The business and culture of our digital lives,
from the L.A. Times

Category: File-sharing

MegaUpload was a 'mega conspiracy,' Justice Department alleges [Updated]

MegaUpload, one of the world's largest file-sharing websites, was shut down Thursday by the U.S. Department of Justice, which accused it of violating piracy and copyright laws.

  In an indictment, the Justice Department alleged that MegaUpload was a "mega conspiracy" and a global criminal organization "whose members engaged in criminal copyright infringement and money laundering on a massive scale."

The Justice Department said MegaUpload, which had about 150 million users, tallied up harm to copyright holders in excess of $500 million by allowing users to illegally share movies, music and other files. Prosecutors said in the indictment that the site's operators raked in an income from it that topped $175 million.

Justice Department indictment of MegaUpload DOCUMENT: Read the indictment against MegaUpload

MegaUpload was just one of the many services that allow for the easy sharing of large files online. Others include sites such as Mediafire and Rapidshare and cloud storage services that allow for shared folders such as and Dropbox.

One way MegaUpload differentiated itself was with its online marketing campaign that featured celebrities such as rapper/producers Kanye West, Lil' Jon, Sean "Diddy" Combs and Swizz Beats stating in YouTube videos why they loved using the site. Other videos feature tennis star Serena Williams, boxer Floyd Mayweather Jr., Def Jam Records founder Russell Simmons and director Brett Ratner testifying to their use of MegaUpload.

The release of the Justice Department indictment came after dozens of websites, led by tech heavyweights Wikipedia, Craigslist, Mozilla and Google, altered their websites to protest two anti-piracy bills under consideration on Capitol Hill: the Stop Online Piracy Act (SOPA) and the Protect Intellectual Property Act (PIPA).

Critics of the bills say the proposed laws would give the Justice Department the ability to censor the Internet by giving the agency clearance to shut down a site without having to get court approval of an indictment, as it did with MegaUpload. Although the indictment was unsealed Thursday, it was issued by a federal court in the Eastern District of Virginia on Jan. 5, the agency said.

In a statement issued with the indictment,the Justice Department said "this action is among the largest criminal copyright cases ever brought by the United States and directly targets the misuse of a public content storage and distribution site to commit and facilitate intellectual property crime."

The Justice Department said that at its request, authorities arrested three MegaUpload executives -- officially employed by two companies, Megaupload Ltd. and Vestor Ltd. -- in New Zealand, including the site's founder, Kim Dotcom, who was born Kim Schmitz. The agency is also looking to arrest two additional executives.

The indictment charges the two companies with running a "racketeering conspiracy, conspiring to commit copyright infringement, conspiring to commit money laundering and two substantive counts of criminal copyright infringement."

According to the Associated Press, before the MegaUpload site was shut down Thursday, a statement was posted on the site saying the allegations made against it were "grotesquely overblown" and that "the vast majority of Mega's Internet traffic is legitimate, and we are here to stay. If the content industry would like to take advantage of our popularity, we are happy to enter into a dialogue. We have some good ideas. Please get in touch."

Visits to on Thursday showed the website as unable to load. The Justice Department had ordered the seizure of 18 domain names it linked to the alleged wrongdoing.

[Updated at 3:42 p.m.: As noted by Times reporter Ben Fritz on our sister blog Company Town, the hacker group Anonymous has allegedly lobbed a denial-of-service attack that has temporarily taken down the websites for the Department of Justice and Universal Music as a move in retaliation for the shutdown of MegaUpload. Forbes is reporting that the same attack has struck the sites for the Recording Industry of America and the Motion Picture Assn. of America.]

[Updated at 3:50 p.m.: The Twitter accounts @YourAnonNews and @AnonOps are taking credit on behalf of Anonymous for the web attacks on the websites of the Justice Department, Recording Industry of America, Motion Picture Assn. of America and Universal Music.]


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-- Nathan Olivarez-Giles

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Copying and file sharing recognized as a religion in Sweden


Can the gospel of file sharing really be recognized as a religion? In Sweden it can.

In the midst of a worldwide debate about Internet piracy, Swedish authorities have granted official religious status to the Church of Kopimism, which claims it considers CTRL+C and CTRL+V (shortcuts for copy and paste) to be sacred symbols, and that information is holy and copying is a sacrament.

The church was founded by philosophy student Isak Gerson, who is also the self-appointed spiritual leader of the movement.

In a statement on the church's website, he says its religious roots stem back to 2010 and that it formalized a community of file sharers that already has been "well spread" for a long time.

"The community of kopimi requires no formal membership," he writes. "You just have to feel a calling to worship what is the holiest of the holiest, information and copy."

(For those who are unaware, kopimi is pronounced "copy me.")

According to the Church of Kopimism website, church services consist of "kopyactings," whereby the "kopimists" share information with each other through copying and remixing.

Bertil Kallner of Sweden's Financial and Administrative Services told the Swedish newspaper Gagens Nyheter that a religious community could "basically be anything."

"What's important is that it is a community for religious activities," he said.

Still, it took the Church of Kopimism three tries over the course of a year before members were able to formalize their way of praying or meditation so that they could be recognized as an official religion.

The blog Torrent Freak reports that membership in the church has grown from 1,000 to 3,000 in the last six months, and the founders expect more people to join now that its religious status is making a splash on the Internet.

"Being recognized by the state of Sweden is a large step for Kopimi," said Gerson. "Hopefully this is one step towards the day when we can live out our faith without fear of persecution."

Kopi that.


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-- Deborah Netburn

Photo: Is a file sharing organ in the works? They might model it off this one in the Holy Trinity Church in Kristianstad, on the east coast of Sweden. Credit:  Katie Lee Pelon.

LimeWire to pay $105 million to music industry in piracy settlement

Official LimeWire Website - Lime WireLimeWire -- a file-sharing service that was responsible for the distribution of millions, if not billions of songs -- and its CEO Mark Gorton have agreed to pay $105 million to a group of major record labels in an out-of-court settlement.

The settlement, which was announced Thursday and reported by our sister blog Company Town, will bring to an end a piracy suit against Gorton and LimeWire, which was shut down in October after a court order mandated that the service stop allowing its users to share copyrighted content with each other.

"We are pleased to have reached a large monetary settlement following the court's finding that both LimeWire and its founder Mark Gorton [are] personally liable for copyright infringement," said Mitch Bainwol,  chairman and chief executive of the Recording Industry Assn. of America, who represented the record labels against the peer-to-peer service.

Bainwol said in a statement that LimeWire "wreaked enormous damage on the music community, helping contribute to thousands of lost jobs and fewer opportunities for aspiring artists."

He also praised the settlement as a landmark end to "the continuing evolution of online music to a legitimate marketplace that appropriately rewards creators. This hard-fought victory is reason for celebration by the entire music community, its fans and the legal services that play by the rules."

Gorton and officials at LimeWire were unavilable for comment Friday afternoon.

The suit went to a New York City jury trial last week to determine the amount of damages Gorton and LimeWire would be liable to pay after the October court injunction found the company liable for copyright infringement.


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-- Nathan Olivarez-Giles

Image: A screenshot of, which notes the court order that shut down the file-sharing service. Credit: LimeWire

Osama bin Laden’s hide-out had cache of porn [Updated]


It appears Osama bin Laden may not have been totally disconnected electronically.

Despite reports that he didn’t have Internet connection or mobile service, Reuters quotes high-ranking Pentagon officials saying the Navy SEALs found pornography --- and a lot of it -- at Bin Laden's compound in Abbottabad, Pakistan, consisting of “modern, electronically recorded video.”

[Updated, 4:35 p.m.] According to the report, there was no word on how the material got there or to whom it belonged, as other people also lived inside the compound with Bin Laden. The story relies on unnamed government officials who have not released any other details or other evidence to back the claims.

The report has prompted some analysts to speculate that the porn may have been brought into the compound using thumb-sized flash drives that Bin Laden allegedly used to send emails while in hiding. Or it could’ve been through the satellite television that he used to watch Al Jazeera.

Either way, it was there, according to the officials, who declined to disclose the titles of the “extensive” collection.


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-- W.J. Hennigan

Photo: The U.S. government released five videos seized at Osama bin Laden's compound, including this image of the Al Qaeda leader watching himself on TV, with President Obama also seen. Credit: Reuters

BitTorrent gets a makeover

BT BitTorrent Inc. released a new version of its client software Thursday, offering a simpler way for people to find, download and share files -- including, for the first time, a way to share them with a select group of friends. It's a potential boon to consumers looking to send high-definition home movies or slide shows to far-flung family members. The gains are more limited, however, for Hollywood studios and other copyright holders.

The BitTorrent protocol speeds up the transmission of files by enabling users to download them from multiple other users simultaneously. That's made it the protocol of choice for file-sharers, particularly for bootlegged movies and song collections. It's a neutral technology, though, and the Hollywood studios made their peace years ago with BitTorrent Inc., which invented the protocol. The company also claims to make the most popular client software for using its protocol; according to Shahi Ghanem, its executive vice president and chief strategist, more than 1 billion copies of those clients have been downloaded, and more than 100 million people use them at least once a month.

On Thursday the company released a beta version of its new client, dubbed Project Chrysalis, designed to make BitTorrent easier to use for consumers and content creators. It's still a work in progress on both fronts, but it's a step forward in several ways.

Continue reading »

Consumer Electronics Show: Ultraviolet here, BitTorrent there

BitTorrent Certified This week's Consumer Electronics Show has been a coming-out party for Ultraviolet, the online video-distribution platform backed by a consortium of major Hollywood studios, device makers, retailers and service providers. But while leaders of the consortium -- the Digital Entertainment Content Ecosystem -- were outlining their plans in a packed conference room at the Las Vegas Convention Center on Thursday afternoon, Bram Cohen was privately demonstrating a new streaming technology based on the BitTorrent file-sharing protocol in a Vegas hotel suite.

The company Cohen co-founded, BitTorrent Inc., also announced Thursday a partnership with Taiwan's Industrial Technology Research Institute, an influential tech R&D center, to develop standards for playing back BitTorrent downloads on a wide range of consumer electronics. It's conceivable that when Ultraviolet-compatible devices hit the market (probably in 2012), some will also bear the logo, "BitTorrent Certified."

That, in a nutshell, is the challenge faced by backers of Ultraviolet. The platform, which the studios hope will breathe life into sluggish sales of downloadable films and TV shows, has to compete with file-sharing software and hosting sites that let people download or stream unauthorized copies of just about anything for free.

Ultraviolet promises a dramatic improvement over the first generation of download-to-own services. But the developments at BitTorrent Inc. show that file-sharing applications are advancing too. And while UV starts from an installed base of zero, more than 20 million people around the world use BitTorrent daily, and more than 100 million use it monthly, BitTorrent Inc. announced earlier this week.

It's important to note that BitTorrent Inc. -- one of several companies that distributes software based on the BitTorrent file-sharing protocol Cohen developed years ago -- doesn't actively encourage piracy, even though that's what most people use the technology for. In fact, the new version of its software, due this spring, will promote more prominently the content that some (typically non-Hollywood) filmmakers and recording artists are distributing via BitTorrent.

Continue reading »

Pew report: Nearly two-thirds of Internet users pay for content

Beatles Not all Internet users expect to get something for nothing -- at least not all the time, according to a report released Thursday by the Pew Research Center's Internet & American Life Project.

Nearly two-thirds -- 65% -- of the 755 users surveyed said they had paid to download or access some type of online content, with music and software being the most frequently purchased items.

Thirty-three percent of respondents said they had paid for digital music and software, respectively. Other frequently purchased items included apps for cellphones and tablet computers, with 21%; digital games with 19%; news articles with 18%; and videos, movies or TV shows, with 16%.

Only 2% of users admitted to paying for adult content.

However, the typical user wasn't breaking the bank: most spent about $10 per month, the survey found, although some high-end users pulled the average up to $47.

Users between the ages of 30 and 49 were most likely to purchase most types of content (with the exception of games), as were users with a college degree and those in higher income brackets.


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-- Abby Sewell

Photo: Music by the Beatles available for download from the Apple Inc. iTunes website is shown on a computer screen in London on Thursday, Nov. 18, 2010. Credit: Simon Dawson / Bloomberg

Operation Bank-Troll: rumored leak of MasterCard numbers is Web-attack in the name of WikiLeaks


Operation: Payback is being followed by Operation Bank-Troll -- an online effort to spread a rumor through e-mail, Twitter, Facebook and other social media websites that MasterCard has been hacked and credit-card numbers have been leaked.  MasterCardRumorsTweet

On Twitter, some messages claiming that MasterCard numbers had been leaked included links to a, a file sharing website where hundreds of numbers and dates were posted -- numbers MasterCard says are fake.

One image circulating on Twitter described how to take part in Operation Bank-Troll step-by-step in an effort to trick MasterCard users into canceling their credit cards.

MasterCard has also taken to Twitter to deny the rumors, which have been dubbed Operation Bank-Toll on various websites and in images passed around online.

In response to a message from Drew Olanoff, who tweeted:

looks like a huge dump of mastercard data was posted online. check your statements closely kids.

MasterCard wrote:

@thatdrew Rumors of security breach are false. Numbers published fake. Customer information is secure. @MasterCardNews

In statement on the earlier attack that downed, and the rumors of credit card number leaks, the company said:

MasterCard has made significant progress in restoring full service to its corporate website.

Our core processing capabilities have not been compromised and cardholder account data has not been placed at risk. While we have seen limited interruption in some web-based services, cardholders can continue to use their cards for secure transactions globally.


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-- Nathan Olivarez-Giles

Images: (Top) Promotion of Operation Bank-Troll.  (Bottom) Screenshot of a tweet from MasterCard denying the Operation Bank-Troll rumors

Two Orange County men sue YouPorn for 'history sniffing,' tracking Web browsing

Two Orange County men have filed a class-action lawsuit against the owners of YouPorn, a website that streams adult movies over the Internet, accusing the site of searching through a user's Web browser history to secretly collect data on what other sites that person has visited.

YouPornlogo The two men, David Pitner and Jared Reagan, both of Newport Beach, accuse YouPorn's parent company, Midstream Media, of intentionally using "history sniffing" or "history hijacking" techniques to "capture personal information from unsuspecting users of its websites ... without their knowledge or consent," according to the lawsuit.

The suit, filed in U.S. District Court in Santa Ana on Friday, describes YouPorn as the "61st most popular website in the world" and as "a resource for people who want to view and share free pornographic media."

Midstream Media does not disclose collecting data from a user's Web browser history in its user terms and conditions, the suit said.

Without telling its users, Midstream, based in the Netherlands, inserted hidden links on its webpages to other pornographic websites, the complaint said.

The user's Web browser would then identify the hidden links as websites which the user had visited or not -- most browsers identify visited links and unvisited links in different colors, which a Javascript function could pick up on, the court documents said.

The method was "essentially tricking plaintiffs' browsers into providing information from plaintiffs' web history files" without permission, according to the suit.

Officials at Midstream were unavailable for comment Tuesday afternoon, as were Pitner's and Reagan's lawyers.

Forbes magazine has reported that YouPorn stopped using the alleged "history sniffing" tactics Nov. 30.


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-- Nathan Olivarez-Giles

LimeWire goes down, but where do its users go?

LimeWire, p2p, file-sharing, RIAAFive months after finding LimeWire and its former chief executive liable for inducing users to violate the record companies' copyrights, a federal judge on Tuesday ordered the company to pull the plug on its file-sharing network. Although both sides agreed to the terms of the permanent injunction that District Judge Kimba M. Wood signed, neither got what it really wanted out of the months of talks. LimeWire wasn't able to obtain the licenses it needs to start an authorized music service. And the labels didn't get a check from LimeWire and former CEO Mark Gorton to compensate them for almost 10 years' worth of infringements.

And so the lawsuit continues to play out like a movie we've all seen before, with a court ordering the network's operator to do everything in its power to stop users from coming back. At some point in the future, LimeWire might have a legitimate service to offer them, but they'll probably be long gone by the time it does.

Not that people who used LimeWire for free downloads would have been eager to sign up for a paid service -- witness what happened to iMesh when it shifted abruptly from free (and illegal) to paid. And it's hard to fault the labels for wanting to shut off the spigot of bootlegs flowing out of LimeWire as soon as possible, rather than waiting until the licensing negotiations were finally completed.

Yet the labels also demanded that LimeWire settle all the legal issues -- including the industry's multimillion-dollar damage claims -- before they would agree to terms on licenses. That proved to be an insurmountable hurdle. Unless a settlement on damages is reached before then, Wood will hold a hearing in January on how much LimeWire should pay.

One interesting thing about the service LimeWire wants to launch is that it wouldn't be based on the LimeWire network. According to Jason Herskowitz, vice president of product management, the company has nearly finished work on a service that integrates cloud-based music streams into users' personal music collections. The point is to give people a single interface that lets them play and discover music from either source, as well as to download new tracks from LimeWire.

Herskowitz says that existing subscription services in effect force users to ignore the collections they assembled over the years. And while they work with an increasing number of smart phones, their libraries of online songs don't work with iPods that can't connect to the Net. LimeWire wants to lighten the impact on iPod users by letting subscribers download a number of MP3s each month in addition to streaming songs to their connected devices. It's hard to judge how good an offer that would be, though, because the number of free MP3s and the amount of the monthly fee is still being negotiated.

It's worth noting that the latest iteration of the Napster subscription music service as well as Microsoft's Zune Pass service bundle free MP3s with their streams, but neither one has drawn a mass following. On the other hand, LimeWire's file-sharing software had many millions of users -- its software had been downloaded an estimated 200 million times. That base could provide a huge head start toward mass adoption for the new service, if it proved to be compelling.

The injunction, however, appears to put the kibosh on that kind of shortcut to legitimacy. Among other things, it requires the company to disable "all functionality" of its current software and provide users a tool to uninstall it. Again, I understand why the labels want to stop the infringements. But offering users a legitimate LimeWire alternative concurrently with the shut-down would have done more to reduce infringements in the long run than simply telling them to take their piracy elsewhere.

-- Jon Healey

Healeywrites editorials for The Times' Opinion Manufacturing Division.



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