Dotcom's ad-substitution software is nasty spyware - Christie

NZ media, IT industry figures angry over "spyware" that will replace ads served to their sites with those from Dotcom's own network - hurting small publishers, or anyone struggling to make money from a website.

Well, kinda. Keep reading.

The story so far: Dotcom launched the Mega online file storage and sharing service last week.

He plans to follow it up with a music service called MegaBox* in around six months (and possibly a film service called MegaMovie).

MegaBox will sell songs, in the manner of iTunes, but also offer free content for those willing to install a piece of software called MegaKey. As you surf general sites around the web, MegaKey will block their ads, instead throwing up ones from Dotcom’s own ad network.

The more ads you view, the more credits you earn for free MegaBox content. Dotcom has promised artists (and their label, if they have one), a cut of the revenue (a difference from his earlier Megaupload, which paid cash rewards to uploaders if a file proved popular and thus more ads were served around it, and it helped to attract paid members – who could watch longer files and got faster download speeds).

Dotcom sees himself on the side of the angels. He says he’ll target Google’s megabucks ad network, supplanting its ads with MegaKey’s and funneling some of the revenue to the music industry.

Others beg to differ.

In the bluntly-titled "MegaBox: From f**k-all to zero," Russell Brown says MegaKey will hurt small website publishers, such as his own Public Address. Online ad revenue is miserable enough without MegaKey  replacing the few ads that do get booked.

Dotcom partially addressed this in an interview last week. When I mentioned NBR’s publisher would not be particularly thrilled with any piece of software that blocked this site’s ads, the Mega founder replied:

Here’s how we’ll do it at first. Only 10 percent of the ads you see will be ‘adjusted.’ This is not a general removal of ads. We’re not going to replace ads off small publishers, for example, or sites that have an Alexa rating below 100. That is not our goal. We’ll be taking it [ad revenue] from the big guys, and giving it to the smaller artists.

Nice Robin Hood promise. But the social media set was not impressed.

Brown wanted more detail on how this could work. Fair point. It’s tricky to imagine the logistics of it as Alexa’s list of the world’s top 100 sites changes every day. It’s easy to suspect that MegaKey will simply block any ad served by Google, to a site big or small.

Don Christie – cofounder of NZRise and a director of Catalyst IT, whose web development clients include Fairfax’s Stuff, among many others – was particularly acerbic. In comments on Public Address and sent to NBR, he expressed his personal opinion that:

The ad revenue diversion is certainly problematic. But consider this, the MegaKey technology is basically spyware and nasty substitution technology. It’s spyware because it will report on the site you are visiting (how else would it know if it was a top 100) and it could presumably substitute *anything* on your web page. Not just ads. Links, keywords, pictures, anything.

This sort of technology is not new, simply a nasty virus that Dotcom seems to be trying to legitimise.

Dotcom can expect public sympathy when it is deserved, but we shouldn't give him a free ride.


I put Christie’s comments to Dotcom, who came back with the unsatisfying:

There is way too much speculation going on. It would be wiser for everyone to wait until the Megakey is released before making wild and unfounded allegations. I am not designing a malicious product. The Megakey will be the best thing since Marmite.

Come on Kim, you can do better than that.

The Mega crew has done a pretty good job responding to criticism of the service’s security and encryption setup. They’ve got out  in front of the debate by providing detailed replies to media and public comments, and seem ready and willing to make changes to what Dotcom calls an “open” framework. The communication has been better than that provided by most startups, or tech companies full-stop.

It would be good to see Kim take the same approach to the Megakey debate.

One thing in his favour: he did delay the MegaBox/MegaKey launch because of unspecified elements he was unhappy with. Six months is plenty of time and space to take small website owners' feedback onboard.

Where will the content come from?
Meanwhile, people are also asking: who exactly is going to put songs on Megabox, or movies on MegaMovie?

The music industry has lingering hostility to Megaupload, and plenty of commercial options these days from iTunes to free streaming services Pandora, Spotify and Xbox Live (all available in NZ). Ditto the movie and TV industries (whose online content is much thinner on the ground in these parts).

And while there was a good crowd and genuine buzz at the Mega launch,  music, movie and TV personalities were conspicuous by their absence.

Even if the masses are willing to install Megakey, where will the content come from? Sure they’ll be a handful of artists who go out of their way to support Dotcom; but that’s not going to cut it against the likes of iTunes.

Here, Dotcom has detailed that Hollywood and record labels weren’t as hostile to Megaupload as you would think. He has told NBR (off the record) the names of key industry figures and companies he says were on the verge of supporting Megaupload at the time of the raid.

Still, it’s going to be hard yards finding a critical mass of legitimate content – at least until Dotcom can put the Megaupload case behind him (and remember the extradition case doesn’t even start until August). 

Gobs of money regardless
Meanwhile, Mega could tick over nicely.

The service offers 50GB of free online storage – or a much bigger file locker than that offered by the likes of Dropbox, Google Drive and Microsoft’s Sky Drive.

That’s a decent gob of space, but keen sharers of files will soon be after more.  Dotcom is willing to give it to them, for a competitive monthly fee ranging from €9.99 ($NZ19.50) a month for 500GB to €29.99 for a terabyte (1000GB - the sort of storage you get with a top-of-the-line PC these days).

As Dotcom is no doubt keenly aware, this “give ‘em some online storage free, upsell them to more” approach seems to have worked Dropbox, a company that has prospered since Megaupload was shutdown a year ago.

According to a recent Forbes profile, Dropbox signed up its 100 millionth user late last year, and had estimated revenue  close to $US500 million mark. The privately held company has not said if it’s profitable – but that barely matters with investors clambering to buy private equity shares that value  Dropbox at around $US4 billion.

* Now known as Baboom

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