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REPORT PREPARED FOR:Assignment 3Critique: Copyright and Data OwnershipBY Anastasiia Volkova, Shobana Iyer, Ian LobkoPOSTGRADUATE DIPLOMA IN BUSINESSAPMG 8119: DIGITAL ENTERPRISEASSOCIATE PROFESSOR DR. NITIN SETHAUTHOR CONTACTS NAME: Anastasiia VolkovaMobile: 0279775183Email:Volkova.anastasia.o@Student ID:NAME: Shobana IyerMobile: 02102886084Email:shobanaiyer@Student ID:NAME: Ian LobkoMobile: 0221988109Email:ianlobko@Student ID:TABLE OF CONTENTS TOC \o "1-2" \u AUTHOR CONTACTS PAGEREF _Toc402481019 \h 2TABLE OF CONTENTS PAGEREF _Toc402481020 \h 3EXECUTIVE SUMMARY PAGEREF _Toc402481021 \h 41. BUSINESS BACKGROUND: PAGEREF _Toc402481022 \h 52. PAGEREF _Toc402481023 \h 62.1 Breached the U.S laws PAGEREF _Toc402481024 \h 62.2 Implications on Customers and other cloud servers PAGEREF _Toc402481025 \h 82. SITES SIMULAR TO MEGAUPLOAD: CASE OF THE PIRATE BAY. PAGEREF _Toc402481026 \h 92.1 History PAGEREF _Toc402481027 \h 92.2 Website setup PAGEREF _Toc402481028 \h 102.3 Funding PAGEREF _Toc402481029 \h 112.4 Legal issues PAGEREF _Toc402481030 \h 122.5 Customer Prospective PAGEREF _Toc402481031 \h 13REFERENCES PAGEREF _Toc402481032 \h 15EXECUTIVE SUMMARYThis reports purpose is to analyse and criticize how breached US’s Copyright and was prosecuted in terms of copyright infringement, money laundering and racketing and its impact on customers and copyright holders. The initial part of this report introduces and describes the business background of Megaupload and covers the part of what activities the company did and how did they monetize. In the next stage we further evaluate in depth to understand the points of breach by from the US law perspective. The learning from this analysis is Megaupload had conducted illegal activities which offended US’s business regulation and harmed several music distributors and entertainment industries. The following part of this report demonstrates the implications on Megaupload registered customers and users as well as the implications on other Cloud storage services. The finding shows that many similar Cloud based web services have become cautious and done certain modifications in their regulations and notifications to access their websites including Apple whereas others have shutdown voluntarily. 1. BUSINESS BACKGROUND:The rise of electronic networks and media has undeniably put substantial pressure on our prevailing intellectual property. Additionally with each of these emerging technologies, copyright law must adapt to changing circumstances. Many predict that until law and technology reach an equilibrium and understanding, businesses innovators will be reluctant to create works for the Internet eco-system as they might not be able to protect their intellectual properties. Others argue that only slight modifications are needed to fit copyright law to electronic networks such as the Internet. Still minority believe in giving lesser importance to intellectual property and believe that this business will continue even without powerful copyright rights CITATION Thend \l 1033 (ERIC, n.d). is a commercial website and service founded and established by Kim Dotcom in 2005 with head quarters based in Hong Kong. It is an online data storage and upload service that reproduces and distributes copies of popular intellectual property and copyright content such as music and movies, video games, electronic books, images, television programs and other software services and – as with any other cloud storage service – some potentially infringing material CITATION Ams13 \l 1033 (Amsterdam Robert*, 2013). At one point was the 13th most frequently visited site that in turn accounted for four percent of the total Internet traffic. It claims to have over one billion visitors in its history and over 180 million registered users CITATION Cle12 \l 1033 (Clerk, United States District Court, 2012). ’s revenue came primarily from two streams: Premium Subscriptions and Online Advertising Sales. The former contributed to over $150 million and Advertising revenue was over $25 million. In exchange for fees charged, provides faster reproduction, quicker access and distribution of infringing copies of copyrighted works. Besides the company also launched another attractive loyalty scheme that allowed users to upload and/or download files for points and cash CITATION Cle12 \l 1033 (Clerk, United States District Court, 2012). The financial earnings of have been mainly directed to four sources. First, to corporate entities they control, other collaborators and networks, and internal staff. Next, funds allocated towards developing and promoting and complementary services, such as , , and similar services. Third, they promised cash transfers to premium subscribers for uploading copyrighted and popular content under the “Uploader Rewards” Program. Fourth, millions of dollars were spent on acquiring and maintaining the infrastructure, including the leasing of computers, hosting charges, and Internet bandwidth. Apart from going against the U.S laws of copyright and intellectual property; did not make any significant financial contribution to the copyright owners for reproduction and distribution, which accounts for over 500 million dollars CITATION Cle12 \l 1033 (Clerk, United States District Court, 2012). These activities were deemed illegal by the United States Department of Justice and this led to closure of Megaupload on January 19, 2012 and Kim Dotcom, the founder, was arrested in New Zealand under the US charges of criminal and now under the extradition CITATION Cle12 \l 1033 (Clerk, United States District Court, 2012).2. 2.1 Breached the U.S lawsThe criminal prosecution of Megaupload and Kim Dotcom is supposedly the “largest copyright case in history and Megaupload was charged and shut down by the U.S Department of Justice for allegedly operating as an organisation dedicated to CITATION Cle12 \l 1033 (Clerk, United States District Court, 2012):18 U.S.C. § 371 - Conspiracy to commit copyright infringement under the 18 U.S.C. § 1956(h) – Conspiracy to commit money laundering 18 U.S.C. § 1962(d) – Conspiracy to commit Racketeering18 U.S.C. §§ 2, 2319; 17 U.S.C § 506 – Criminal Copyright Infringement by Electronic Means and for commercially distributing a copyrighted work1. positions and promotes itself as a private data storage provider. However, as part of the service, unregistered anonymous users (referred to as “Non-Members”) are allowed access to content files, and is deleted if not downloaded within 21 days. In contrast, if these files including infringing copies of copyrighted works are repeatedly downloaded, that file remains on the controlled computers and is available for distribution by anyone who can locate the link. Similarly, registered free users (or “Members”) are allowed to upload and download content files, and remains on the system for 90 days. Only premium users who pay money for additional benefits have a realistic chance of having any private long-term. The company has a financial gain of over 150 mn from premium users and subscriptions.2. The users are targeted through online advertisements on the download pages, and this provides a financial gain to the company, Megaupload in this case. Depending on the popularity of the content, such as copies of well-known or famous copyrighted works, has higher potential for Megaupload to make more money. The company’s business strategy for advertising requires maximizing downloads and increasing distribution of content, which is also not consistent with the business concept of private storage. In addition to advertising revenue, the business model is also designed to increase paid subscriptions and this is done through various marketing tactics. The attractiveness of the infringing content on the Mega Sites has generated more than $25 million in online advertising revenues for the Company. 3. To conceal the scope of its infringement, did not make itself available via search on the website. Instead it relied on thousands of hosting and 3rd party linking sites, which makes the website appear more legitimate and hides the popular content that hides the copyright- infringed works driving its revenue. The company thoroughly monitors the traffic from these linking sites in turn generate a very high percentage of the millions of visits to its websites and services thereby providing financial benefits through advertising revenue and opportunities for new premium subscriptions. These links include links to user-generated content created by including and and are financially supported and incentivized through attractive schemes such as the “Uploader Rewards Program” which ensured extensive circulation of links throughout the Internet thereby generating an inventory of popular content. These linking web sites, promote and direct users to access Mega upload content and also allow them to share, reproduce and distribute infringing copies of these copyrighted works. 4. The user must view any video advertising before using megauploads services and it had contracted with companies such as adBrite, Inc., Google AdSense, and PartyGaming plc for selling advertising space. The advertising business model is therefore not based upon storage but upon maximising downloads. The company also started project , to set up advertising campaigns and the high traffic volume further allowed to charge advertisers at a higher rate than would be achieved by the other traditional internet methods. This is another means of earning money using public data and information for financial gain CITATION Wik145 \l 1033 (Wikipedia , 2014). 5. In addition to copyrighted files, there is a claim that other types of illicit content have been uploaded onto the servers, including child pornography and terrorism propaganda videos. The company claims to have deleted such illicit content from the Mega Conspiracy’s servers. However the company has failed to implement a similar program to actually delete or terminate access to copyright infringing content CITATION Wik145 \l 1033 (Wikipedia , 2014). 2.2 Implications on Customers and other cloud serversLegitimate customers claim to have lost a lot of private data and material uploaded on the website. The customers have lost access to their private data and unable to retrieve their legal digital intellectual property till date. There are many sites has operated the business similar to Megaupload, for example, , Dropbox, Youtube, Pirate bay and Google Drive. After Megaupload’s activities were indicted as criminal business against the laws, other cloud storage operators become aware. A number of similar websites have either increased the regulations for sharing content on their servers, or shut down operations whereas the other have a more cautious approach. This includes Apple’s iCloud. A lot of questions remain unanswered and unaddressed as to who really owns this data and what could be the possible implications what are the implications on cloud storage CITATION Cle12 \l 1033 (Clerk, United States District Court, 2012). In the case of Apple’s iCloud, as they have many servers across various locations around the globe, these businesses function as cyberlockers, where they notify the user that the ownership and responsibility of data lies with the user and Apple is only responsible for the storage space. Though people still continue using such services, however after the Megaupload case, many cloud services have come under observation and this has not only impacted the companies, but the users and customers of these services, who feel unsafe and risky with sharing their personal information and material. 2. SITES SIMULAR TO MEGAUPLOAD: CASE OF THE PIRATE BAY. The Pirate Bay (commonly abbreviated TPB) is a website that provides magnet links (and some torrent files) to facilitate peer-to-peer file sharing using the BitTorrent protocol. It is the most visited torrent directory on the World Wide Web. The site was founded in Sweden in 2003.In 2009, the website's founders were found guilty in Sweden for "assisting in making copyright content available". In some countries, internet service providers have been ordered to block access to the website. Since then, proxies have been made all around the world providing access to The Pirate Bay. 2.1 HistoryPicture 1 - The Pirate Bay in 2004The Pirate Bay was established in November 2001 by the Swedish anti-copyright organization Piratbyr?n (The Piracy Bureau); it has been run as a separate organization since October 2004. The Pirate Bay was first run by HYPERLINK "" \o "Gottfrid Svartholm" Gottfrid Svartholm and Fredrik Neij, who are known by their nicknames "anakata" and "TiAMO", respectively. They have both been accused of "assisting in making copyrighted content available" by the Motion Picture Association of America. On 31 May 2006, the website's servers in Stockholm were raided and taken away by Swedish police, leading to three days of downtime. The Pirate Bay has been involved in a number of lawsuits, both as plaintiff and as defendant. On 17 May 2010, because of an HYPERLINK "" \o "Injunction" injunction against their bandwidth provider, the site was taken offline. Access to the website was later restored with a message making fun of the injunction on their front page. On 23 June 2010, the group Piratbyr?n disbanded due to the death of HYPERLINK "" \o "Ibi Kopimi Botani" Ibi Kopimi Botani, a prominent member and co-founder of the group. The Pirate Bay was hosted for several years by PRQ, a Sweden-based company, owned by creators of TPB Gottfrid Svartholm and Fredrik Neij. PRQ is said to provide "highly secure, no-questions-asked hosting services to its customers." From May 2011, Serious Tubes Networks started providing network connectivity to The Pirate Bay. On 23 January 2012, The Pirate Bay added the new category Physibles. These are 3D files described as "data objects that are able (and feasible) to become physical" using a 3D printer. On 10 August 2013, The Pirate Bay announced the release of HYPERLINK "" \o "PirateBrowser" PirateBrowser, a free web browser used to circumvent internet censorship. 2.2 Website setupThe Pirate Bay allows users to search for Magnet links. These are used to reference resources available for download via peer-to-peer networks which, when opened in a BitTorrent client, begin downloading the desired content. (Originally, the Pirate Bay allowed users to download HYPERLINK "" \o "Torrent file" BitTorrent files (torrents), small files that contain HYPERLINK "" \o "Metadata" metadata necessary to download the data files from other users). The torrents are organized into categories: "Audio", "Video", "Applications", "Games", "Porn" and "Other". Registration requires an email address and is free; registered users may upload their own torrents and comment on torrents. According to a study of newly uploaded files during 2013 by HYPERLINK "" \o "TorrentFreak" TorrentFreak, 44% of uploads were television shows and movies, porn was in second place with 35% of uploads, and audio made up 9% of uploads. The website features a browse function that enables users to see what is available in broad categories like Audio, Video, and Games, as well as sub-categories like Audio books, High-res Movies, and Comics. The contents of a category can be sorted by file name, the number of seeds or leechers, the date posted, etc.According to HYPERLINK "" \o "Piratbyr?n" Piratbyr?n, The Pirate Bay is a long-running project of performance art. Normally the front page of The Pirate Bay features a drawing of a pirate ship with the logo of the 1980s anti-copyright infringement campaign, HYPERLINK "" \o "Home Taping Is Killing Music" Home Taping Is Killing Music, on its sails. 2.3 FundingOriginally was funded by Sweden right-wing entrepreneur Carl Lundstorm, stating that most of the cash raised went towards acquiring servers and bandwidth. From 2004 until 2006, TPB had a "Donate" link to a donations page which listed several payment methods, stated that funds supported only the tracker, and offered time-limited benefits to donors such as no advertisements and "VIP" statusFrom 2004 until 2006, TPB had a "Donate" link to a donations page which listed several payment methods, stated that funds supported only the tracker, and offered time-limited benefits to donors such as no advertisements and "VIP" status. After that, the link was removed from the home page, and the donations page only recommended donating "to your local pro-piracy group" for a time, after which it redirected to the site's main page.The site also links to an online store selling site-related merchandise, first noted in 2006 in HYPERLINK "" \o "Svenska Dagbladet" Svenska Dagbladet. Since 2006, the website has received financing through advertisements on result pages. In an investigation in 2006, the police concluded that The Pirate Bay brings in 1.2 million SEK (US$169,000) per year from advertisements.As of 2008, IFPI claims that the website is extremely profitable, and that The Pirate Bay is more engaged in making profit than supporting people's rights. The website has insisted that these allegations are not true, stating, "It's not free to operate a Web Site on this scale”.2.4 Legal issuesNZ Copyright Law states that In New Zealand, copyright protects original literary, dramatic, musical and artistic works, sound recordings, films, communication works and the typographical arrangement of published editions. Copyright comes into existence automatically under the Copyright Act 1994, when a work is put into material form e.g. manuscript, audio/video recording. No registration is necessary (or even possible), nor is any other formality required for securing copyright protection.The law which is sustainable to the Pirate Bay (or Megaupload) case in New Zealand is called the Copyright (Infringing File Sharing) Amendment Act 2011. In a nutshell, the changes were aimed to crack down on peer-to-peer, or P2P, file sharing.What’s interesting, NZ file sharing regulation goes in three “strikes”:A detection notice. Please don't do it again.A warning notice. You seem to have ignored your detection notice.A enforcement notice. See you at the tribunal.Therefore Pirate Bay users in New Zealand would have time to prepare and avoid being sued in court.Talking about the legal processes going for the owners of the Pirate Bay, I should state that most of them were executed under Sweden or US jurisdiction.2.5 Customer Prospective Therefore all data shared and stored on sited like ThePirateBay ( or, Megaupload, as the first case) is illegal. But for me as a customer it is not clear how I can share music or videos I like with my friends and family then. In early 90s when all the media content was bought on cassette tapes and CDs it was a common practice that one of my friends bought new album of our favorite band and we all made copies out of it – not for sale or any kind of commercial activity, but for ourselves. Legally we have also violated the copyright law. "People [in the United States] are paying US$8 to $10 a month for unlimited movies. Provide that to Kiwis and take away the data cap, piracy would be dead."- states InternetNZ chief executive Vikram Kumar, - “About half of the illegal downloading here relates to TV shows, he says. However, the latest Ipsos MediaCT survey shows 28 per cent of adults have downloaded pirated music via peer-to-peer sites in 2012. The survey results, released this week, also show that 21 per cent had used peer-to-peer for movies and 18 per cent for TV shows.It’s hard to escape the conclusion that people sharing copyrighted material have simply switched mechanisms - from bittorrent to technologies like VPN, SSH or the use of file downloading services (yes, like MegaUpload) and seedboxes in other jurisdictions.I suspect that there has been little net-change in the sharing of copyrighted material and that the answer remains business models that make it available easily and at reasonable price - that’s why Netflix (online movie service) accounts for 1/3 of total internet traffic in the US!The Internet interprets censorship as damage and routes around it. Legislation will never be able to keep up with technical innovation.REFERENCES - The Pirate Bay"Newspaper Attack on Bureau of Piracy Backfires". TorrentFreak. 29 July 2006Andersen, Ivar (2 March 2009). "R?tteg?ngen mot The pirate bay: ?klagaren yrkar p? f?ngelse". Fria Tidningen (in Swedish).(English tr.)Paul, Ryan (1 February 2008). "Pirate Bay: big revenue claims fabricated by prosecutors". Ars TechnicaDucklin, Paul (31 January 2013). “First pirate prosecution in New Zealand under "three strikes" law”. of all Pirate Bay uploads are porn TorrentFreak, January 24, "All your bus are belong to us!" (2008-02-22). The Pirate Bay Blog.Torrie, Bronwyn (04 October 011). “Where you stand under new copyright law” , Donald (19 March 2012). “File sharing law - NZ downloaders simply shift tactics” BIBLIOGRAPHY Wikipedia . (2014, January). Megaupload legal case. Retrieved from Wikipedia, the free enclyclopedia : Robert*, R. P. (2013, May 07). Megaupload White Paper. Retrieved October 30, 2014, from Rothken Law Firm: , United States District Court. (2012, January). In the United States District Court for the Eastern District of Virginia . Retrieved from Washington Post Web site: , S. (n.d). The Intellectual Property Renaissance in Cyberspace: Why Copyright Law Could Be Unimportant on the Internet. Retrieved from btlionline: ................
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