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How Megaupload Differs From Dropbox (And Why It Matters)

Megaupload Screengrab

 

NEW YORK (MainStreet) – Federal prosecutors shut down the popular file-sharing website Megaupload on Thursday after having indicted the service earlier in the month for helping to pirate content that cost copyright holders “well in excess of $500 million,” but this decision raises concerns about which other sites may be targeted next.

Megaupload billed itself as being a “leading online storage and file delivery service,” and on the surface the site did have much in common with more reputable storage services like Dropbox, SugarSync and Box.net. Each allowed users to save and share media files in the cloud for little to no cost. Yet, there were several key differences between Megaupload and these other sites which will likely prevent prosecutors from targeting them.

“Though people can use these legitimate services to bypass copyright restrictions, they are not designed to make that easy to do,” says Frank Gillett, a senior analyst at Forrester Research who focuses on infrastructure technologies like cloud computing.

With Megaupload’s affiliate sites like Megavideo and Megaporn, users could search for copyrighted content uploaded to the site by anyone, which allowed these sites to function more like peer-to-peer file-sharing services. On the other hand, traditional cloud storage services like Dropbox do not let users perform a system-wide search on the site for content. Instead, users can only share files with themselves and the handful of friends and co-workers they may connect with on the site.

To be sure, that does leave the virtual door open for friends to share copyrighted songs or videos with one another, but search limitations (not to mention storage space limitations) necessarily prevent this from turning into a widespread online piracy ring. Indeed, at its worst, Dropbox effectively functions as a digital version of friends sharing mix tapes with one another.

What’s more, Gillett argues that the fundamental business strategy for the legitimate storage sites differs significantly from that of Megaupload. He points to a report from the Palo Alto Networks that distinguishes between storage services like Dropbox and Box.net that are used for productivity purposes (sharing Word documents and the like) and those like Megaupload that are used for entertainment purposes, based on the kind of content that appears on the site and amount of bandwidth it takes up.

The fact that Megaupload’s bread and butter was making copyrighted content incredibly easy to access and share, combined with the many explicit wrongdoings outlined in the Justice Department’s 72-page report on the company, make it less of a surprise that the site was ultimately shut down.

“Looking at the website, the warning signs were certainly there. You should always be asking yourself if it seems too good to be true,” Gillett says. “I don’t see it as posing a long-term issue for the other legitimate cloud services.”

Seth Fiegerman is a staff reporter at MainStreet. You can reach him by e-mail at seth.fiegerman@thestreet.com, or follow him on Twitter at @sfiegerman.

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