, the court heard from US authorities that Megaupload had paid out more than $3 million in such rewards, driving even higher levels of copyright infringement on a global scale.  One user alone made $50,000 over a five year period, demonstrating just how long Dotcom was able to profit from his illegal online venture before finally being shut down in 2012.

Now, his chickens are coming home to roost.

It has taken another three years to reach this point thanks to the self-imposed exile in New Zealand. Nonetheless, it shows that there really is no hiding place for those who engage in piracy, particularly when it’s on a commercial scale. It is not a legitimate business, those who run such sites are not entrepreneurs, and any ill-gotten gains will eventually be reclaimed in damages.

So spare a thought for poor old Kim as we approach the holiday season, but don’t make it a sympathetic one. Firstly, we hope that the creators will soon see justice done in 2016 and have Kim Dotcom answer for his exploitation of their work.

And, in the true spirit of giving, let’s hope that the authorities in Auckland see fit to offer the U.S. a gift and hand him over for the holidays. A late present is certainly better than never receiving one (unless your name is Kim, of course!)

Kim Dotcom Extradition Hearing Highlights Fraud on a Global Scale

The long-awaited extradition hearing of Kim Dotcom finally got underway last week, as a court in Auckland, New Zealand began to listen to arguments in favor of sending the piracy figurehead to the USA to face justice.

It’s no secret that Dotcom has polarized public opinion over the months and years since his file-sharing service Megaupload was shut down by US authorities in 2012. To some, he is the face of the “information wants to be free” argument, suffering persecution for their cause. To others, including the creators on whose back his company Megaupload crassly profited, he is simply a fraudster who has managed to evade the law… until now.

 

The latter is the case that the prosecution will make as they try to make the case that the self-styled “Bond villain” of piracy has crimes to answer for in the United States. The early appeals have been for the judge to disregard the distractions raised by Dotcom’s offline antics, from luxurious mansion-living of his Antipodean exile to his poorly-executed political career. Instead, prosecutors point to the “simple scheme of fraud” perpetrated by the service’s founder and his three cohorts at Megaupload.

That scheme includes not just offering unlicensed content for download, as is bad enough and so many sites continue to do. No, Megaupload was much more manipulative in its climb to the top of the piracy site standings.  The site created a reward structure that incentivized subscribers to seek out popular content and share it, in exchange for features and financial benefits depending on the demand for what they offered. The site was not innovative, as its owners claimed, nor was it making the requested and required steps to remove unlicensed content that Dotcom told authorities were in progress.

Consider the gall of offering something that others work hard to create, without paying for the privilege to make it available, then making users pay for that access without passing anything on. Throw in the profits from advertising and you have hundred of millions of dollars generated, for doing nothing more than creating a cloud storage system full of content you have no right to offer.

The case of Kim Dotcom typifies both the difficulty that authorities face in protecting home-grown talent on the global stage and the progress that can be made when national organizations work together to ensure that no-one is out of reach.

Although the distraction and theater surrounding Dotcom means it has taken years to get to this point, and will take longer still to get him to the US to answer the charges against him, the results will speak for creators everywhere. Intellectual property is protected by copyright law and that law forces piracy advocates .

Even when it takes years, the case of Kim Dotcom and the fate of his peers shows that there is nowhere for piracy profiteers to hide, regardless of how long it takes to make them face justice.

How “Going Global” in New Zealand Hurts Legitimate Internet Providers

Last month we examined the issue of Internet providers in New Zealand being warned by the country’s broadcasters to take action against subscribers who use virtual private networks (VPNs) to get around geographical licensing restrictions. With these services, viewers around the country can access and view website content that might otherwise be restricted to other nations or regions.

Although this can sound harmless enough on the surface, when it comes to valuable content like movies, television, and music, there’s every chance it could mean the difference between business and bankruptcy for legitimate Internet providers in New Zealand.

 

Once you delve deeper it becomes clear just how intentional this practice is at a business level, not one driven by individual users. Several non-facilities based telecommunications companies – i.e. those with no central offices to pay for or networks to maintain – from New Zealand are engaged in the resale of broadband connections to residential subscribers. On its own this is of course a legitimate business model, much in the same way that non-network mobile providers in the U.S. make use of the main carrier networks to repackage and sell cellular services.

It’s the next step that has the major telecoms providers and rights holders up in arms, and with good reason.  As this article on Tech Policy Daily explains, the resellers are attempting to gain market share by bundling a DNS geo-block defeating mechanism into their broadband services. Essentially, they’re saying to customers that they can provide them with a way around those pesky viewing barriers, or “legal regional licensing agreements” to those of us who have some degree of respect for creative rights and control of content.

Where this particular article departs from fact is in suggesting that there is any argument that these non-facilities based resellers are promoting. One look at the marketing literature from these companies, or even the comments from those in charge, shows exactly where their intentions lie.

Take Slingshot, for example, who make no bones about their “Global Mode” sales pitch:

Slingshot Global Mode Plan

This marketing push is enough to assure customers that they will gain access to overseas content services such as Netflix simply by signing up with services like Slingshot.

What’s more, the offering is pitched in such a way that it makes it sound like this level of access is not only legitimate, but something they should expect from all providers. When those who have invested in networks, offices, and content licensing agreements specific to their country fail to offer such a global service, it perversely reflects badly on the legitimate provider, rather than the likes of Slingshot who are skirting the rules and riding on the infrastructure of other businesses.

The bottom line is that established and respected service providers spend more than US $300 million every year for rights to the content they bring to New Zealand. Add this to the cost of providing a variety of traditional and Internet-based services to customers, with all the infrastructure and capital costs that brings, and it’s a significant investment in bringing that content to the country in the many ways viewers and listeners want to consume it.

While there may be some lag between release windows, the fact is that legitimate services are constantly evolving to meet customer demand and the licensing agreements in place ensure that creators are rewarded for each new market in which their work succeeds. This is the basis for continued revenue to the most in-demand creative talent, wherever it is in the world, and a keystone incentive to keep production flowing. Free riders, in this case the businesses who trade on the back of other providers’ networks and promote unlicensed content as a competitive advantage, only detract from that carefully constructed ecosystem.

An important point to note is that this is a battle against unfair business practices, not taking legal action against individual consumers who pursue their own viewing practices. John Fellet, CEO of Sky New Zealand, confirms this point, explaining that “this is a business-to-business issue; it’s about creating a fair playing field.”

When resellers are able to contribute little but gain a lot in terms of market share, it reduces the incentive for those providers with a major capital investment in the country, like Sky New Zealand and Telecom New Zealand, to continue bringing licensed programming from overseas and, more crucially, investing in home-grown creative talent. In that scenario the large American services like Netflix have an easier time dominating, even if they their revenue streams are diluted by geo-dodging, as they cut by far the biggest slice of the global pie.

In the long term this inhibits innovation and limits production diversity, which is exactly what customers want, and how free-riding resellers play on their trust to promote access to content that hasn’t been paid for.

Geo-dodging Thrusts VPNs Into the Global Piracy Debate

Earlier this year we looked at the growing trend of geo-dodging, a process whereby a user in one country can use a server in another country to access content with geographical release restrictions.

The act uses virtual private network (VPN) providers to bypass the online footprint that would otherwise flag their general location and raise the access limitations requested by rights holders.

 

Up to now, geo-dodging has been a secondary concern in the fight against piracy. Now, though, we see cases in New Zealand of television companies threatening to sue VPN services, bringing the trend to the front of technology and intellectual property headlines. Four of New Zealand’s most prominent media companies, SKY, TVNZ, Lightbox and MediaWorks, have joined together to deliver warning letters to VPNs and the internet service providers (ISPs) who enable their user activity.

While geo-dodging has frustrated companies like Netflix, which is known around the world but not available in all major markets, the greater focus has been on fighting direct piracy activity, such as unlicensed file-sharing, torrents and pre-release leaks.

Users getting around geographical content restrictions fell further down the list for two reasons: 1) the technology to accomplish geo-dodging was either not widely available to, or understood by, a majority of users, and 2) often it involves a paying subscriber in one country, so at least there is a sense that content is paid for, even if it isn’t authorized.

In other cases, such as US residents accessing the BBC’s UK-based iPlayer service, the issue is further blurred by the fact that the state broadcaster does not directly charge for its platform, though British tax payers do fund the organization as a whole. At its most basic, though, viewers are accessing content that wasn’t intended for their market, wrenching control from rights holders, and therein lies the problem.

As VPN apps become more common, so geo-dodging on legitimate content platform becomes more of an issue for anyone hoping to license their content to others.

As this practice grows into the public consciousness, it comes back to the very simple concept that content creators and rights holders have the right to choose where and when that content appears. The fundamentals of the licensing system – the market place through which creators can set a value for their content and allow others to use it based on demand, or simply artistic vision –  require that restrictions are respected by broadcasters, intermediaries, and viewers alike.

Though broadcasters and legitimate intermediaries tend to respect those restrictions and, indeed, pay a premium when they want to remove them, piracy facilitators and viewers . VPNs will have to decide which side of the fence they’re on, and how long they can play the privacy card before the weight of intellectual property law gives them a more serious problem to deal with.

 

MPAA Flags Global Offenders in its “Most Notorious Markets” List

A new infringement list created by the Motion Picture Association of America (MPAA) underlines the global commitment required if creators in every country are to be protected from piracy on an international scale.

In a press release on Monday, the MPAA listed a number of sites, particularly in Russia and the Netherlands, that it classed as especially problematic in terms of online piracy.

Piracy demonstration international issue

MPAA list underlines the global piracy problem. | Image Credit: Wikimedia

Rarely far from the headlines, it comes as little surprise that sites in Russia, like the country’s Facebook equivalent VKontakte and the lesser known Rapidgator.net, are at the heart of a trend towards illegal direct downloads and using streaming cyberlockers to access unlicensed content.

But sites based in Europe are no less to blame, with Dutch site Uploaded.net and even Germany’s Netload.in featuring among a shortlist of what the MPAA calls the “World’s Most Notorious Markets.” The list has been submitted to the Office of the U.S. Trade Representative, following the office’s request for input from those familiar with the matter.

While the MPAA’s focus is inevitably devoted to the impact on the U.S. creative economy, its findings speak to the wider struggle facing creators around the world. All too often the sites that take their work without permission are based in countries where their creative reach ends

In an age of global connections and widespread Western co-operation on a number of international issues, it seems unthinkable that no consensus can be reached to take down notorious havens for piracy in locations like Germany, the Netherlands and New Zealand. With wider global concerns at play in Russia movement is perhaps less likely, although even there a commitment has been shown to clamp down on the theft of intellectual property. The country’s efforts have tended to fall down after the tough talk is done, however, as the case of major music labels being forced to take their own legal action against the aforementioned VKontakte demonstrates.

Though the global will may be present, it seems that effective action on the ground is not. It remains for the U.S. Trade Representative to escalate the issue, which requires not just national but international attention if creators in every country are to be effectively protected and receive the revenues they’re due.