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SXSW 2013: Megaupload chief Kim Dotcom vows never to go to prison

March 11, 2013|By Rebecca Keegan
  • Kim Dotcom, the founder of the file-sharing website Megaupload, talked via Skype at a SXSW conference in Austin, Texas.
Kim Dotcom, the founder of the file-sharing website Megaupload, talked… (Brett Phibbs / Associated…)

AUSTIN, Texas -- Kim Dotcom challenged Hollywood as "outdated" and assured a crowd at the South by Southwest Interactive festival on Monday that he would not go to jail for founding the controversial file-sharing service Megaupload.

Dotcom spoke to an audience at the Austin, Texas, conference via Skype from his home in New Zealand, where he is fighting extradition to the U.S. on charges of pirating copyrighted material and money laundering.

"I will never be in a prison in the U.S., I can guarantee you that," he said to rousing applause from the approximately 600, mainly high-tech industry attendees.

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The conversation, occasionally hampered by technical difficulties when Dotcom's audio broke up, was conducted by Wired contributing editor Charles Graeber, who wrote a lengthy profile of Dotcom while the larger-than-life entrepreneur was under house arrest last year.

The FBI launched its case against Dotcom last January, alleging that Megaupload users who share movies, TV shows, music, software and other copyrighted materials have cost copyright holders more than half a billion dollars. Dotcom denied the charges, but Megaupload was shut down. In preparation for an IPO prior to its shutdown, Megaupload had been given a valuation of more than $2 billion and employed 220 people, Dotcom said.

"Hollywood has an outdated business model," Dotcom said. "When the studios release movies in the U.S. and don't make them available anywhere else in the world for three to six months, that is encouraging piracy."

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A recent Carnegie Mellon study said shutting down Megaupload had led to a 6% to 10% increase in digital movie sales in 12 countries. The study was conducted using data from Carnegie Mellon's Initiative for Digital Entertainment Analytics (IDEA), a research center financed through a gift from the Motion Picture Assn. of America.Dotcom dismissed the study, likening it to tobacco companies funding research on smoking effects.

He said that the cooperation between U.S. and New Zealand authorities in his case is a result of the "Hobbit effect" -- a cozy relationship between movie studios who shoot films in New Zealand and the prime minister there.

Dotcom's appearance at SXSW was just one of many moments at the Austin conference and festival that highlighted the increasing tensions between the entertainment and high-tech worlds over copyright issues. "Downloaded," a documentary about the early file-sharing service Napster, and "The Pirate Bay Away From Keyboard," a documentary about the founders of Swedish file sharing service the Pirate Bay, both screened during the film portion of the festival, and multiple panels dealt with the issue.

Despite the looming criminal charges, Dotcom was jovial during the talk, his disembodied head appearing on a black screen above the podium like a giant orb.

"Do you believe you're going to be subject to a drone strike?" one audience member asked.

"You mean like rockets?" Dotcom said, laughing. "No."

Dotcom, 39, born Kim Schmitz in Germany, rose to prominence there in the 1990s as a teenage hacker. At 6 feet, 7 inches and nearly 300 pounds, he has an outsized persona and a taste for luxury. When New Zealand police arrested Dotcom in January, they seized $17 million in assets, including 18 cars, mutiple big-screen TVs and several expensive pieces of art.

"I'm certainly a flamboyant character," Dotcom said. "I enjoy life."

But he said his lifestyle since his arrest hasn't changed a lot. In the intervening months, Dotcom has launched a new company, Mega, a cloud storage service that relies on encryption to protect users from third parties seeking to invade their privacy.

"It's pretty relaxed," Dotcom said of his day-to-day existence. "I play XBox, I watch movies, I go to the cinema. They took all my toys, but I don't really miss them that much."

Dotcom said he still has one car, a station wagon he uses to take his kids to school. He told the audience he would be hosting a marathon on his property Sunday for 1,500 runners — an indication of just how vast his estate is.

The restriction on international travel seemed to be more of a hindrance for Dotcom.

"I miss Germany," he said. "I miss mom."

Dotcom's extradition has been subject to multiple appeals in New Zealand, with his attorneys asserting that the warrants used to seize his property were too broad. The next step in the case is a hearing in April.

Graeber is working on a book about Dotcom, who said he is open to the book turning into a movie.

"If the movie is pirated, I wouldn't cry," Dotcom said.

[For the record, March 11, 11:30 p.m.: An earlier version of this post said the Carnegie Mellon study was financed through a gift from the Motion Picture Assn. of America. The center that conduced the study is financed by the MPAA.]   

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