What the Megaupload shutdown means for other traffic-hogging “cyberlockers.”

When I imagine the masters of overseas file-sharing websites, I picture a bunch of canny, untouchable Internet buccaneers—that's why they call it the Pirate Bay, right? That image took a hit yesterday with the shutdown of Megaupload.com, one of the world's largest file-hosting services, or "cyberlockers." The site, it turns out, was run out of Hong Kong and New Zealand, and American authorities worked with the Kiwi gendarmerie and other international police forces to knock its servers offline and arrest a half-dozen of its top operators. Among the arrestees was Megaupload’s capo, a moon-faced computer hacker with a checkered past and a taste for women in bikinis who went by many names, including Kim Dotcom and Kim Tim Jim Vestor. (His real name is Kimble Schmitz.)  News reports say the 72-page indictment is full of delectable tales of the spoils its staffers reaped with their ill-gotten wages. (Dotcom was supposedly renting the largest house in New Zealand). It also contains evidence that Megaupload personnel frankly discussed the site's myriad copyrighted material, undercutting the defense that they didn't know what its users were doing.

Cyberlockers have been in the news lately as part of the debate over SOPA, the anti-piracy bill that has been causing such a ruckus on the Web—they were prominent among the "rogue sites" under attack in the legislation. SOPA was heavily supported by the music and movie industries, and no wonder. As I noted in an April Slate piece, several cyberlocker sites have come out of nowhere to appear on lists of the world’s most-trafficked websites.

Along with Megaupload, which ranks 70th on Alexa's latest global list, the biggest ones are Mediafire (at 66th) and 4shared (88th). To give you a sense of their scale, these three get the same general volume of traffic as AOL, CNN, and eBay. (And, um, Xhamster.com, which is also in the business of sharing video.) Reports vary, but this Ars Technica story says that the cyberlocker sites account for 7 percent of Web traffic worldwide. (Megaupload itself claimed 4 percent in a defiant YouTube video; more on that below.) They have one other thing in common, too: They are all based overseas, making it difficult for the U.S. media industries to attack them, though it seems like they managed it this time. (That in itself seems a good argument against the draconian remedies of SOPA, which were predicated on the contention that these "rogue sites" were outside the reach of American law enforcement.)

How do these cyberlockers work? It’s important to note that they’re different from torrent sites like the Pirate Bay, which don't distribute media. (The Pirate Bay isn't technically hosting torrents any more, but that's another story.) The Pirate Bay and its ilk direct you to "torrent files," which—when you load them up in a program like Vuze or Utorrent—add your computer to a swarm of users swapping bits of a song, album, or film. (The latest study I've seen says torrenting accounts for 15 percent of U.S. web traffic.) Torrent sites make their money by selling ads, a lot of them of an adult nature. To cite the Pirate Bay again, it's on the Alexa list in that same rarified AOL-Megaupload-eBay air and, given its immense user base, presumably makes a great deal of money from advertising.

The cyberlockers, by contrast, host files, plain and simple. When you download one, you're downloading an actual song or movie—not a torrent file that allows you to build that song or movie piece by piece. To hear sites like Megaupload tell it, they are in the business of helping folks move files around that are too big for email. Say you need to send out a gigabyte-sized sequence from a movie you're editing. Just upload it to one of these sites and then send the link to whomever needs to view it.

If you're like me, you occasionally get a file like this from a friend or a business associate, generally through YouSendIt. That's a California-based company whose business seems to be largely legitimate. No one's ever sent me a file through any of the offshore sites.

What Megaupload et al. really do is host copyrighted material. Folks put up songs, albums, TV shows, or movies and let the URLs get around. Unlike the torrent sites, the cyberlockers don't make money from advertising. Here, for example, is the spare front page of Megaupload, which I grabbed before the site was taken down Thursday:

While some cyberlockers use ads, they mostly make money by encouraging people to buy premium accounts. They do that by making the free download process cumbersome, asking users to poke around to find the download button, and then sometimes forcing them to wait for a minute or more before they can punch another button and download the file. (That's, um, what I've heard, in any case.) All the while, the sites push ads for their premium services, which allow faster, easier, simultaneous downloads. (4shared, for example, charges $6 or $7 bucks a month for premium service, which it says lets you download 100 gigabytes of data per month.)

The sites also stream media, legal and illegal, sometimes accompanied by ads. The Megaupload indictment says that site had a plan that rewarded premium users who brought lots of desirable (that is to say, copyrighted) content to the site. This feature—which other sites include as well—makes the movie and music industries scream. The sites are making money off illegal copies of the studios’ content, and individual users are getting paid to supply it to them. The sites all claim that if they are notified by copyright holders, they take the offending material down, but there's no reason to think they took this chore seriously. The Megaupload indictment discusses the various ways that crew got around it. For example, they limited the number of official takedown notices they processed a day but agreeably increased the number as the site grew and they could afford to throw Big Content a sop.

Cyberlockers have another odd feature. They generally don't sport search engines—it would be awkward to provide easy search results for pirated content while denying that you knew it was there. The sites that do have search engines hobble them to the point of absurdity. If you go to 4shared.com and search for "Harry Potter," you get a spurious message that there were no results. Go to Google and search for "Harry Potter" and "4shared.com" and you get pages of video, music, game, and e-book links.