What’s Next After Megaupload?

For anyone involved with the media and entertainment business – online and not – the company Megaupload Limited has been on the radar for a while now. A couple of weeks ago, this Hong Kong-based company captured headlines but not for positive reasons. Instead this company got a lot of free publicity for actions taken against it by the U.S. Department of Justice.

On January 19, the U.S. Department of Justice seized the company’s 18 domain names and its websites were shut down. The primary and most popular of Megaupload’s websites and services was megaupload.com. Billed by the company as a way to upload, store and download files of all types – it had close to 150 million users. So why would the U.S. Department of Justice be interested in a file-sharing and storage website?

It all comes down to the content on this and Megaupload’s other sites. Authorities maintain that megaupload.com really was a way for people to access copyrighted movies, films, television programs, music and other protected digital content. The prosecutors state that the company has resulted in copyright holders losing more than £320 million in revenue.

What is interesting about this case and charges is the timing. The company was effectively shut down and the two founders (and two other employees) were arrested on January 19 – just the day before the SOPA and PIPA bills were postponed by the U.S. government. These two bills were created to fight copyright infringement and online piracy. But due to broad wording and a large degree of public outcry from companies including Google, Wikipedia, YouTube, and Reddit, these bills were postponed for further review.

In the wake of the megauploads.com closure, a number of other file-sharing websites and services have willingly gone offline. And the trickle-down effect? Upset consumers and users. Yes, there were a lot of people using megaupload.com to access copyrighted content and this should be prevented. Online media and entertainment companies have a right to be reimbursed for the content they produce. Most of such companies have willingly spent their own money investing in secure online solutions that enable content protection and easy access for subscribers.

But what about the people who say they were using megaupload.com to store legitimate content? There are people who were using this file-sharing site to simply store content – such as photos, work files, important documents, and other personal online media. Now these people cannot access their content – and if they were using megaupload.com as a  back-up or file-sharing mechanism – they are essentially left out in the cold. And now there are rumours that all of this content will be destroyed… In the end, the legitimate user loses out.

So where does this leave everyone? This is where savvy marketers need to step in. Particularly those behind legitimate file-sharing and content storage websites/services. It is critical that companies such as Dropbox get busy and explain to their users that their content is safe and why. Education needs to start to help consumers understand the difference between illegal file-sharing sites and legal ones. A chunk of the megaupload.com users likely didn’t even know about the copyrighted content that was readily available… and now these people will lose their private and legitimately uploaded content.

Is the right solution to expect users to pay for all online data storage – does that make the sites legitimate and legal? How can companies who really do offer legal cloud storage and file-sharing services convince consumers to trust them? Copyrighted content needs to be protected and in a world of booming eCommerce and online media channels, this is an issue that is not going to disappear. Megauploads Limited may be shut down, SOPA and PIPA are postponed – but what is the solution to prevent this from happening again? Where does the responsibility lie – with the consumer, the service provider, the media and entertainment companies, with the companies who design and provide secure online payment systems?