MasterCard may cut off file sharing sites over piracy

File-sharing sites like Megaupload and RapidShare could find themselves cut off from MasterCard payments due to their users' propensity to use them for file-sharing. Though these sites have many legitimate users, as they provide a convenient way of transferring files too large to be conveniently sent by e-mail, they are also commonly used to distribute music, videos, and games without the permission of the rightsholders.
This piracy link means that the sites in question could fall foul of the proposed—but essentially dead—Combating Online Infringement and Counterfeits Act(COICA). COICA would allow judges to force service providers, including credit card companies, to block payments to websites "dedicated to infringing activities." However, the bill was blocked by Senator Ron Wyden (D-OR), who described it as a "bunker-busting cluster bomb," when what was needed was "a precision-guided missile."
In spite of COICA's failure to pass—in this Congress, at least—the RIAA and MPAA have been pressuring payment providers, advertising networks, and ISPs to do more to fight piracy, and the combination of industry pressure and the possibility of legislation appears to be having some effect. Earlier this month, Googleannounced a range of measures to improve its response to copyright infringement.


It's credit card network MasterCard that the industry groups called out for special praise, however. Insiders told CNET that MasterCard is supportive of COICA's measures, and a statement from Mitch Glazier, the RIAA's senior vice president of "government relations and industry relations," said "MasterCard in particular deserves credit for its proactive approach to addressing rogue Web sites that dupe consumers. They have reached out to us and others in the entertainment community to forge what we think will be a productive and effective partnership."
This is a strong indication that the company is ready and willing to cut sites off if the law should demand it. It also raises the prospect that MasterCard could cut sites off even without a legal requirement to do so. The company recently came under fire from Anonymous over its decision to cease processing payments for WikiLeaks, something it was under no legal obligation to do.


One file-sharing site specifically called out by the RIAA was Megaupload. Megaupload supports payment through a variety of mechanisms, including MasterCard, Visa, and American Express, as well as non-credit-card mechanisms like PayPal. As with many other file-sharing sites, it also hosts some amount of pirated content. However, the site believes that it is fully compliant with copyright safeguards already. It has amechanism by which rightsholders can demand infringing material to be taken down. Bonnie Lam, speaking on behalf of Megaupload to ZeroPaid, pointed out that "In five years of operation we have not been sued by a single content owner."
In any case, it's not clear how much difference the loss of MasterCard would make to Megaupload. As Lam explained, "the vast majority" of Megaupload's revenue is from advertising: the loser from such a move would be MasterCard, losing the revenue it would make from the transactions.