Rapidshare Aims To Convert Pirates Into Customers

The file-hosting service Rapidshare is seeking major entertainment industry partners for an online store where links to infringing material will redirect to. The plan is an attempt to bridge the gap between copyright holders and users of the site who distribute infringing material.

rapidshareSimilar to many other companies that operate in the file-sharing business, Rapidshare often finds itself caught between two fires. On the one hand it wants to optimize the user experience, but by doing so they have to respect the rights holders to avoid being continuously dragged to court.

To ease the minds of some major executives in the entertainment industry, Rapidshare’s General Manager Bobby Chang has revealed an ambitious plan through which copyright holder could benefit from the file-hosting service. At the same time, Chang says that his company will target uploaders of copyrighted material – who he refers to as criminals – more aggressively.

Earlier this week we already hinted at Rapidshare’s intention to terminate accounts of copyright infringers. In that article we made the mistake of quoting a fake email that has been circulating for a while, which suggested that Rapidshare had been logging IP-addresses for legal purposes. In reality, the company has only been terminating the accounts of infringing uploaders.

The true reason for us posting the earlier article was founded on information we obtained completely separately and was totally unrelated to the misquoted email.

TorrentFreak recently received documentation showing communication between Rapidshare’s General Manager Bobby Chang and representatives of the entertainment industry which is 100% genuine. In the documentation we have Chang reveals some of Rapidshare’s future plans.

“I would like to use this mail to inform you about some changes of our company’s business strategy. RapidShare’s supervisory board has decided to not just rely on the filehosting business but to extend our company’s efforts to officially distribute licensed content,” begins Chang in his writing to the media executives. Rapidshare’s manager then goes on to explain how the filehosting business is currently undergoing some major changes.

“For quite a few weeks and months we have seen changes in the filehosting business. Several new players are trying heavily and with shady or unfair business practices to get into the market. I am convinced that most of those new players are trying really hard to gain the favor of those users, who rely on cyberlockers to spread and distribute copyright protected content,” he writes, adding that other well-established cyberlockers are trying to compete with the aggressive marketing efforts of these new players.

According to Chang, Rapidshare is determined to take another route. Instead of gaining the favor of copyright infringers (or ‘criminals’ as Rapidshare’s manager calls them), they are going to take a stand against these competitors. In addition, they will step up efforts to go after users that upload copyrighted material.

“RapidShare has decided not to participate in this battle and not to fight for the favor of criminals. Instead we would rather like to agitate against these activities and – if possible – to institute proceedings against those competitors of ours, who are intentionally supporting criminal activities,” Chang writes.

“We are more aggressively than before terminating accounts of users who have been caught uploading copyright protected content,” he explains, while adding that they have also stopped the payout option that was part of the “rewards program.”

This last paragraph is what led us to post the earlier article about account terminations. In follow up conversations over email and on the phone, Rapidshare remained vague about what this would actually entail. We were told that Rapidshare doesn’t have any logs of the files people download, but that uploaders can indeed have their accounts terminated if they are caught.

Referring to infringing users as “criminals” does also explain Bobby Changs statement to the entertainment industry that “Our cooperation with the German-based organization GVU is running for several years.” GVU is the German anti-piracy outfit that includes members such as the MPA and other local content owners. Bobby Chang does not go into detail in explaining how this cooperation has effected
RapidShares relationship to content owners in the past.

Perhaps even more interesting is Rapidshare’s commitment to “institute proceedings” against competitors “who are intentionally supporting criminal activities.” By “criminal activities” Rapidshare means uploading copyrighted material, the same activity that helped their business to flourish. What the basis of these proceedings will be is not clear from Chang’s writing.

In the second part of his letter Chang goes on to plug an interesting business proposal to the media executives. Instead of simply removing pages where copyrighted material can be downloaded, Rapidshare would like to redirect users to an online store where the same content can be bought legally.

“If a user finds out that several attempts to download an illegal copy of a DVD are in vain, and if his several attempts to ‘steal’ this DVD have just brought him to an online-store, he may finally be frustrated and willing to purchase a licensed version of this movie,” writes Chang, while noting that this also works for music, games and other media.

Rapidshare already has a licensing deal for promotional content with Warner Bros. and they would like to extend this to full titles of various studios. “Currently, we are redirecting users to a website [link] on which they can view promotional content only. Even though this website does only offer promotional content, it does already have 250,000 users per day,” Chang writes.

“We are willing to invest substantially into this online store and I would be glad to not just talk about RapidShare as a threat for the entertainment industry, but also about RapidShare as an interesting option to sell your products. My company does have several million users per day. I am sure, that quite a significant proportion of these users may be willing to buy your companies’ movies,” he concludes.

Rapidshare’s plans will probably be received critically by many users, but they might be essential for the site’s survival. A Rapidshare spokesperson told TorrentFreak that copyright holders have been pushing hard for proactive filters that will prevent users from uploading copyrighted material. The shop proposal on the other hand gives the copyright holders an option to convert downloaders into customers, and this might benefit all parties in the long run.

Rapidshare was sent a draft of this article and didn’t question the authenticity of the information we posted. They got back to us with the following comment:

“RapidShare is seeking the partnership of the content industry to generate new models that make piracy obsolete. One of these models is to redirect users to legal content on our own website, which is provided by content owners. This redirect has been in place since beginning of 2010 and well perceived by users so far. We experience that many users seek the content in the first place and are very often not aware – and cannot find out – if any content is pirated or not. That is why they prefer to consume it from a reliable and safe source, instead of risking to be involved in piracy. RapidShare has initiated a dialogue between the content industry and the internet industry to go forward and create new models of cooperation that eliminate the need for piracy, thus the need for pursuing users and thus protect data privacy on the internet. We believe that if users can instantly find what they are looking for at a fair price, piracy will become a problem of the past.”

We also have a German translation of this article.

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