The Closing Of Megaupload & The Industry's Conflicted View Of Digital Distribution Services

Several Hip Hop artists and industry experts weigh in on how the early 2012 closing of Megaupload was ordered by some of the same people who use it most frequently, and just who and what was hurt.

On January 19th, 2012, the home page of was replaced with an increasingly familiar image — a virtual certificate from the FBI stating that the domain had been seized under suspicion of racketeering, copyright infringement and money laundering. Several similar digital distribution sites have been shut down in the same manner, but Megaupload is the largest and most recognizable so far and the Justice Department’s actions may signal the start of a much more hands-on approach to curbing piracy. The take-down mirrored that of several notable Hip Hop blogs and websites in late 2010, including and For its Hip Hop users, Megaupload's seizure may have been familiar, but the effect reverberated through the entire entertainment industry.

Founded in 2005 by notorious online entrepreneur Kim Dotcom (his legal name), Megaupload quickly became one of the more popular sites of its kind. Despite its stated purpose as a legal file-hosting service—sometimes referred to as “cyberlockers”—Megaupload was well known among Internet users as a rich cache of pirated music, movies and software uploaded by its many users. For the film, software and video game industries, Megaupload is nothing but trouble, creating an easy way for their products to be distributed illegally without any clear benefit. For the music industry, on the other hand, things are a little murkier.

The Legitimate Side Of Megaupload

Today, the classic story of emerging rappers selling mixtapes from the trunks of their cars has been replaced with savvy young artists sending links to fans and bloggers. Current stars like A$AP Rocky, Kendrick Lamar and Odd Future owe much of their success to the ability to give away music online, and even established artists like Lil Wayne, Kanye West and 50 Cent have seen their profiles rise from popular free releases.

“For dudes like me that are still building up a fan base, these sites have been an asset for helping us to distribute music,” acknowledges Brooklyn rapper Torae. He has released material with independent label mainstays like Duck Down and Fat Beats throughout the last five years. “They also help to get musical collaborations done. Producers can send you [beats] to record on, and other artists can send you verses for songs and vice versa.”

Naledge of independent Rap duo Kidz In The Hall echoes the sentiment, crediting the Internet as “the major platform that we used to launch our career. Although I never was a big user of Megaupload, for independent artists like Kidz In The Hall, these outlets were tailor made to fit our free-wheeling infrastructure.” For artists on a tight budget, there’s a need for cheap, convenient methods of distribution, and perhaps as a result, some even express sympathy for fans trying to watch their own budgets.

“In this tough economy a lot of the fans are looking to save money and get your project for free,” Torae points out, having released over four projects to retail. “Sometimes the fans are just trying to get to the music—they may not have $10.00 to drop on an album, but they still want the project so they just go get it however.”

While some artists may be sympathetic to fans’ desire to hear music without paying for it, The Recording Industry Association of America—the national trade organization that represents music distributors—certainly is not. Soon after Megaupload’s shutdown, they released a statement explaining that their actions do in fact lead to increased sales with legal online retailers. Because the RIAA largely represents the people who profit most directly from the sale or CDs and MP3s (i.e record labels) it should come as no surprise that they’d prefer to get rid of file-hosting services altogether.

Mixtapes And The Record Industry's Legal Grey Area

Focusing purely on sales, however, misses the point that there is still an important promotional benefit to be found in cyber-lockers. Though it appears that music makes up the largest percentage of copyrighted content, a large portion of that material was intentionally put there by record labels, artists and PR agents who had the right to do so. Clayton Blaha, a Chicago-based publicist for the prominent digital PR firm Biz 3, recalls how Megaupload’s shuttering interrupted the promo cycle for a recent release:

“[Heems of Das Racist] released his [Nehru Jackets] mixtape just before Megaupload was shut down. We serviced the music with a Megaupload link, so tons of people to whom I sent the link couldn't listen the music by the time they tried to obtain it, which was really annoying,” Blaha recounts. “Viral spread of the tape, which was 100% original content save a few obscure samples, could have been hampered by the shutdown.” Besides independent duo Das Racist, Biz 3 has represented major label acts such as Asher Roth, Freddie Gibbs and Death From Above 1979.

Mixtapes are rarely intended to be a direct source of income (and exist in a legal grey-area to begin with) so generally, it’s just easier for artists to distribute them through virtual middlemen rather than spending the money to host and distribute the files through their own servers. The ability to host files for free is also a keystone for music blogs, many of which would see their server costs grow exponentially if they had to host and distribute every song or mixtape they covered.

“If artists aren’t getting paid to create new music—and so few are—then they should at least have the means to make sure it’s heard by anyone and everyone,” adds Blaha, though he also recognizes that “upload sites could be considerably more diligent in taking down pirated content. They know it’s there and they thrive on it.”

The Profits From A “Mega Conspiracy”

Until now, Megaupload’s owners (as well as those of similar sites like Rapidshare or Hulkshare) have mostly survived on claiming ignorance to what users were uploading. Nevertheless, the Justice Department would seem to agree with Blaha, alleging that not only was Megaupload aware of the large amount of copyrighted material on its site, its owners actively conspired to profit from it.

According to the indictment filed with the U.S. District Court of Alexandria, Virginia, Dotcom and his associates “were members of the “Mega Conspiracy,” a worldwide criminal organization whose members engaged in criminal copyright infringement and money laundering on a massive scale with estimated harm to copyright holders well in excess of $500,000,000 and reported income in excess of $175,000,000.”

The document goes on to state that “since at least September 2005, has been used by the defendants and other members and associates of the Mega Conspiracy to willfully reproduce and distribute many millions of infringing copies of copyrighted works, including motion pictures, television programs, musical recordings, electronic books, images, video games, and other computer software.”

“Megaupload is two things,” says Noah Rubin, VP of Music at Decon Records - a label distributed Fontana, a subsidiary of Universal. “On one hand, it’s a technology platform which I fundamentally support, and on the other, it’s a company that, both in policy and public image, went out of their way to treat artists and the creative industry in a divisive way, which diminished the core value of what they had to offer.”

In its own promotional materials, Megaupload claimed to have 1 billion users and represent 4% of all Internet traffic, and while those numbers seem to be an exaggeration, more conservative estimates still put the site at around 800 million users, some of which were being paid for uploading popular content whether they owned the copyright on the content or not. Analysts point out that there’s no telling how much of the site’s traffic actually involved pirated materials, but at least from an anecdotal standpoint, it’s commonly known that Megaupload was one of the top places to search for illegal files.

While it’s clear what motivates Megaupload and equally clear why the RIAA wants to stop them, it’s the artists themselves who seem unable to decide what the value of their music is, sending a mixed message to fans about whether or not “stealing” that music is wrong. Confusing the matter further, artists like Kanye West, Diddy and appeared in a recent ”music video” endorsing the site.

Universal Music Group (who is the parent company to labels which all three artists are signed to) managed to have the video briefly removed from YouTube on the grounds that Megaupload didn’t have authorization to use their artists’ images, but Megaupload claims to have signed consent forms from everyone involved. They filed a retaliatory suit against UMG but dropped it soon after, so the details of who was or wasn’t paid probably won’t come to light until the federal trial, if at all. Whatever their original purposes, the clips do still show those artists speaking favorably about Megaupload, so it’s probably fair to assume that they see at least some value in it.

Steps Toward A Real Solution

OnSmash founder Kevin Hofman pulled from his years working at major record labels in addition to suffering from take-downs in 2010 spoke about the grey area to the labels. “As copyright holders, they have the right to select partners for their content just like any other business,” stated Hoffa. “The real problem lies when one department solicits content to a third party while another department targets that same entity for supporting it. Since copyright laws have not caught up to technology we are left with grey area polarized by an individual or entity's best interest.”

Ultimately, until the presumed victims of piracy find a way to get “on message” in regard to their opinions and then provide real solutions, there’s little hope of stopping it. Artists need to stop telling fans that they “just want people to hear the music” if it isn’t really true. And if it is true, they need to be more active in discouraging the labels from closing those distribution channels. Meanwhile, labels need to work more actively to create and support good, useful alternatives to Megaupload rather than waiting for the public to latch onto cumbersome, inconvenient subscription services that bind paying customers into restrictive licensing agreements.

Yes, there are both advantages and disadvantages to Megaupload’s existence, but until The Industry decides collectively whether or not to support it and then sticks to their guns, the fans will make the decision for them. The RIAA may succeed in closing Megauload, but there are similar sites already in existence and more likely to come—not only is it time to acknowledge that this problem won’t be solved by lawyers and threats, it’s also time to reassess what “the problem” even is. If not, the rest of us will be perfectly happy continuing to benefit from the confusion.
Alex Thornton has been a contributor to HipHopDX, since 2007. A former Associate Editor at, he can now commonly be found at MSN Groove or arguing with teenagers on the train in New York City.


  • Anonymous

    I hope mediafire survives. All the hip hop lovers, please check my vid in green screen :

  • mike

    i wonder how long till datpiff gets shut down....

    • rn506

      Won't happen.. they work with labels, not against them...only thing I see that is a problem is them being very slow to remove folks who upload new albums to the site..

  • yours truly

    the fat fuck in the pic who's profiting is in the wrong yes.. but everyone here is missing the real point, all these fuckin record companys, who got plenty of fuckin money as it is, are being greedy lil bitches and want more.. they make millions , while we (the people who illegally download cos we cant afford to afford it) get in shit over it.. its a mess but just ask urself, these guys make enough money anyway, why all this?

  • yess

    Great article. I am actually happy about this, bring CDs and vinyl back to the epicenter.

  • Sensei

    P2P file sharing or sites like Mediafire and Megaupload aren't going anywhere. This happened before when the feds shut down Napster. They want to create an example out of the bigger sharing companies so that the smaller ones follow suit and shut themselves down in fear or being sued. I feel that this is a scare tactic, but fans will always find a way to get their music free. I mean, you would have to get rid of Audacity and other sound recording programs to prevent illegal holdings of music. Just my opinion though.

    • Sensei

      I definitely hear you, and I'm in no way saying that this guy should profit off of any artists music if he had nothing to do with the creation of the product. I'm just pointing out that in my opinion, sites like the one mentioned above will always be around for users to illegally download and share music.

    • Anonymous

      If its free for all thats one thing, but a fat fuck like this shouldnt be allowed to make tens of millions of dollars by supporting theft Its like the drug war, Drugs will always find there way into life but that doesnt mean people should just sit there and let Pablo Escobar get rich off of it and do nothing If the artist and the companies arent gonna get paid for there work why should a fat sloppy fuck like this profit from there work???.....

  • Anonymous

    I laugh at the way people try and justify stealing copyrighted material and really convince themselves they've done nothing wrong, people can justify anything if they want to, I could walk outside and kill someone and then give youy a list of 20 reasons why it was the right thing to do if I really wanted to This Fat Fuck in the picture made money hand money hand over fist by allowing people to use his program to upload and distribute cvopyrighted material. He could have very easliy put in a filter, if Youtube can filter out nudity this dude could have designed summin to eliminate copyrighted movies and records, but his traffic would have died off and he'd of lost money that way, so he didnt I hope they send him to a real prison for a few years and he could be locked up with real criminals who rob people to there face "Hey Pillsbury, I robbed a liquor store at gunpoint and beat the fuck out the clerk, what you in for??" - Cellmate "I created a website that allows people to steal music" - Doughboy "Bend Over Crakka" - Cellmate

    • Lol

      Actually, youtube can't filter out nudity. It still slips by, unfortunately. Youtube relies on its users to flag videos, for the main part. Also, people don't go to youtube to watch pornography, so that argument is invalid. People GO to megaupload and other sites TO download things they want, just like you'd go to a porn site to view pornography. People illegally download music because they don't feel they should pay 15 bucks for maybe 3 good songs. If artists were allowed to make the music they wanted, not what these companies are forcing them to make, maybe it'd be a different story. These companies are upset that they aren't making as much money as they should, while they still line their pockets with millions. Also, it's not necessarily theft, it's merely a copy of an original, or even a copy of a copy. If the companies are really that upset about this, they shouldn't be going after everyday people like they do sometimes, they need to find out the people who are leaking the material early. And after the release date, people will find a way to get a copy of something free anyway. Whether it's going to your friends house to get a burned CD or downloading it yourself. Besides, I'm sure you've cheated on your pre-algebra exams, that's "theft" in these companies' eyes, when it's just a copy.

    • Anonymous

      Make good music and it will sell. Music is just plain horrible nowadays. Who the fuck would spend $15 on an album in 2012?? A dumbass. That's who. Niggaz plain lazy. One good hit to sell the album and they're work is done.

  • black melancholy

    even mediafire got shook. everytime i want to download something the file isn't there. looks like they deleted every upload on there so they wouldn't catch a case.

  • firealarm

    Although I support artists I like, downloading their stuff is how I discover them and decide to pay for any material, not to mention I'm then more likely to go to the artist's concert which is where they're making their money anyway. Not to mention the pure word of mouth that gets spread now through social media sites.

  • The B

    Fuck it don't buy or download shit anymore and just listen to the shit that you already have. Anything that came out after 2000 is garbage anyway

  • Anonymous

    Congress Wants To Make Streaming A Felony: The big business lobbyists who are behind the Internet Blacklist Bill are already making the sequel. The Ten Strikes bill would make it a felony to stream copyrighted content like music in the background of a Youtube video, movies and TV shows more than ten times. demand progress org

  • Anonymous

    and that idea came out wrong i meant to say his old mixtapes were better

  • Anonymous

    And that idea came out wrong, i meant to say his old mixtapes were better than C4

  • Anonymous


  • NONO

    people will pay for music...Itunes was their proven example of that. All of the kids kicking and screaming will eventually grow up and join the business world. Your "mom and dad" don't work for free, When you have to pay for your own, you will learn the the art of "compensation". If it wasn't put out for free, then you already know that you have violated, no questions about it.

    • Think about It

      If you believe that artists getting their check (before sales) from a label is the same as the payroll methods of a working adult then you truly are stupid and cant be helped.

  • NONO

    They get drug dealers on conspiracy charges every year, so this ain't hard to perceive.They will push em' all on conspiracy. We've gotten so used to stealing, that we started making our own rules.The government is smart. They knew that people would become dependent on the internet. They got us addicted so that they could regulate us through all of these social sites.We are too addicted to the internet to oppose anything the government does. Eventually we will comply. They are just reminding us. Saw it coming years ago.

  • Drandom313

    The reason that sites like Megaupload & Napster were needed is because radio for years has not done what it was supposed to do: break new artists. Corporations own radio stations & give 'radio personalites' 20 song playlists without any indie artists on them. So for new artists like the Odd Future crew or Kendrick Lamar to get heard, this was a great source. I personally don't steal albums but $15 in this economy is a pricy investment to make on something that might not be good. If the radio would do album highlights & play more indie artists it may balance out the stealing because at least you would know what you're paying for. But, that will never happen because radio people are just as greedy as the record companies.



    • NONO

      So if people felt this way about everything, the same way you feel about rap, it would be cool for everyone to steal what they want?...and your excuse would be I'm going to do it anyways...that makes sense...NOT

  • Anonymous

    They should simply acquiesce. We're going to download everything from music to games to movies, so that is that. Accept it and move on because if they try to establish a tiered system of internet browsing or a pay for click regime it will be the end of the internet.

  • Marx

    How about a locker that allows you to upload your music but takes out monthly fees for the illegal downloads that you have. Like if Google Music was to shut down your account if you didn't pay but could have you pay a monthly rate & distribute it to the record companies. Slow money is better than no money & law suits will take forever.

  • Raiden

    Bandcamp is really good these days. Alot of people should be taking advantage of that. But I'll have to agree with T-Dubb, when alot of musicians are releasing garbage for inflated prices people take the download route. Its really up to more artists to use sites like bandcamp that allow listeners to preview music before buying.

  • Zilla Rocca

    How come there's no mention of Soundcloud or Bandcamp as viable options?

  • T-Dubb AKA Royal T

    Same shit happened with Napster, & Limewire, & now this site. If popular artists weren't constantly releasing horseshit albums these days, I would have no problem supporting them. but $15 for a CD in the recession? Fuck 'em. put more effort into your shit & release a classic, then I'll purchase it. If you're half-assing your "art," you deserve to get jacked for it.

    • J

      I ain't talking about rules, I'm talking about right and wrong. And it just ain't right to steal other people's stuff. CEOs and record labels been been stealing the creative profits of hip hop for long enough without the fans doin it too. And if the music isn't any good in the first place, then I don't know why you'd wanna jack it anyway.

    • GoReadABook

      Haha shut the fuck up you doucher. You're more concerned about following rules than forcing artists to quit making bullshit albums, which means you really don't belong in hiphop, which means you should leave this site. Go call the cops on someone dickhead, dude is right. I buy albums that are dope, download em if they're wack. Straight up

    • J

      No one deserves to be robbed, but if you take something that you didn't pay for then you deserve to be fined or punished for stealing (which is still illegal). If an artist releases a "horseshit album" then don't listen. But stealing shit is wack, and I think they need to start enforcing legal penalties (fines, community service, etc.) on people who jack artists' albums.