Why MegaUpload was really shut down...

G-S-T said:

Im pretty sure an artist would be aware that they didn't own the full rights to their music in such a situation. The responsibility would then be with the artist to make sure that they distributed their cut to the others involved in the production of said piece of music.

Im also pretty sure that megaupload would be able to automatically handle the equal distribution of funds related to said track. After all, its just a matter of dividing 1 number by another and making sure that the artist provides full disclosure as to who owned the full rights to the track.

It would seem that if this new megaupload venture went through, it would reshape the music industry, hence recent events.

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Hey G-S-T, thanks for answering!

Before I say anything else, let me state again that I've been doing music and involved in this industry for years.

Music First, IM Second.

You guys are great at IM, but I will BOLDLY state most of you have no clue as to how the music industry AS A WHOLE is run.

Kim is great at IM (collecting money from advertisements hosting content people want to see/use/download), but he also has no clue!

Now that thats out the way, let me educate you guys on how royalties are collected.

The cliff note version of this argument is, ARITST ARE NOT INVOLVED IN THE COLLECTION OF ROYALTIES!

That task belongs to three major organizations:

BMI publishing (collects publishing from a wide range of mediums from radio to TV)
Ascap publishing (Same as BMI)
and The Henry Fox Organization (involved mostly in the collection of synch fees thru tv and film)
The American Federation of Musicians (collect mostly for session singers and musians who do commercial work and session work)

There is a good reason for this. Artist are human, after all. The collection of money directly from an organization such as Megaupload to the artist itself would open them up to all types of audits from future managers, producers, and songwriters who might not take the artist "word" nor megauploads "word" that all money has been distributed fairly.

This is the reason you have separate organizations for separate purposes: All have no vested interest in the artist or its writers, producers, and musians. Some take on the form of unions to help there members get fair treatment from there "employers" (AFOM).

Megaupload, with all due respect, cannot just decide to "skip" these organizations which represent more then 98% of ALL PROFESSIONAL songwriters and producers as well as the artist themselves.

All of the services you guys probely use, (including youtube's partner program, which came AFTER the Viacom/youtube court case), have to interact with these organizations in some way, shape, or form in order to be legit.

Megaupload wants to skip all of these just to go directly to the artist, which would be a disaster, as once that money hits there back account, even IF megaupload divides it all equally, the artist would then have to deal with audits, court cases from other writers who feel they were "unfairly compensated", session players who's royalty checks look funny, and etc.

All that without getting into what the record company would do, who would probely have no problem suing the pants off of MU.

WHY????

BECAUSE RECORD COMPANIES STILL OWN THE COPYRIGHT TO THE MUSIC!!

Yes guys, Rhianna, Lady Gaga, Justin Beiber, Adele, all of there copyrights belong to the record companies that promote them.

a. Which means they control the content.
b. Which also means they control the money directly from direct sales to customer.
c. Which also means they can SUE THE PANTS off of anyone who MASS DISTRIBUTES that content. (which is what they have been doing)

That means if megaupload tried to distribute the latest GAGA record, even IF it paid lady gaga her fair share, without the record companies consent, it would be liable for litigation and a crap load of court cases......

FOR EACH COPYRIGHT VIOLATION!

And thats just the record companies. If kim decides he wants to stream music on Megavideo, again, ASCAP, BMI, and every music union in the world would have Kim's ass in court everyday!

The model CAN work, itunes is already doing it in a way, it just charges directly for the music itself.

But they can do that only because the record companies (begrudengtly I might add) consented to them doing so.

Its not the model in and of itself that will be responsible for its epic fail, it will be the litigation it would face from courts around the world (except china and russia).

So no, it CAN'T sustain itself. Atleast not legally. It would have to continue operating in a underground manner, like its been doing.

Or get in bed with record companies...........

So thats why.. Interesting.

A bit off topic but if/when will the domain names be expired and/or available again?

OK guys, lesson number 3 for you internet marketers who have NO music business experience......

Question: why do artists want to own their own record label as soon as they can afford to have it?

Lets rephrase that question and ask "why do artist not start there own record companies from the start instead of going to labels first"!

Answer: because most artist have NO CLUE how to run a business, since they spend most of there time practicing there craft and becoming GOOD enough to where you guys would actually want to listen to there material.

This question more then likely comes from the perspective of a singular IM head who runs his business with minimum overhead.

If your a well known artist playing shows in stadiums and touring for six months to a year at a time, while also working on your next record in the studio in the mean time, teh LAST thing you want to worry about is who is collecting royalties, paying the producer a ceratin amount of points negotiated in meetings 8 months ago.....

paying for dancers and musians and tour buses and studio time and getting airplay and smooching the PD's at record stations and setting up TV interviews and collecting synch fee's from commercials across the ocean who featured your song and schdualing a session with puff daddy and etc. etc. and.......

Whew, ran out of breath, and thats just only 20% of what PEOPLE OTHER THEN TEH ARTIST DO FOR THE ARTIST TO BECOME "KNOWN" and continue to make those "HITS" you guys put in your uploaded youtube videos to get traffic to your sites.....

Sorry guys, I will state again, your GREAT at IM, but you have no clue as to how the industry is run, NOR how you get to hear about main stream artist in teh first place. NOR how those main stream artist are introduced and PROMOTED to the world on a constant basis.....

Read "All you need to know about the music business", then come back and tell me how your "revolution models" will work without some type of industry to back it up!

Oh, and one more thing:

Yes, artist DO start there own label after a certain time.

But guess who is still distributing there product around the world?

If you guess Universal, Sony, or Warner Bros., Give yourselves a cookie!!

Again, Kim has no clue........

there are some reasons disclosed on internet out there.., dont wana mention
them here.. i was one the biggest user of megauploads =/

Fuggz said:

A bit off topic but if/when will the domain names be expired and/or available again?

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lol... love the spirit

gb5000 - you chose to play inside the sandbox and play by the rules that reward rehashing of old garbage by talentless hacks (think WF), instead of rewarding artists that actually create original works, Kim Dotcom chose to create his own sandbox, where original artists get to keep rights to their original works and bypass all the above entities that you mention.

Creative destruction, my friend, one of the great things about capitalism.

The shutting down of Megaupload sponsored by RIAA and MPAA would be the same as the horse-buggy industry lobbying the government to shut down Henry Ford's plants, because it interfered with their business model.

People critisised steve jobs itunes as unrealistic for much the same reasons (why sell just 1 song if you can force people to buy a whole album, shared rights for songs royalties etc.). Guess it can be done though... Just show artists/ writers/producers/labels and anybody else who has a legitimate claim to the earnings that it will bring in money for stuff that is being downloaded for free already. If you could convince them everybody gains from it, they would be idiots not to use this distribution model as an extention of their current business model.

Having said that, I doubt that this is the real reason to shut down kims operation.

Check this out...Kim knew it was going to come sooner or later.

Also this is the latest update on the case:



Here's why it was really shut down. Please read instead of thinking that Megabox announcement was the reason they put him behind bars.

gb5000 said:

OK guys, lesson number 3 for you internet marketers who have NO music business experience......

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Btw, you don't need to speak to us like we're 12, tons of people on this board operate legitimate businesses and have extensive business experience. Many are involved in the music industry as well, and I know for a fact several are big players in it.

You have some experience in the industry? Fantastic, please do share with the rest of us, but you don't need to do that in a condescending tone, you can take the attitude elsewhere.

gb5000 said:

Again, Kim has no clue........

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You are being quite rude and treating us all like morons, and acting like you are the god of music industry knowledge. Unless you actually know what Kim knows, then you are just talking out your ass by claiming Kim has/had no clue.

Kim could easily have financed several major viral songs to be released each month for years to come. The song Friday took over the world for several months. It did not need big budget backing to become a reality, because it went viral.

I don't think Kims vision was to play in stadiums around the world and manage tours. Kims visions are entirely based on the facts that more and more people refuse to leave their house to take part in any activities, and would rather experience things in their own bedroom.

What exactly is Kim going to be sued for if:
He purchases the complete rights to certain classic songs.
He completely finances several viral songs each month.
He only allows music which the artist owns the complete rights to, to be sold?
He acts as an affiliate to provide points of sale to songs which he doesnt have any rights to?

I am not even sure if you really understood his concept. Because I just don't see any way he can be sued for giving people a platform to sell their music which they own the complete rights to. People are not allowed to sell their own music online?

demongerbil said:

gb5000 - you chose to play inside the sandbox and play by the rules that reward rehashing of old garbage by talentless hacks (think WF), instead of rewarding artists that actually create original works, Kim Dotcom chose to create his own sandbox, where original artists get to keep rights to their original works and bypass all the above entities that you mention.

Creative destruction, my friend, one of the great things about capitalism.

The shutting down of Megaupload sponsored by RIAA and MPAA would be the same as the horse-buggy industry lobbying the government to shut down Henry Ford's plants, because it interfered with their business model.

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Well, I guess thats your opinion.

But that "rehashed garbage" is loved by millions, feeds thousands of people who work in the industry, and helps fund OTHER talented people who would otherwise go unknown had it not been for the industry (and I'm talking BIG SHIT, BIG FAME, not no "viral fame" you guys are probely thinking about in the back of your heads! Not that viral is a bad thing, but its very "flash in the pan" and needs something else behind it to take it to the next level.)

So your opinion on what the industry is putting out (and it promotes more then just pop guys, FYI) is just that, YOUR OPINON. And as long as people have opinions different from yours, it will live on even past your distaste of it.

gb5000 said:

But that "rehashed garbage" is loved by millions, feeds thousands of people who work in the industry, and helps fund OTHER talented people who would otherwise go unknown had it not been for the industry (and I'm talking BIG SHIT, BIG FAME, not no "viral fame" you guys are probely thinking about in the back of your heads! Not that viral is a bad thing, but its very "flash in the pan" and needs something else behind it to take it to the next level.)

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Nobody here cares about what millions of people love, or what feeds thousands of people who work in the industry, or what helps fund OTHER talented people who would otherwise go unknown. All we care about at this point in time, is whether or not Kim Dotcom could have found a way for artists who create original music which they own the complete rights to, to make enough money to be happy, without needing intervention from a major label. Not everyone dreams of being controlled by a record label. Some people just want to make music and survive. You are arguing that it isn't possible, because Kim would be sued. Where exactly are these lawsuits coming from?

gb5000 said:

Well, I guess thats your opinion.

But that "rehashed garbage" is loved by millions, feeds thousands of people who work in the industry, and helps fund OTHER talented people who would otherwise go unknown had it not been for the industry (and I'm talking BIG SHIT, BIG FAME, not no "viral fame" you guys are probely thinking about in the back of your heads! Not that viral is a bad thing, but its very "flash in the pan" and needs something else behind it to take it to the next level.)

So your opinion on what the industry is putting out (and it promotes more then just pop guys, FYI) is just that, YOUR OPINON. And as long as people have opinions different from yours, it will live on even past your distaste of it.

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You chose to focus on a very narrow part of my argument. Forget my opinion about the quality of most mainstream music. Actually there are several artists who are mainstream, whose music I really enjoy.

That's not the fucking point.

Point is you are very comfortable with the sandbox that exists right now, and all the rules, and the players.

But you have to understand that it's an obsolete business model. 80% of people in it are useless. It's overhead, which was necessary 10-15 years ago, when CDs had to be printed, shipped to the local Tower records, etc etc. Technology allowed for new distribution channels, and it allowed for greater democratization of the industry, where little guys, who had talent can make $, without selling their soul to the machine (by selling copyrights to their songs).

So what MPAA and RIAA are doing is they are fighting tooth and nail for survival, because they see the writing on the wall. They aren't fighting for the artists, they are fighting for their profit margins. But their business model is obsolete, and they know it. So instead of winning market share on merits, they play crony capitalism, lobby the Feds to shut down competition, and force everyone to pay $20 a pop for DVDs, and $12.99 for CDs, which ain't gonna happen anymore.

Problem is you're inside the industry, so you don't want to see it collapse, but the new business models are infinitely better for the consumer AND the artists (why do you think so many artists were backing Megaupload?)

gb5000 said:

Oh, and one more thing:

Yes, artist DO start there own label after a certain time.

But guess who is still distributing there product around the world?

If you guess Universal, Sony, or Warner Bros., Give yourselves a cookie!!

Again, Kim has no clue........

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To be fair you may be coming out eith some valid points BUT your just speculating that he didn't know what he was doing. I'm sure he had already looked at all the points you have brought up evaluated them and and come up with a solution before he even announced that he was going to be doing mega box. To say he doesn't no how to make money is laughable he sits around playing MW3 all day while your grafting for 16 hours out of 24.

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Yeah, dude.. You're kind of being a tool, gb5000. People here aren't (all) stupid.

Allow me to chuck a stick in your spokes... Your entire lecture here is based on the assumption, I'm assuming it's an assumption based on the knowledge that you most likely don't know the owner of Mega, Kim Dotcom.

That assumption is that MegaBox planned to ONLY pay the artist directly. I'm assuming this assumption is based on previous statements in this thread, which you took to heart and decided we needed further learning on.

Now, let's ASSUME even more.. What if, and this is a big one, MegaBox decided that instead of paying the artist directly....... They wanted to, you ready for this? Hold onto your butts, PAY one of those larger organizations on BEHALF of the artist? Therefore, placing the responsibility of payment exactly where it belongs.

Unless it's a small independent artist, who manages their own material. (I know I'm no record exec, but I've seen this field on music sites that I signed up for... Are you the manager... Or are you the artist?)

Oh man, you see what I did there? You had this sound logic going against everybody here and there was a very easy solution to the problem you presented. (That everybody here except for you is partially retarded.)

Lesson #1 regarding this wacky theory of mine.. Not only are artists busy doing stuff besides collecting and paying people... A lot of them probably are not suited (smart enough) to be handling money and dishing it out. Which means that most other places that collects money on behalf of the artist, most likely does not give it straight to the artist.

When you buy a CD at Wal-Mart, the artist is not there ringing up your order. Are they? But why not? The money HAS to go directly to the artist, right?? I can't give it to Sally, does she even fucking KNOW T-Pain?? How can she give him his money if she doesn't know him.

Because, the cliffnotes of this lesson is this:
$$Money$$ -> Consumer -> Store -> Mystical Money Company -> Artist.
So why could Mega not do this?
$$Money$$ -> Consumer -> Mega -> Mystical Money Company -> Artist.

............That seems pretty easy. And something that a multi-millionaire planning on starting a music sharing site would be able to figure out (or pay somebody to figure out for him.)

OMG. What an ambitious project! thanks for letting us now the the real reason why megaupload went off

Kickflip said:

You are being quite rude and treating us all like morons, and acting like you are the god of music industry knowledge. Unless you actually know what Kim knows, then you are just talking out your ass by claiming Kim has/had no clue.

Kim could easily have financed several major viral songs to be released each month for years to come. The song Friday took over the world for several months. It did not need big budget backing to become a reality, because it went viral.

I don't think Kims vision was to play in stadiums around the world and manage tours. Kims visions are entirely based on the facts that more and more people refuse to leave their house to take part in any activities, and would rather experience things in their own bedroom.

What exactly is Kim going to be sued for if:
He purchases the complete rights to certain classic songs.
He completely finances several viral songs each month.
He only allows music which the artist owns the complete rights to, to be sold?
He acts as an affiliate to provide points of sale to songs which he doesnt have any rights to?

I am not even sure if you really understood his concept. Because I just don't see any way he can be sued for giving people a platform to sell their music which they own the complete rights to. People are not allowed to sell their own music online?

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Kickflip, I am sorry you took my post for treating you like morons. Thats not what I'm trying to do.

But you guys have a tendency to view things from a very limited perspective on certain issues (I'm guilty of this as well, we all are) without actually looking at the bigger picture of things, nor do you take the time to actually research what this industry is about before you think that a "revolution" will benefit all parties involved.

As with all things, there are PRO'S and CON'S to every action, thats the way LIFE, whether business or personal, IS!!!

To get back on topic, Again, please read what I said.

I'll take something that you've said and answer them for myself, but you can also take them to any music attorney you can get your hands on and pretty much come up with the same answers.

He purchases the complete rights to certain classic songs.

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IF Music Companies sell those rights in the first place.

Also, do you know how much the beatles catalog is worth? (look it up, MJ bought it).

Do you know how much EMI sold its publishing arm to another major distributor for?

Kim would run out of money before he gets the rights to sell even HALF of those songs across the internet.

Next question:

He completely finances several viral songs each month

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.

He hasn't done that yet (atleast not to my knowledge) other then with the megaupload song.

And Friday? really? yeah...

Rebeca Black's success was based strictly off of buzz, PERIOD. As soon as that buzz was over, even though she signed with DB Entertainment (which is not as well funded as, say, a Def Jam or the like), she was never heard from in teh media since (other then another video which quickly fizzle).

Her SONG went viral, NOT the artist (or her career).

Again, artist cannot sustain success in the industry off of buzz alone. Eventually, they will have to sign with someone who can take their success to the next level, which is the Record Companies you guys LOVE to hate.

Next question:

He only allows music which the artist owns the complete rights to, to be sold?

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Yeah, good luck finding enough music which has the demand large enough to drive traffic in large enough quantities in order for the service Kim provides to be able to sustain itself.

Ever seen Megauploads "most downloaded" charts?

You don't even have to look for it, go to ANY service like Megaupload's and look for a chart that has a "most downloads" section.

I bet you won't find one that isn't filled with atleast 80% of things like TV shows, Movies, and music that is MASS MARKETED BY RECORD AND MEDIA COMPANIES....

Who also own THE COMPLETE RIGHTS TO SAID CONTENT.....

Go ahead, search. Prove me wrong. Please......

Next question:

He acts as an affiliate to provide points of sale to songs which he doesnt have any rights to?

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Hmm, do you mean like radio, youtube (who pays the record company and percentage of the money earned by there partner program, for those who didn't know),

PANDORA........

Sirus.........

ITUNES........

AMAZON........

ALL DON'T OWN COMPLETE RIGHTS TO THE CONTENT OTHER THEN TO SELL.

In other words, he would again have to get in bed with record companies...

Which again, proves an earlier point I made.

I am not even sure if you really understood his concept. Because I just don't see any way he can be sued for giving people a platform to sell their music which they own the complete rights to.

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Some independent artist do this. But not very many has the demand to sustain the traffic needed to make megaupload stay within reach or million dollar revenue streams.

The artist music he wants to sell, the one's who will bring traffic to his site in droves, more then likely, if there is a huge demand, do not own rights to their material. So he will have a hard time getting those rights without, once again, GETTING IN BED WITH THE RECORD COMPANIES YOU GUYS LOVE TO HATE!!

People are not allowed to sell their own music online?

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If they are signed to a Major Media (Record/TV) company, NO!

They will get sued, and so will the person allowing the sale and taking whatever percentage they negotiated without the record companies consent.

Sorry if this comes off as "asshole material" for you guys, just want to inform you atleast somewhat on how the music business is run.