Details on the closure of Megaupload website and arrest of the co-founders and employees in New Zealand is covered by the BBC News website.
For those who have not heard of Megaupload previously, it is a web based filesharing site, where people can upload material and then send the resulting URL to other people. Various search options are often available, either built into a service or ran by a third party. Revenue is generated by offering only slow and limited access to files for free, but faster and multiple file downloads are often allowed for subscribers. The majority of web based filesharing systems did operate take-down arrangements, so where a copyright holder informed them content was on the site without their permission it would be taken down.
It is this revenue stream that should be of biggest interest to the media industry. Not because it is thought that Megaupload may have cost the media industry $500m in lost revenue but that Megaupload generated revenue of some $175m. If a site with user uploaded material can generate that sort of money, the distribution arms of the media industry need to get involved rather than destroy things. The battle against copyright infringement continues because people continue to find methods to get content they are interested in at a price they feel is fair, the fact that Megaupload is generating revenue shows that if the content is available people will pay something.
The media industry has not ignored the internet totally, there are plenty of services which now offer subscription based access to films and music. Alas these are tainted by exclusive deals between studios and an outlet, or content available on the service in the USA, is not available on the same service in other countries. In addition to the range of content on the legal services, the most often cited reasons for people using other unapproved sources, is these often offer better quality recordings and are free of Digital Rights Management (DRM) allowing playback on almost any suitable device.