Around half a million people signed up for cloud storage and file sharing site Mega within the first 14 hours of it being live early last week. These numbers make it clear that users are willing to embrace the successor of the controversial Megaupload service, which was taken down by US authorities last year.
It’s not just people looking for cheap cloud storage that are eager to work with Mega, either. A handful of notable European service providers, including DigiWeb, Hosting.co.uk, EuroDNS, and Instra, have started working with Mega in different investment and reseller capacities.
While Mega’s official reseller program is not available yet, the four aforementioned service providers have developed pre-launch agreements with Mega to give their customers first dibs at buying vouchers for the new cloud service. According to Hosting.co.uk’s Frederick Schiwek, it works like this: a customer comes to a resellers’ website, selects and orders a Mega package, pays by credit card, and receives by email a code which he can activate as virtual money on the Mega website. Right now, Mega is not taking payments directly.
So far Schiwek says most of the orders on the Hosting.co.uk website for Mega are coming from businesses, and he suspects they are using it for backup storage. The most popular package on Hosting.co.uk is the 4TB of storage for €299 per year, Schiwek says. Other resellers offer monthly payment packages as well.
“I think the customer knows exactly what they are buying, and putting something in the cloud, with Mega or somebody else, you always have the same risks,” Schiwek says. “If you sign up with a cloud storage service from New York, Berlin, or Russia, or wherever, and tomorrow the company goes out of business, where is your data?”
Schiwek had never worked with Kim Schmitz before, and only knew him from the media, but was approached by his friend Xavier Buck, EuroDNS CEO, and decided to pursue the partnership with Mega.
“I saw it as a little opportunity for us as a very new company in the hosting sector why not partner with one of the biggest platforms on the planet?” Schiwek says. “This is a complete new product, a complete new team, just the same marketing person – Kim Dotcom.”
“What we thought in a very basic way was that reselling Mega would be a very good marketing action, and we reached out for them, and it was very straightforward, maybe because of our strong brand and having this generic keyword,” Schiwek says. “We run WebHostingForum.com and we told them if you accept us as a reseller and maybe the first and exclusive reseller in the UK, we could do a bit of marketing and email our members in our forum. They found it quite interesting, and within two days, everything was settled.”
Not every reseller will have such an easy time getting up and running with Mega. According to Instra VP of business development Dennis Kittrell, the reseller program, which is set to launch in the next week or so, is going “to dramatically change” and will require deposits up front, commitments, and resellers will have go through an approval process.
“We have two types of integrators, the first type is a payment provider. Mega is looking to spread out across many different payment points all over the world because payment processing is a critical piece of the puzzle and redundancy is what this is all about,” Kittrell says. “Having multiple payment points is a way to ensure that sustainability of the business and ensure the sustainability of the cash flow.”
The other integrator is a hosting integrator, who is essentially “anyone with servers who wants to allow mega to cluster into their data center or network.”
Kittrell says that while Mega will not accept hosting integrators from the US for legal reasons, it is happy to accept US-based web hosts as payment integrators.
Instra co-founder and Mega CEO Tony Lentino has known Kim Dotcom for a while on a personal level, and wanted to expand their business partnership even before Megaupload was shutdown. Now the business partnership is finally coming into fruition.
“The Instra and Mega relationship has been a long time in the making, even before Megaupload was shut down and there’s some obvious synergy there with Mega and cloud storage and connecting domain names to cloud storage, as well as upselling complementary products and integrating with other services like hosted email and web hosting,” Kittrell says. “That’s why this partnership has become what it is now, it just makes good business sense and the customer demographics line up.”
After watching web hosts like Carpathia Hosting face monetary and legal challenges after working with Megaupload, some hosting providers may be hesitant to sign-up with Mega, and Kittrell says he understands the concern. Kittrell comes from the hosting industry, and has worked for Go Daddy and APlus.net in the past.
“I’m sure that there’s a lot of risk as far as reputation. It’s something that’s controversial, some people are on each side of the fence, I mean obviously I don’t know what percentage that is and it varies by country and obviously hosts in Europe are not necessarily as concerned as hosts in the US because it is the US government who has initiated the indictment and everything,” Kittrell says. “It’s a bit closer to home for US web hosts, but the risk is real. When you’re dealing with public opinion the risk is always real. It’s really a matter of personal opinion. Most hosting providers know how takedown notices go, how much overhead there is with investigation, how much churn is involved with accusing customers of hosting illegal material, they know the challenges that go along with that.”
“When [hosts] see a company shutdown it’s easy to assume that Kim was wrong because the federal government wouldn’t have done that without real evidence. It’s easy to believe the propaganda but the reality is what happened to Kim could have happened to anybody, any web hosting provider if they were targeted,” he says.
UPDATE Feb. 3, 2013: A previous version of this article said Mega’s reseller program will not accept US hosts, which is untrue. Mega is not accepting US-based hosting integrators, but can accept US-based resellers for collecting payments.
Talk back: If you are a European host or payment processor, are you looking forward to applying to be a Mega integrator? Do you associate Mega with its predecessor Megaupload, or can you separate the two services? Let us know in a comment.