Megaupload's Kim Dotcom: Inside the Wild Life and Dramatic Fall of the Nerd Who Burned Hollywood
He wanted to be the next Steve Jobs (and talked about starring in a reality TV show). But the outrageous ex-hacker and self proclaimed Dr. Evil, who collected yachts and $400,000 supercars as his file sharing website amassed 180 million users, faces 50 years in prison as showbiz braces for the nastiest piracy fight ever.
Despite signs that Dotcom wanted to go straight, the indictment paints him and his company as singularly obsessed with profitability and uninterested in obeying copyright law. The indictment alleges that Megaupload generated fresh content through its "Uploader Rewards" program, which provided free premium membership and up to $10,000 for users who uploaded any popular works to the service (Megaupload did not ask users for specific content). There also are indications that the company's employees knew the legal line they were straddling. The indictment cites an online chat exchange between Mathias Ortmann, chief technical officer, and Bram Van Der Kolk, the company's "programmer-in-charge," in which Van Der Kolk stated: "We have a funny business … modern days pirates:)" Ortmann replied: "We're not pirates, we're just providing shipping services to pirates :)." Both were also named in the indictment.
At first, Megaupload did not register on Hollywood's radar. But industry watchdogs began to take notice as Megaupload appeared to grow more bold. For example, the indictment alleges that Dotcom and his colleagues illegally distributed the Liam Neeson thriller Taken in October 2008, months ahead of its January 2009 release. Creative America, a SAG-AFTRA-supported advocacy group aligned with the entertainment industry, produced a 2011 public service announcement that targeted Dotcom and showed the "infamous" businessman next to luxury yachts and automobiles. The group accused him of earning $300 million a year off the backs of copyright holders and urged action.
But the jurisdictional barriers to arresting and prosecuting Dotcom were significant. Under the U.S. Digital Millennium Copyright Act, "takedown" procedures have been found by courts to shield digital video services. Additionally, unlike The Pirate Bay, another site on Hollywood's hit list, Megaupload refrained from the more brazen model of allowing users to directly search its network; instead it relied on other websites to provide such services. In the Campbell Live interview, Dotcom said that in terms of copyright infringement, his company was a "lamb" compared to websites such as Google-owned YouTube, which is far bigger and more powerful. The video-sharing service has become a tool for studios and record labels to promote and distribute content, though it does remain locked in a $1 billion copyright infringement lawsuit brought against it by Viacom. "I'm an easy target," Dotcom said. "I'm not Google; I don't have $50 billion in my account."
But anti-piracy lawyers believe Megaupload's takedown procedures were all just a shell game designed to mollify content owners while doing little to curb copyright infringement. According to the indictment, in September 2009, after a Warner Bros. representative e-mailed Megaupload asking for the ability to flag more infringing files, Dotcom told a colleague in an e-mail to allow Warner Bros. a maximum of 5,000 removals a day but "not unlimited." Warner Bros. had been requesting removal of about 2,500 files a day. In an April 2009 e-mail to three colleagues, Dotcom is quoted complaining about the deletion of links to infringing content: "I told you many times not to delete links that are reported in batches of thousands from insignificant sources. … And the fact that we lost significant revenue because of it justifies my reaction."
The cavalier attitude displayed in such messages has led some observers to question Dotcom's stance that he has done nothing wrong. "Dotcom might have thought himself on safe ground, but I have a hard time thinking that he believed himself to be innocent," says Steven Fabrizio, a lawyer at Jenner & Block who represented the entertainment industry in the Grokster matter.
Adding to the legal issues, not all of Megaupload's users trafficked in pirated material -- and some, quite simply, want their stuff back. On April 13, an attorney representing Megaupload user Kyle Goodwin, a video journalist, asked O'Grady to grant access to his data and to resolve issues related to stewardship of the company's servers. And Dotcom's lawyers are promising to call government witnesses to testify about their own use of Megaupload. "Many members of the military used Megaupload to share photos with loved ones back home, Rothken says. "There are countless ways that people used it for socially beneficial uses, including the people who used it to store copyrighted materials they purchased and owned."
While legal experts say jail time is a serious possibility, it is unlikely Dotcom would serve the maximum 50-year term he faces. And given his knack for quick rebounds, it is likely that Dotcom will get another shot at going mainstream, if that is what he still desires. The question is whether the entertainment business would embrace him. "He's been able to figure how to aggregate large audiences, and for me, that is of the utmost importance in this business, to be able to connect with the consumer," says Logan Mulvey, head of video-on-demand distribution company GoDigital. "He may have done it in an illegal way, but he was still able to do it."
Cooper doesn't doubt that his old friend will be back, writing on his blog that he hopes to have drinks with Dotcom on his yacht this summer. And Dotcom appear to think so, too. When asked in the March Campbell Live interview about what his future held, at first Dotcom could only laugh. His steel-gray eyes flitted about and he stammered before responding: "I am a fighter. … So, I will fight it. It's all I can do."
Eriq Gardner contributed to this report.
Email: Daniel.Miller@THR.com; Matthew.Belloni@THR.com