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Megaupload's office in Hong Kong - Source: Reuters -
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Online file-storage service Megaupload.com was working on a legitimate music download service as recently as December that impressed the chief executive of New Zealand internet society InternetNZ.
United States technology website Techcrunch said the service, Megabox, was designed to let artists sell music direct to consumers online, cutting out record labels, and could even have seen them paid small amounts when they allowed their music to be downloaded for free.
Techcrunch said Megabox was tested with listed partners of 7digital, Gracenote, Rovi, and Amazon - the world's largest online retailer. Amazon would not comment on the nature of any relationship.
InternetNZ chief executive Vikram Kumar said he was impressed by the business model for Megabox, which seemed completely legitimate.
Megaupload.com chief executive Kim Dotcom and three associates face extradition to the United States on copyright, racketeering and money laundering charges after their arrest last week.
Kumar said the case against them would boil down to the level of knowledge they had about illegal file-sharing taking place through Megaupload.com and the actions they took to prevent it. Emails cited in the US indictment appeared ''quite incriminating'' but the case would not be easy, he said.
In denying bail for Dotcom, Judge David McNaughton said he had been operating "in plain sight for some years'' and appeared to have an ''arguable defence'' against copyright charges levelled against him.
"No doubt very considerable resources will be brought to bear both for the prosecution and the defence should the matter proceed to trial,'' he said. Kumar speculated the legal action might be settled before then.
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