Dotcom - Why I chose Hong Kong over NZ for new Megabox service
March 13: NBR recently stumbled on the fact that while Kim Dotcom talked up New Zealand at the Mega launch, he has placed his coming Megabox music service under control of one of his Hong Kong-registered companies. Another project, Megamovie, will also be controlled by one of his Hong Kong companies. (see below).
NBR Online asked Mr Dotcom why he put one of his Hong Kong companies in charge of Megabox.
"It involves some US artists as potential shareholders and they want a more tax-friendly jurisdiction. That's why we looked at Hong Kong and Singapore," he replied.
But a source familiar with international tax law told NBR there would be no particular advantage for the US artists if they were shareholders in a Hong Kong-based company controlling Megabox. They would still be subject to US tax.
The Hong Kong setup could potentially benefit Mr Dotcom's own tax and privacy situation, however.
Mr Dotcom confirmed that "Vikram [Mega CEO Vikram Kumar] is not involved in Megabox and Mega NZ has nothing to do with it."
At the January 20 Mega launch in Auckland, Mr Dotcom said Mega would follow six months later.
He told NBR he would talk further before the Megabox launch, had no further comment at this time. Anything media writes about the services is "pure speculation" at this point, he added.
The Hong Kong Integrated Companies Registry lists four active companies associated with Mr Dotcom: Kimpire, Trendax, Data Protect, Kimvestor and Megaupload.
Mega IPO chat reveals Hong Kong twist
March 7: Kim Dotcom talked up an NZX listing when his new file sharing service, Mega, was launched on January 20, and constantly underlines that his new company was based in New Zealand and registered here.
IPO talk as been further stoked by an ad for a CFO experienced in taking companies public.
While talking to Mega CEO Vikram Kumar about the CFO role, NBR also asked for an update on Megabox and Megakey - two key projects Mr Dotcom said would launch six months after Mega.
Surprisingly, the Mega CEO said he did not know. He was out of the loop.
Megabox and Megakey fall under a company listed in Hong Kong, Mr Kumar said - a detail not mentioned by Mr Dotcom at the Mega launch, which was heavy on references to his desire to build his business from a New Zealand base.
Further queries on the services were referred to Mr Dotcom. NBR awaits comment.
On the eve of the Mega launch, Mr Dotcom talked up Megabox as a major initiative. It will sell music on an iTunes-style model, he told NBR ONLINE, but will also offer free content if users racked up credit by installing a Megakey app that subsituted ads as they surfed the web.
After an outcry from publishers and privacy advocates, Mr Dotcocom clarified Megakey would only replace ads served up by the world's 100 largest sites, although no detail was offered on how this would be achieved, or whether it would include the ads served to many smaller sites which are Google Ad Words partners.
Megabox will be followed by a second service, Megamovie.
NBR asked if this movie download service would also fall outside the orbit of IPO candiate Mega.
"Megamovie is still at concept stage but, yes, is the responsibility of the Hong Kong entity," Mr Kumar replied.
More than one Hong Kong company is involved, he said.
A Wired profile details how Mr Dotcom moved to Hong Kong after receiving a 20-month suspended sentence on embezzlement charges in Germany.
He set up Kimpire Ltd and a network of inter-related companies in December 2002, shortly after arriving. They included Data Protect Ltd, the company that became Megaupload.