Editorial: Dotcom case - beware killing golden goose

Bram van der Kolk, Finn Batato, Mathias Ortman and Kim Dotcom at the North Shore District Court. Photo / Greg Bowker

If the police swoop on a Coatesville mansion tells us nothing more, it brings home (literally) the extraordinary wealth being made by some people in strategic positions on the internet. Kim Schmitz, a German who has renamed himself Kim Dotcom, says he and three associates arrested in Auckland have nothing to hide. They should not, therefore, need to resist deportation to the United States to answer charges of conspiracy to commit money laundering, racketeering and copyright infringement.

Mr Dotcom founded a site where large volumes of content - a full movie or book or music recording - could be deposited by others and made available to anyone for a fee. One of those arrested allegedly claimed in an email, "We're not pirates, we're just providing shipping services to pirates."

Be that as it may, their role provided a life of luxury. More than $100 million of assets have been seized worldwide. Mr Dotcom is said to have made $42 million in 2010 alone. He rented the $30 million "Chrisco" estate at Coatesville, having been declined permission to buy it when he moved his family here from Hong Kong last year. He failed a character test for foreign land purchases on account of convictions in Germany for hacking and insider trading.

Nevertheless, he had been granted residence in 2010 and rewarded this country with a $10 million investment in Government bonds, a "large" contribution to the Christchurch earthquake relief fund and a $500,000 fireworks display on the Waitemata that New Year's Eve. Personal indulgences such as his $4 million makeover of the mansion, the $6 million of motor vehicles removed from the property and $10 million spent on a "crazy weekend" party in Europe, suggest money was easily made.

More disturbing than the global breach of copyright alleged in the charges is the belief among many users of such sites that the net is, or should be, a copyright-free zone.

The ability to share and exchange enjoyable material is one of the most attractive and commonly used features of the internet. Just about everyone joins in the free distribution of something everyday. When we click on a link or forward an email, we seldom pause to wonder whether the originator of the material has a property right.

Common sense should tell everyone the originator needs a copyright to be able to sustain the creation of such material but common sense appears to elude some of the internet's enthusiasts. They regard pay-walls as an impediment to virtual democracy and a challenge to their technical agility. Yet the wealth we now witness at Coatesville suggests they are not evading all tolls on their traffic.

It may be argued that sites such as Megaupload provide a service that any originator of material could provide. The issue may be the price they can charge if they face none of the costs of original creation. It seems internet users are happy to send movies, music and other works they possess to a "cyberlocker" for faster transmission to their friends. Once the cyberlocker has the material it can be made universally available for a small fee.

As the home of Hollywood, popular music and indeed, the world's leading software creators, the United States has more "intellectual property" to defend than most places. But countries such as ours should be unequivocal in their support of efforts to police global copyright.

Internet breaches should not be confused with parallel importing, which this country permits. Parallel importing is made possible when suppliers discriminate between countries and charge some a lower rate. The internet is an instant global supply; it cannot discriminate between national markets.

The internet needs to protect intellectual property somehow. Unauthorised distributors of underpriced work can prosper only at the expense, and eventual death, of their golden goose.