Kim Dotcom is back to stir up more trouble for the music business with Baboom, his new music service that puts an emphasis on high quality audio streaming and which he believes will blow a hole in Google’s ad business, with money from this being “liberated” and used to pay musicians.
Wait? Kim Dotcom looking to pay artists? Is this the same person the biggest names in copyright want extradited to the US in order to stand trail for facilitating mass copyright infringement? He is as complex as he is controversial and a new twist here is that he is using Baboom to put out his own EDM album, making him an artist – sort of like the ones the RIAA and IFPI accuse of ripping off.
Music Ally recently spoke to Kim Dotcom about making music, mass piracy, the role and future of copyright, where Baboom fits in here and if he could ever work with the music business.
When you release Good Times, will you expect people to pay for it? Will you care if they share it on torrent sites?
Hey, I don’t mind at all! I want as many people as possible to listen to my music. I want them to enjoy it. Download it for free. If you really like it and want to pay something for it, that’s up to you. If you can’t afford it, just enjoy it for free. I am really easy when it comes to that.
Your lyric “When you work hard for your money, spend it on a good life” seems designed to annoy the record labels who hate you?
It is not at all addressed to them. As long as your money is sitting in the bank, it really belongs to the bank and they are gambling with your money on the stock market. And if they lose it like they did in the big financial crash, you are at risk to lose your money. So I think it’s good if you invest whatever you have to create these great lifetime experiences that no one can take away from you and are going to generate memories that you are going to have for the rest of your life. Make use of the money you have and spend it on a good time.
In Robbie Williams’ video for ‘Goin’ Crazy’, he wears a Megaupload jacket. What did you think of that?
I was, first of all, really excited when I saw that. Second of all, I think there are a lot of people in the music industry who are tired of the old ways, the old regime, the old system. And who have, frankly, also been abused by the labels. It’s like in the Artifact documentary [about 30 Seconds To Mars's legal fight with EMI].
A lot of A-list artists – and I know a few of them as I have been dealing with artists for quite some time as I was building this website, Megabox, which is now called Baboom – and the story is the same for everyone. They feel that the labels are abusing them. They feel that they don’t have the creative freedom. They feel that the creative accounting is basically stealing their money and they don’t get what they deserve. They are all looking for the answer. They are all looking for the next big new thing that is going to allow all of them to sell direct to their fanbase, be independent and do what labels do themselves.
I think what Robbie Williams is saying with that Megaupload jacket is that digital distribution and the internet are the future – and we have to look at that in a positive way rather than trying to destroy every new innovation that is coming around the corner as that might be the answer to our problems.
Let me give you a really simple example. Hollywood was fighting Sony over the Betamax in the 1980s and said it was going to destroy the movie industry and would ruin their business model as everyone was going to copy movies onto these home recording devices. They lost in the Supreme Court and in the end the videotape became another massive revenue stream for Hollywood. And the same will happen with the internet.
Ultimately, every content creator is going to make more money and is going to be bigger with the help of the internet. The question is what the solution is going to be and what it’s going to look like. I am working on that and a lot of other people are working on that, but I think the answer is just around the corner.
Your house was raided almost exactly two years ago. Tell us about that day
In the morning of the raid, around 4.30am, I was driving back from the recording studio to my house. About two hours later, I was still awake. I was on my work bed and checking some things on my computer. A helicopter landed in my courtyard. There was noisy banging on my door. I followed the security protocol we agreed on [with the security guards in the house].
I pressed the panic button and made my way to the panic room and waited there to see what would happen, I locked the panic room and once they got through the door I heard the screaming of ‘Police! Police!’ Once I heard that, I unlocked the door so they could come in and moved into the far corner of the room as I didn’t want to pop out of the room and cause someone to do something stupid.
I waited for them to come to me. I was taken to the police station, but the scale of the raid is what was so shocking. Two helicopters, 72 heavily armed police including a special unit called the STG [Special Tactics Group], which had only been used for anti-terrorism activities. They really deployed almost a military-style raid on my home and my family. That is quite unusual for a copyright matter.
You have been painted as a Bond villain. Do you play up to that image?
That is absolutely not me. I enjoy a good life. I always enjoyed a good lifestyle. I like nice cars and things. But that is really just the kid inside me that just loves toys. I am nowhere near this description of a super-villain that Hollywood was trying to get everyone to believe. I am really a down to earth guy. I am a family man. I have five kids. I spend a lot of time with my kids and family. It is the most important thing to me.
Of course, 10 years ago, that was a whole different story. I was competing in the Gumball rally. I was all over the place, hosting big parties on yachts in Monaco at the Grand Prix. That was my life before, but when we moved to New Zealand, me and my wife [wanted to] build a family and give our kids a safe and green environment, far away from the troubles of the world.
Totally. I was inspired [by that]. The reason why I chose this extravagant lifestyle was really the inspiration from James Bond movies. They have opened my eyes and made me think outside the box in terms of what is actually possible.
You saw these guys that turned super-tankers into yachts or islands into bases or even one of the villains had a space station. Another one had this whole compound under the water. When I was 10 years old and watching this stuff, I thought, “Great! I want that!” But I didn’t want the evil part of it. I was just looking at the toys and what was possible.
It gave me the drive to try and be successful and to be a businessman so as to create wealth. When I started Megaupload, I wasn’t for a minute thinking that this was going to be an issue. I was trying to solve a problem where you couldn’t send large attachments over email – which you still can’t do today. It turned into this massive online success and now they are trying to say I started this with the intention to pirate the planet. That’s just wrong.
The copyright industry holds you up as public enemy number 1. What do you actually think of copyright?
Copyright, of course, has a right to exist. There is no question about it. If you create something and spent time and money to make a song or a movie, of course you should have your rights protected. But the problem we have today is in the world of the internet, you can’t expect people, when it comes to movies for example, to wait three months for something to be released. They release it in the US, all the movie trailers are out there but then it doesn’t come out in New Zealand or Britain for another two or three months.
When I look at the iTunes store with my US account I get to see this great offering. It’s all there, everything, no problem. Then you look at it with a New Zealand account and you only have about 25% of the content available. People are looking for ways to access it and it’s really a problem of the business model in the content industry. Especially in the movie industry. With music, it’s a different story.
It’s a problem the movie industry especially has with not making its content available around the world at the same time and at a fair price, without all this DRM stuff. It should play on all devices. You choose what device you want to watch it on. Why is Hollywood telling me I can’t watch this on this computer because it doesn’t have an encrypted HDMI cable?
So it’s not copyright that’s the problem but windowing?
Yeah. The internet needs to be embraced more by the content industry. The music industry has done a much better job than Hollywood. They are like a couple of years ahead. When you look at the amount of music that you can access online now, that you can stream or access for free, that’s great. Yes, the music industry had a decline for 10 years with the taking off of the internet, but it is turning around now. They are finding new revenue streams and adopting new technologies.
I think the music industry is going to see a path of growth by adopting all these different options. I heard a really cool story the other day about Iron Maiden and how he is now planning his tours. They are looking at the BitTorrent piracy hotspots around the world, where most of his albums are being pirated and downloaded and that is where they go to tour. They are sold out.
People go and buy these tickets and Hollywood is still calling every movie download a loss, but it’s those people who don’t pay for it [music] who go to the concerts and who are fans who tell their friends about it who then go online and buy it. Piracy has its benefits but it also has, of course, its downsides. But it is up to the content industries to make the internet work for them.
That Iron Maiden story was debunked as they never actually used Musicmetric data in that way.
You know how things like that change? When all of a sudden the label bosses are reading this stuff and going, “Are you crazy?” Like the director who said pirating the TV series of Game Of Thrones was really helping their brand. Two days later he gets a slapping from HBO and everybody else. “Are you nuts? Why are you saying this? We are out there fighting this battle and trying to educate everyone about how bad piracy is and you are going against us.”
I think that is what probably happened in this Iron Maiden story.
Hmmm… What about things like Creative Commons trying to retool copyright for the digital age?
I think it’s good. I think there are many different ways to monetise music today. I am working on something I think is really ground breaking with Baboom. I want to provide a monetisation channel that allows people to download stuff for free and they pay for it with their eyeballs.
The way it works is it uses a little programme called the Megakey. You install it on your computer and what it does is that when you surf the internet and browse all these different websites, every now and then we replace some of the ads you would see. For example, on Google or on Yahoo. We will replace them with ads that we control on our ad network and then that money is credited to your account as a user. You can then use that credit to spend it on content.
When Baboom is launched, you will be able to download 10-15 albums a year just because of your normal browsing behaviour; just because you have that tool installed, you will be able to access content for free and legitimately – and the artist still gets paid. That is something I am trying to do. Even thought this whole case has put such a dark cloud over my life and my family, I am still sitting here thinking how I can solve all of this.
We’ve seen this sort of thing before with the likes of SpiralFrog. But it failed…
What everyone else tried in the past is to show you additional ads like pop-ups. That’s just annoying and that’s why it didn’t work. What Megakey is doing is doing it on the fly while you surf the internet on sites where you would see ads anyway.
I am primarily targeting Google-owned sites because Google is probably the largest beneficiary of piracy. When you look for any music album or artist, on the first result page you will find at least one link that leads to pirated material. So they are showing their ads alongside all that stuff and they are not paying anything to the artists. So if I am evil then they are the peak of evil.
If I can take 5-10% of their ad revenue with a solution like Megakey and pay that to the artists, morally I think that’s a great thing.
When is Baboom going live? [the interview was conducted earlier this month]
There will be a really small soft launch on 20th January with my own artist page. It’s really just an introduction to how the page will look and feel. Most of the features will not be active at that point in time but it will give people a good idea of what I am trying to do. Probably six-to-nine months later, we will do the big launch. I am taking my time because for that big launch I am planning to launch with 10 A-list artists that are going to release exclusive music on Baboom.
Have you confirmed the acts?
Can you tell us who they are?
[Laughs] I can’t! Not yet.
So the 20th January launch is primarily to promote your new album?
Yes. The album will be available through Baboom and you can stream it for free. The coolest thing about Baboom is that you can stream music in the FLAC format. What makes no sense at all is that everyone is using MP3s – still. MP3 was created when we were still in the modem age. When you go to YouTube and watch a video, it’s full HD now. Why didn’t they do that to music already?
Baboom is going to be all about the quality of the music. I want people to embrace the FLAC format and stream lossless music. Yes, OK, each stream is probably 70-90MB in size and it will cost more bandwidth, but in the end I want every artist who puts their music up there to be confident that it’s being played in the best possible quality.
I am a perfectionist, so when I go into the studio, I can hear the difference between my 96kHz master and a CD. I can hear that. Baboom is all about making music streamable in the highest possible quality.
You and Daniel Ek have a lot in common. Code geeks. Web entrepreneurs. Then involved in P2P. He went one way. You went another. Had you seen those parallels before?
Not really. There are a lot of great web entrepreneurs out there who are all trying the same thing – to make the best use of the internet to distribute music or any content more efficiently, faster and in a more user-friendly way. Spotify has done a great job with their model. They became successful.
I think Baboom is trying to go a step further. Baboom is going to be a hybrid between iTunes and Spotify but with this massive benefit of monetising free. No one is doing that yet. That’s like 80% of the market. Anyone who cracks that and figures out how to monetise free downloads is going to do a massive job for the creative industries.
I really see myself as an innovator, not as a pirate. I am trying to solve the problem. I didn’t create the problem. People need to understand that. I am a web developer. I try to create great websites and try to solve the problems for everybody.
Is there a time when you could work with the traditional music industry?
Hey, I have tried! I tried before the raid happened. I reached out to Hollywood and Universal Music. I was having talks with a lot of people to try and find new licensing models for content and working together with them. It is such a pity that they have been so emotional about Megaupload and myself because it didn’t allow them to see the bigger picture and try and work with me.
They just totally went on a witch hunt and didn’t tap into the capacity that I have where I think I could have actually helped them quite a bit. I tried and they just blocked me off. The door was shut and I just couldn’t do anything.
There are some parallels here with the old Napster and its attempt to go legit…
The problem with Napster was that it was a site designed for piracy. The founder of that site [Sean Parker] is a multi-billionaire today. Meagupload was not designed to be a piracy site. Megaupload was a general filesharing tool that basically has to be seen as a giant hard drive that is connected to the internet and what you do with it is your responsibility. If we got a takedown notice for content that shouldn’t have been uploaded to Megaupload, we have taken those things down.
We had a good track record in compliance with takedown notices. The difference between Napster and Megaupload is massive. You went to the front page of Napster and you would find every top album on the Billboard charts ready for download. On Megaupload we didn’t even have a search feature. You wouldn’t even find anything pirated. It wasn’t designed like that at all. But here I am facing 88 years in prison and extradition to the US while the Napster founder is a multi-billionaire and enjoying his piracy fame.
It just shows you how far copyright has come in the last 10 years. It’s a scary trend because I believe that it is going to affect how the internet is going to work in the next decade.
Finally, what is happening with your case in the US?
It is really being delayed all the time. The US government is appealing all these decisions that we had in New Zealand where we won. For example, a decision that the US has to provide us with discovery of our own data. The court here ruled that they need to give a copy of the data that they seized at the raid – which they, by the way, shipped illegally to the US without the permission of the New Zealand courts – to the defendants.
They appealed that all the way to the Supreme Courts and we are still waiting for the decision on that. They don’t even want to give us our own material which allows us to defend ourselves because that contains emails and communications where we can show that this was a totally harmless web operation and not a criminal organisation like they make us out to be.