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Out on bail, Megaupload's Kim Dotcom speaks: "This is completely insane"

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Kim Dotcom, the flamboyant founder of the recently shuttered site Megaupload, has been released on bail after being dramatically arrested by New Zealand Police.

In his first interview since going to jail on Jan. 20, he insisted all of MegaUpload’s actions were technically legal, that legal complains against his company were utterly erratic, and that he’s simply been the target of overly zealous and powerful corporate interests.

MegaUpload was a cyberlocker site, meaning any user can upload any file, ostensibly legally and purely for storage purposes, and accessible by a URL. Anyone else with that URL could also download it, making it a haven for Internet pirates.

Talking to a news reporter for TV3 in New Zealand, Dotcom’s home country, he described the past few months as “a nightmare,” adding that his wife is pregnant with twins.

He said there were drastic inconsistencies in his indictment by a U.S. grand jury, like where it states he cost “copyright holders well in excess of $500,000,000.” The indictment doesn’t clarify the source for that figure.

“That’s complete nonsense,” Dotcom said. “[I]f you hear what the Prosecution has said in court, at least $500 million of damage were just music files and just within a two-week time period. So they are actually talking about $13 billion U.S. damage within a year just for music downloads. The entire U.S. music industry is less than $20 billion. It’s completely mind-boggling and unrealistic.”

Dotcom said compared the government attack on his website, since he thinks it was based on false pretenses designed to protect American interests, was similar to the U.S. government claiming there were “weapons of mass destruction in Iraq.”

He named several other sites “that offer the same service” as MegaUpload that haven’t been punished. He cited one in particular, Mediafire, as a U.S.-based company that “offers exactly the same service.”

Mediafire’s CEO, however, said in January that there were differences between the sites, notably that MegaUpload paid users for uploading content, effectively giving incentive for piracy.  “We don’t have a business built on copyright infringement,” unlike MegaUpoad, he said.

Dotcom’s claim that inflated music figures were used against him aside, it seems his real enemy is the movie industry, notably the Motion Picture Association of America (MPAA), which represents the legal interests of Hollywood’s six biggest studios.

A 2011 study found that among Cyberlockers such as MegaUpload, feature-length and non-pornographic films compromised 35.8 percent of all downloads, and 99.2 percent of those films were copyrighted.

The MPAA reportedly took a proactive stance in the case against Dotcom, compiling its own information about MegaUpload’s operations to give to the FBI.

In the interview, Dotcom referenced a recent study that indicates Hollywood studios only loses money to piracy in countries that have delayed movie premieres.  

They release something first in one country but they show trailers to everyone around the world pitching that new movie. But then the 14-year-old kid in France or Germany can’t watch it for another six months, you know? If the business model would be one where everyone has access to this content at the same time, you know, you wouldn’t have a piracy problem. So it’s really, in my opinion, the government of the United States protecting an outdated monopolistic business model that doesn’t work anymore in the age of the Internet.

His most convincing arguments were that he says he consistently complied with the Digital Millennium Copyright Act in the U.S., meaning whenever copyright holders complained that their material was being downloaded on MegaUpload, the site would take down the links. Others could quickly re-upload the same material, though.

“We have spent millions of dollars on legal advice over the last few years and our legal advisers have always told us that we are secure and that we are protected by the DMCA.”

“If you are a company that is hurt so much by what we are doing, billions of dollars of damage, you don’t wait and sit and do nothing,” Dotcom said. “You call your lawyers and you try and sue us and try to stop us from what we are doing.”

However, he stated, “No legal document has ever reached us from any of these studios,” nor, he added, has any major company ever tried to sue MegaUpload.

“I’m sitting in jail, my house is being raided, all my assets are frozen without a trial, without a hearing,” he said. “This is completely insane, is what it is.”

Screengrab from 3news.co.nz