Analysis: Mega signs 500,000 members on first day, Dotcom claims

Jan 20: Kim Dotcom's new file sharing service, Mega, went live at 6.48am this morning, the to-the-minute anniversary of the raid on his mansion. NBR ONLINE will live blog the launch event from 7.30pm tonight, on this page, and provide intermittent updates through today. Mega's largest investor has been revealed as its CEO, New Zealander Tony Lentino. It is initially being hosted in Germany. Dotcom and his team have outlined the legal arguments they will use when Hollywood launches an expected counter-attack. The DOJ this week hinted at new charges if the Mega launch - which could be interpreted as a bail breach - went ahead. Mega offers 50GB of free online storage (more than the likes of Google Drive and Dropbox); paid options for storing more stuff (scroll down) and a unique one-click file enryption technology for that Swiss bank feel.

11pm: Despite ongoing overloading problems, Mega had 1 million visitors and signed 500,000 members duriing its first 14 hours of operation, Kim Dotcom said at a media launch at his rented Coatesville mansion tonight.

Dotcom is hoping to monetize the service by upselling some members to premium accounts. He's also no doubt looking for a ready-made audience for Megabox (a service that will sell content) and Megakey (which will offer said content free, if you're willing to install a plug that will display his ads in your browser as you generally surf the web). Megabox/Megakey will launch in around six months.

In keeping with the man himself, the event was equal parts cheesy and visionary. It included a helicopter and "FBI" agents rapelling down from the mansion roof. And with a row of mini-skirted guards in front of him, the accused pirate waxed lyrical about the role of Mega's encryption technology in an age of prying governments.

Some people say if you've done nothing illegal, what have you got to hide, Dotcom said. But many people hid many things, "even from their friends and family." Mega addressed a "human need for refuge from the community … and maintaining the balance of power between the individual and the state."

On a more meat and potatoes level, he said he wanted to build an econ-system of third-party privacy applications around Mega.

Dotcom said he hoped to one day list Mega on the NZX (for now, the company is majority-owned by a trust controlled by his wife).

ABOVE: Dotcom's mystery Mega investor and CEO Tony Lentino (with his sister Vinnie Hill). Lentino - definitely a beer straight from the bottle man - told Keallhauled he met Dotcom offline when "he came to drag one of his cars on my airstrip" (Lentino's 1000 acre property in Wellsford includes a airfield).

Dotcom included a greatest hits of his pre-emptive legal arguments for the lawyered-up Mega, and repeated his argument that Megaupload was a neutral conduit, and no more responsible for piracy than any other file sharing service. Google's YouTube has more pirated material today than Megaupload ever did, he claimed, while Google provided easy links to copyright-infringing content.

NZX-listed caft beer Moa got a look in with the catering. But this being a Kim Dotcom function, there were also bucket-sized cans of energy drink.

NBR pressed that a key difference was Megaupload paid cash incentives to uploaders (rather than an artist, label or studio, as with his proposed new services).

In hindsight, does he see that as a mistake?

No, said Dotcom. Cash incentives were only available to registered users - meaning someone could be more easily identified if they uploaded infringing material - and rewards were only given for traffic generated by a file of 100MB or less. That is, too small for most movies and TV series.

Dotcom's US lawyer Ira Rothken said Mega's copyright compliance and take-down policies exceeded legal requirements.

L-R: Lawyer Ira Rothken; Megaupload co-accused Bram van der Kolk and Mathias Ortmann. The pair had lead technical roles in Megaupload, as they do with Mega.

Dotcom was also asked about jobs for New Zealanders on Mega. He said Megaupload had employed 220. Some had got other jobs in the meantime, but he would offer any still in the job market a Mega role as his first priority. After that, locals would be first on his list.

Missing from all the hoopla was any mention of Dotcom's birthday as the event wound down close to midnight - as co-accused Mathias Ortmann and Bram van der Kolk reminded Keallhauled as they headed inside to celebrate.

The pair had been awake for 40 hours straight.

But Mega wasn't quite behaving. Strorage servers were having to be rebooted every hour in efforts to rebalance the hosting setup.

Having too many signing up at once is a good problem to have, but tomorrow it will definitely be back to work.

InternetNZ, which adminsters the domain, was happy to front up at the launch. Pictured: policy lead Susan Chalmers.

Dotcom's wife Mona watches her husband onstage. On paper at least, she is in control, holding 89.31% of shares in Mega Ltd through a trust. A company controlled by Lentino holds the balance. Lentino's wife Emily is in the blue dress at right.

Rothken and Lentino onstage. In the event, there was no FBI raid, but as you can see they took sensible bodyguard protection.

Dotcom's lead US lawyer, Ira Rothken (left), and Paul Davison QC share a quiet word.

... and Ortmann, van der Kolk and co-accused Finn Batato (who handles marketing).

Media set up. 

Looking down the hill from the northern slope of Dotcom Mansion's grounds (click to zoom).

A toy drone helicopter buzzes guests before the presentation kicks off - complete with a full-size helicopter used to stage a mock raid.

The FBI agents in the raid helicopter proved friendlier than those who stormed the grounds last year:

(via @timphin)

11am: NBR readers report best results trying to access the overloaded Mega via - the "s" is the operative bit) rather than (which your browser will likely default to if you just type Even on that first address, it's a little slow to load at least from NZ."

(The German-hosted, global service got an NZ-registered web address after Gabon - which yielded the alphabetically-pleasing - suspended the company's domain, allegedly under US pressure.)

Kim Dotcom's colleague and co-accused Finn Batato told NBR ONLINE shortly before 11am, "We are literally overwhelmed by the popularity of the new Mega. Our tech team is sorting everything out. No major issues, just the usual challenges when you launch a big service like ours. Currently approximately 1200 users are signing up per minute. It is a huge load." 

Who knew the FBI has so many agents?


Jan 20, 9am: Kim Dotcom's new file sharing service is inaccessible. On Twitter, Kim Dotcom claims the service, hosted by Cogent in Germany gained 100,000 registered users in its first hour (Kim later updated the figure to 250,000 shortly after 9am), but then became overloaded by "huge demand". The site has been simply not loading for NBR since at least 8.30am. Dotcom says it is running at maximum capacity and the Mega team is working on balancing the services.

Most of those who had an early look at the new online file-sharing service yesterday praised its 50GB free storay (scroll down for paid options), simple interface and unique one-click enryption feature.

But it also drew a jab from Torrent Freak for its surprisingly illiberal, law enforcement-friendly privacy policy, and the amount of data it collects about users (read: Mega Launches: Brilliantly Secure, But Not Anonymous).

The policy includes these sections:

We keep the following personal information:
- When a user signs up for particular services on our website they may need to give us the details required in our registration form and keep that information up to date;
- Communication logs, traffic data, site usage and other information related to us supplying the services (including for serving of advertising material on our site);
- Any personal information included in data uploaded to our system including but not limited to registration information.

We keep records of IP addresses used to access our services.

While this may not be a huge issue for the mainstream, privacy buffs usually prefer more anonymity. Currently dissidents and whistleblowers are not shielded from being exposed by Mega, if the authorities come knocking.

Mega won’t hand personal information out to random strangers of course, but they will cooperate with law enforcement and comply with subpoenas as they should. In their privacy policy they state the following:

If we think it is necessary or we have to by law in any jurisdiction then we are entitled to give your information to the authorities.

We reserve the right to assist any law enforcement agency with investigations, including and limited to by way of disclosure of information to them or their agents. We also reserve the right to comply with any legal processes, including but not limited to subpoenas, search warrents [sic] and court orders.

And also this:

We can use any information we have about you as a customer relating to your creditworthiness and give that information to any other person for credit assessment and debt collection purposes.

Jan 19: Mega pricing revealed

Kim Dotcom's new file sharing service, Mega, was opened to trial users early this morning NZ time - just over 24 hours from its official launch at 6.48am on Sunday (the to-the-minute anniversary of last year's NZ police/FBI raid on Dotcom mansion).

As Dotcom tweeted earlier this week, standard accounts will be free, and offer 50GB of free online storage.

That's considerably more than the free allocation offered by rivals such as Dropbox (2GB), Apple's iCloud (5GB) Google Drive (5GB), and Microsoft's SkyDrive (7GB) - although all the services have a raft of promotions on the go, such as the free 50GB Dropbox accounts offered to buyers of Samsung smartphones.

Click screenshot to enlarge.

Today, Mega also published pricing for premium plans, charged in Euros: €9.99 ($NZ19.50) a month for 500GB is a keen price. Google Drive, for example, charges $US19.99 ($NZ23.90) a month for an upgrade to 400GB - or at a more modest level, $US2.50 ($NZ3.01) for a bump to 25GB.

The 50GB free and the paid options are generous. But then again they need to be to lure customers who will naturally be wary of the new service - and none more so than the 50 million-odd users of Megaupload, all of whom lost all their files when the service (hosted in Virginia) was shutdown by US authorities a year ago.

A Megabox/Megakey content service will follow in around six months.

Megabox will offer music artists (or artists plus their label) a cut of profits. The companion Megakey service will sell songs in the manner of iTunes, plus offer people the option to get free content if they accept a browser plug-in, then earn points by viewing ads. Dotcom said while Megakey would replace ads, it would only replace ads served by the largest sites.

Meanwhile, NBR is one of the early Mega trialists. 

From a very quick play, the service seems as easy as advertised, with a drag-and-drop, browser-based interface:

The sites's mooted (HTML5-based) upload acceleration technology was not in evidence as files uploaded in a sluggish time similar to rivals - but that's always going to be the case for most NZ broadband home accounts, which are typically capped at 1Mbit/s upload speed.

FLASHBACK: Kim Dotcom in the dock with (L-R) co-accused Bram van der Kolk, Finn Batato, Mathias Ortmannn after their January 20, 2012 arrest on copyright infringement, money laundering, racketeering and other charges associated with Megaupload and its alleged $US175 million in illegal profits and divereted $500 million revenue from content providers. In part because of procedural and legal blunders by the DOJ, FBI, GCSB and NZ Police, the case to extradite the four to the US has seen a series of delays; the latest has pushed it back to August this year at the earliest. 

Jan 18: This morning I was out at Dotcom Mansion, where Kim and the team were gearing up for the global launch of his new file sharing service, Mega.

READ ALSO: NZ company named as key Mega partner; Mega CEO named

Mega will go live at 6.48am Sunday, the to-the-minute anniversary of the police/FBI raid that saw Dotcom and colleagues  Bram van der Kolk, Finn Batato, Mathias Ortmann on copyright infringement, money laundering, racketeering and other charges associated with Megaupload (if you missed it over the holidays the latest date for their much delayed extradition hearing is August next year).

Keep an eye on NBR, and in particular over the weekend for more details of the new service, the benefactor behind it, and Kim's plan to win the hearts, and business, of the 50 million or so users who lost files in the Megaupload shutdown.

Meantime, here's a couple of behind-the-scenes pics from this morning (click any image to zoom):

ABOVE: A giant "Mega" sign being constructed on the mansion's front lawn.

The stage manager, from corporate events company Mad Ant, told me around 250 people were expected Sunday night (they'll range from reporters to people who have worked on the site to competition-winning members of the public). 

The launch (7.30pm to 9.30pm Sunday night) will also be streamed over the web (the launch is global, but has the distinction of a Kiwi-registered domain. Gabon - which yielded the alphabetically-pleasing - suspended the service's original domain, under alleged US pressure).

Around 150 people have been involved in the setup, he said, which includes the construction of a temporary outdoor stage.

A helicopter was onsite, but Kim (still under bail conditions, albeit pretty liberal ones these days) is not extending his transportation fleet. A security guard told me it was supplied for the event by the production company.

Half way through my interview, a surprise guest dropped by: Lowndes Jordan partner Rick Shera (pictured left with Dotcom's US attorney Ira Rothken). The Auckland intellectual property specialist has joined Dotcom's legal team, which now numbers 20, as the giant German lawyers-up ahead of the Mega launch, and anticipated movie and music company flak.

Lots of room for a stage when you have a golf-course sized backyard.

Check back in Saturday morning for more as Kim and his US lawyer are candid about the challenges facing the new venture - but also heartened by some surprising backers.

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