Hard News by Russell Brown


MegaBox: From f**k-all to zero

Amid the oddities of last night's launch of Kim Dotcom's new file-locker service, Mega, little was said about the German millionaire's next trick -- the forthcoming music-sharing service, MegaBox -- and the business model on which it is apparently to be based.

As William Mace's story for Fairfax explains, consumers will get free access to music if they download and install an application called MegaKey:

Once installed on a user's computer MegaKey will allow Mega to serve up its own advertising on the web pages of third party websites, effectively redirecting the revenue from players such as Google into Mega's pockets.

Dotcom said yesterday MegaKey would exclusively target large publishers such as Google and Yahoo.

So it's okay, because he's not going to steal advertising inventory from small publishers, only large ones. Except that Google and Yahoo aren't only publishers: they also operate advertising networks that place ads on third party sites -- ads that produce revenue that many small publishers rely on.

I've written here before about the punishing trends in online advertising. When you read a story hailing 20% growth in digital advertising, you need to bear in mind that most of that is going to the big players -- Google and Facebook -- and a lesser portion to the larger established media players, such as Fairfax.

Very little of it goes directly to small publishers like us. What I can't see is how MegaKey could possibly do anything but make things worse. At various times, we've had Google AdSense positions on Public Address. They have reliably brought in five eighths of fuck-all. Under MegaKey, things would be simpler: they'd bring in absolutely nothing -- and we'd entirely lose control of advertising content.

AdSense has a console that offers some control of what ads are matched against publishers' content. If you chose to adopt MegaKey's pirate ad network, you might well encounter irksome or even hostile ads on our site and there'd be nothing I could do about it. Sucks to be me.

Dotcom's moral rationalisation, on the other hand, is that it's about your right to control the stream of data to your screen, and to opt out as you choose. This is essentially the argument behind ad-blocking software, and I do get it. I even used a Flash-blocker myself for a while, before switching browsers to Chrome, which handles CPU-sucking banners better than Safari. But it seems a considerable moral leap to install MegaKey purely so you can try and get something else for free.

Dotcom continues in the story:

"Right now Google is linking to all this content and even though Google is a great company and I love them and their attitude, Google is the largest index of pirated content in the world and they don't pay any licence holder and they are in business and they are doing really well," he said.

"So if my software can force companies like Google to pay their little share to content creators, it wouldn't really hurt them."

Google, it is true, does not pay the owners of content it indexes for search. To do so would fundamentally change -- and break -- internet search itself.

But it does pay the owners of YouTube content a small share of revenue from advertising placed against their clips. It's not a lot -- even 'Gangnam Style' only earned its creators about $870,000 on YouTube  last year, and more modest hits (including the odd one from New Zealand) would be lucky to reap a few hundred dollars a year. 

Additionally, the major rights collecting societies -- BMI, ASCAP, PRS -- have blanket licences with YouTube. The system is working better for labels than it is individual composers at the moment. And Warner Music's continued and unwarranted assertion on YouTube of copyright over the Flying Nun Records catalogue it no longer owns -- each geoblocking claim needing to be sorted out on an individual basis -- is probably not the only problem of its kind.

And yet, it can only get better. I'm not sure the same is true of MegaBox, which is fundamentally based on depriving one unwilling party of revenue in order to pass it on to another, on an as-yet-unclear basis.

The US prosecution of Dotcom and his former business Megaupload is symptomatic of the excesses of copyright enforcement. It has been improper and unjust in a number of ways. Dotcom himself is kinda fun to have around. But I don't think we should fool outselves into thinking that either of those things makes his grand ideas for content creators in any way fair or sustainable.

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