Last month the Digital Citizens Alliance and NetNames released a new report with the aim of exposing the business models and profitability of “rogue” file-storage sites.
The report titled Behind The Cyberlocker Door: Behind The Cyberlocker Door: A Report How Shadowy Cyberlockers Use Credit Card Companies to Make Millions, is being used as ammunition for copyright holders to pressure credit card companies and advertisers to cut ties with the listed sites.
While some of the sites mentioned are indeed of a dubious nature the report lacks nuance. The “shadowy” label certainly doesn’t apply to all. Mega, for example, was quick to point out that the report is “grossly untrue and highly defamatory.” The company has demanded a public apology.
4shared, the most visited site in the report with over 50 million unique visitors per month, is now making similar claims. According to 4shared’s Mike Wilson the company has put its legal team on the case.
“We decided to take action and demand a public retraction of the information regarding 4shared’s revenues and business model as published in the report. Our legal team is already working on the respective notes to Digital Citizens Alliance and Netnames,” Wilson tells TorrentFreak.
As the largest file-hosting service the report estimates that 4shared grosses $17.6 million per year. However, 4shared argues that many of the assumptions in the report are wrong and based on a distorted view of the company’s business model.
“Revenue volumes in this report are absolutely random. For instance, 4shared’s actual revenue from premium subscription sales is approximately 20 times smaller than is shown in the document,” Wilson says.
4shared explains that its premium users are mostly interested in storing their files safely and securely. In addition, the company notes that it doesn’t have any affiliate programs or other encouragements for uploading or downloading files.
Unlike the report claims, 4shared stresses that it’s not setup as a service that aims to profit from copyright infringement, although it admits that this does take place.
To deal with this unauthorized use the file-hosting service has a DMCA takedown policy in place. In addition, some of the most trusted rightsholder representative have direct access to the site where they can delete files without sending a takedown notice.
This works well and the overall takedown volume is relatively low. Together, the site’s users store a billion files and in an average month 4shared receives takedown notices for 0.05% of these files.
In addition to their takedown procedure 4shared also scans publicly shared music files for copyright-infringing content. This Music ID system, custom-built by the company, scans for pirated music files based on a unique audio watermark and automatically removes them.
Despite these efforts 4shared was included in the “shadowy cyberlocker” report where it’s branded a rogue and criminal operation. Whether the company’s legal team will be able to set the record straight has yet to be seen.
Netnames and Digital Citizens have thus far declined to remove Mega from the report as the company previously demanded. Mega informs TorrentFreak that a defamation lawsuit remains an option and that they are now considering what steps to take next.