Oram: Mega world of fantasy

ROD ORAM
Last updated 05:00 27/01/2013
Internet mogul Kim Dotcom.
LAWRENCE SMITH/Fairfax NZ
Mega fantasy: Internet mogul Kim Dotcom holds a preliminary press conference at his mansion in Coatsville, north west of Auckland in the lead up to his new Mega website launch.

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OPINION: One day, hopefully, we'll benefit from the ultimate internet. Then we'll be free to share information and knowledge widely while we reward its creators fairly.

We have a long way to go. Globally, governments are trying to curb internet freedom; and existing intellectual property laws and business models are thwarting progress.

We also have some local problems. We're failing to generate enough internet activity to justify investment in far bigger, cheaper cable connections with the rest of the world.

If we could help solve the global issues and overcome our local constraints we would revolutionise our society and transform our economy. Our businesses would be truly global, ingenious and creative people would earn a decent living and our communities would connect and thrive.

We have few leaders rising to these great challenges. But we need more and bolder ones.

Dangerously for us, however, Kim Dotcom has plunged into this gap. The man and his business models are the absolute antithesis of what the internet and this country need.

He dangles a glittering prospect others have offered before: he says we could generate jobs, wealth and taxes if we turned ourselves into one of the world's great data storage sites. After all, we have abundant, cheap and renewable electricity to power the servers. All we'd need is bigger cables to connect us with the world and a change of laws to make us the Switzerland of data secrecy.

He claims his new services, if they were based here, would within three years generate more traffic than the rest of NZ online activity combined. But everything is wrong about this proposition, from the economics to the practicality and morality.

A week ago he launched his first service, Mega, for storing and sharing files. It looks and works very similarly to his Megaupload site, which the US government closed down a year ago. The US is seeking Dotcom's extradition to face charges that Megaupload was a tool for the theft of US$500 million of pirated films and music, which generated US$175m of criminal proceeds.

Mega has one main difference: all data on it will be encrypted automatically as users load their files. Mega's owner and staff, not to mention governments and copyright holders, won't be able to check what might be pirated.

Dotcom believes this will keep law enforcers off his back and his service running. After all, he insists, many technologies have dual purposes - they can be used for legal and illegal purposes. He makes scant effort, though, to support the good and stamp out the bad. He is escalating, not winning, his fight with copyright holders.

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He is also causing trouble for himself by getting offside with some in the international tech community. Within days of Mega's launch, encryption experts exposed numerous weaknesses in its systems. Dotcom has pledged to fix them. But given his history he will find it very difficult to make his service credible to legitimate users and acceptable to copyright holders.

In coming months he will launch his next service, Megabox, for music. Users will either pay for downloads or agree to download Mega software. This will displace ads on other websites with ads on which Mega will collect revenues. Either way, Dotcom says, artists will get money for their music. Google will certainly test the practicality and ethicality of this, since Dotcom is targeting 10 per cent of its ad revenues. He will find it, and other ad services, formidable enemies.

The third in his trifecta of new internet plays will be Megavideo. He's said very little about it yet. But given his view of the world, it will certainly be just as damaging to the cause of true internet progress as his other ventures to date.

Even if these businesses were successful, Dotcom's claims that he can create significant economic value for New Zealand are pure fantasy. Data storage of the type Dotcom peddles is a commodity business with wafer-thin margins and minimal value generation, in either jobs or other activity.

So Dotcom would never invest in server farms here. Even if we offered him fabulous connectivity at dirt-cheap prices he would do as he does now - scour the world for the cheapest storage he can rent from others. We would always be underbid.

Worse, we have become deeply entangled in Dotcom's legal problems. Our Government's stupid decision to give him residence here, and its incompetent surveillance and arrest of him, is dragging it and the country ever deeper into Dotcom's murky world.

We will find it very hard to get rid of Dotcom. If he wins his case against extradition to the US he will be too scared to travel abroad for fear the US will have another go at him. If he loses his case, appeals and delays will drag on for what will seem like eternity.

Meanwhile, he clearly loves life here as he plays the role of internet hero to local and global audiences. New Zealand's reputation can weather this. Every country has its share of such comic fantasists.

Anyone with a bit of sense knows true internet pioneers brilliantly devise and deliver valuable services for others, as have the founders of companies such as Apple, Google and Facebook; or fight heroically for principles, as Aaron Swartz did - as his recent obituary in The Economist testifies.

While many in our internet community can spot the difference, some of them are far too enamoured of Dotcom for their own good or the country's. They acknowledge his fatal flaws but think he can help fast-forward New Zealand's internet development.

We have a lot of things to offer the internet, including integrity. But hosting Dotcom is not one.

- Sunday Star Times

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