A day after many large websites spoke up in outrage over the US government’s proposed SOPA and PIPA legislation, the Fed has swooped in and shut down one of the world’s biggest file-sharing websites, Megaupload.

This comes right in the midst of the growing tug-o-war issue over fighting online piracy vs. infringing on the open freedom of the internet. We could be in for a messy ride.

Megaupload is a popular file sharing site, used by millions to send and recieve large files over the internet. Not all of us have their own servers to host a 200mb file to send to someone else, and files of that size (or larger) are still unsendable by most email applications.

This of course opens the site up to unknowingly hosting pirated material, unless Megaupload individually monitored each file that was stored on its servers. This is not only a daunting task (if not impossible, as the files are compressed and private) but is also unethical. The best that these sites can do is respond quickly to copyright infringement complaints by users as pirated material is discovered… which the company claims to have been doing to the best of its ability.

The indictment is accusing Megaupload of costing copyright holders in excess of $500 million in lost revenue, and even crediting it with the loss of 750,000 jobs in the entertainment industry.

Really? 750 THOUSAND jobs? I have yet to see a disclosure of how this number was calculated. In typical US government fashion, it could have very well been an arbitrary number pulled out of its ass to make a case.

My view on the everchanging and evergrowing piracy issue is this: Things change. Kodak couldn’t stop the digital age from killing its film business, and Blockbuster couldn’t stop the digital age from killing its physical video rental business. To survive in the business world, all companies need to adapt to changing times and markets. If they don’t, they drown.

This doesn’t seem to be the mentality of the Entertainment Industry, however, as it becomes more and more clear that they see an option of bullying lawmakers into fighting a war to keep their sinking ship afloat.

Online piracy is a problem, for sure. But at this point, I’m wondering if we need to be thinking about how to restructure the industry so that piracy isn’t much of an issue, rather than spending millions and allocating absurd amounts of resources to fighting a losing battle and taking away individual liberties from the inernet.

What do you think?

-Clay Lancaster (www.claylancaster.com)