Mega business model 'very different'

Auckland lawyer Rick Shera, who is advising Kim Dotcom on the launch of his new Mega cyber-locker service, says it will follow very different model from Megaupload, which was shut down by US authorities last year.

Shera, a partner at Lowndes Jordan and a frequent commentator on intellectual property-related matters in the New Zealand media, said Mega would probably be the most scrutinised start-up in the history of the internet.

"There are legal teams in all sorts of jurisdictions looking at it and pouring over it. It has been looked at from all angles and everyone is pretty confident."

Megaupload appeared to raise the wrath of US law enforcement agencies in large part because it financially rewarded members who uploaded files that were frequently downloaded by other members, a proportion of which were assumed to be pirated.

The model made sense as Megaupload charged for premium memberships that allowed faster downloads.

But Shera indicated Mega would not have that feature and was based on a very different business model.

Files uploaded to Mega will be encrypted when they are uploaded and Shera said it would be a "completely new service".

"It is a cloud storage service but it has got new features in terms of accelerated uploads and downloads and one-click encryption."

Another of the country's top intellectual property lawyers said it remained anyone's guess if Dotcom's controversial Megakey "ad-substituting" software might run into legal issues.

Dotcom will hold a party at his Auckland mansion on Sunday to unveil the new Mega file-locker service. However, a bigger controversy is building over his planned Megabox music service which is expected to launch six months later and whose business model appears to hinge on Megakey.

Members would only be able to listen to music uploaded to Megabox by artists for free if they downloaded Megakey, which would replace at least some advertisements on any websites members visited with those served up by Mega.

Overseas internet experts have speculated that could breach other website owners' copyright.

Rosemary Wallis, an intellectual property lawyer at Auckland law firm Baldwins, which has advised clients facing sanctions from the music industry under the "Skynet" copyright regime, said that could cause problems but believed it would be difficult to form a view without knowing more about how the software would work.

Wallis said Dotcom was clever and seemed to have run rings around his detractors before.

Shera said he had not advised Dotcom on Megakey. "To be honest it is clearly on the backburner with Mega launching on Monday. It hasn't even been discussed. Everyone is so focused on the Mega launch that it will come later."

InternetNZ spokeswoman Susan Chalmers said she could not express a view on whether Megakey might prove good or bad for the diversity of content on the web.

Dotcom tweeted last week that Megabox and Megakey would "change online advertising forever" and give "power to the user".

"Advertisers will pay you for your eyeballs and you get content for free," he said

The Dominion Post