After many years and hundreds of thousands of illegitimate users being on their service Netflix has finally arrived in Australia, much to the delight of Australian’s everywhere. In the short time it’s been available Netflix has already managed to account for 15% of all of iiNet’s traffic a sure sign that many people have wanted their service for some time. However, as expected, the content catalogue is a small subset of what’s available overseas leading many to keep their VPNs and over circumventions in order to get access to the same content people overseas get. On the surface that would appear to be a big issue for Netflix, given the pressure they’ve been under in the past to shut down dirty VPN users, however the CEO of Netflix (Reed Hastings) has revealed that they’re a small issue and his focus is squarely on converting long term pirates to legitimate customers.
In the interview (which is well worth a read in its entirety) Hastings says that VPN users are “a small little asterisk compared to piracy”, and further goes on to say that they’re users who are willing to pay for content but can’t for some reason. The solution to that problem he says for Netflix to “get global” and remove the incentive to use a VPN with their service. Essentially this would boil down to making the whole catalogue available to all users of their service, regardless of their location around the world. Whilst this idea is highly commendable, and demonstrates Hasting’s understanding of how media consumption has changed in the digital age, it’s ultimately doomed to failure given the challenge that they’re up against.
Netflix’s main issue with their catalogue isn’t the ability to deliver it, that’s been a solved issue for them ever since they switched from mailing DVDs to streaming services, it’s always been securing the rights deals to distribute content in certain areas. This is why their current catalogue in Australia is so paltry when compared to the one in the USA as Netflix, lacking a presence in Australia for so long, has been usurped by other distribution partners like Fox. Indeed Netflix even sold the rights to distribution for their flagship series House of Cards to Fox (through Sony) for the first two seasons, although that seems to have been time limited to coincide with their Australian launch.
Therein lies the rub; Netflix’s catalogue can only grow as fast as it can secure rights to distribute content in the countries that it has a presence in. In order to make their catalogue truly global they’d have to secure rights for every show in every region, something I’m sure they’re attempting to do but will run up against the rights holder empires that have cemented themselves in an old-world business model. They could, in theory, make global licensing rights a condition of any show being on their service however most popular shows are either backed by big production houses with distribution rights already in place or the fee required to do so would be so high that Netflix would be unlikely to sign up for it.
Netflix does have the advantage of being the biggest single provider of content across the globe, giving them a little clout in negotiating these content deals, however they’re running up against an empire that’s been extremely resistant to change for the better part of 100 years. They’ve definitely been at the forefront of changing how consumers want their media delivered to them however the lumbering giants that give them the content are steadfast in defending their regionally based business models. I’d honestly love to be proved wrong on this (although I’d still hold onto my VPN for other reasons) but I honestly can’t see a global Netflix in our future.
The age of the Internet has broke down the barriers that once existed between Australia and the rest of the world. We’re keenly aware that there are vast numbers of products and services available overseas that we want to take advantage of but either can’t, because they don’t want to bring it to us, or won’t because it’s far too expensive. We’re a resourceful bunch though and whilst companies will try their darnedest to make us pay the dreaded Australia Tax we’ll find a way around it, legitimately or otherwise. Probably the most popular of services like this is Netflix which, even though it’s not available here, attracts some 200,000 subscribers here in Australia. That number could soon rocket skywards as Netflix has finally announced that they’ll be coming to our shores early next year.
Australia will be the 16th country to receive the Netflix service, 7 years after they originally launched in the USA. Whilst there’s been demand for them to come Australia for some time now the critical mass of semi-legitimate users, plus the maturity of the cloud infrastructure they will need to deliver it here (Netflix uses AWS), has finally reached a point where an actual presence is warranted. Details are scant on exactly what they’ll be offering in Australia but looking at the other 14 non-US countries to get Netflix we can get a pretty good idea of what to expect when they finally hit the go live button for the Australian service.
For starters the full catalogue of shows that the USA service has will likely not be available to Netflix Australia subscribers. Whilst original content, like House of Cards or Orange is the New Black, will be available the content deals inked by rights holders with other companies in Australia will unfortunately take precedent over Netflix. This doesn’t mean that this won’t change over time as it’s highly likely that rights holders will look to move onto Netflix as old contracts expire but it might put a damper on the initial uptake rate. Considering that there are numerous services to change your Netflix region to get the full catalogue though I’m sure the restriction won’t have too much of an effect.
The DVD service probably won’t be making it here either, although I don’t think anyone really cares about that anyway.
Probably the biggest issue that Netflix will face coming to Australia is the dismal state of the Internet infrastructure here. Whilst most of us have enough speed to support some level of streaming the numbers of us that can do anything above 720p is a much more limited market. As long time readers will know I have little faith in the MTM NBN to provide the speeds required to support services like Netflix so I don’t think this is a problem that will be going away any time soon. Well, unless everyone realises their mistake at the next election.
Overall this is good news for Australia as it has the potential to break the iron grip that many of the pay TV providers have on the content that Australians want. It might not be the service that many are lusting after for but over time I can see Netflix becoming the dominant content platform in Australia. Hopefully other content providers will follow suit not long after this and Australia will finally get all the services it’s been lusting after for far too long. Maybe then people will realise the benefits of a properly implemented FTTP NBN and I’ll finally be able to stop ranting about it.
Coding a location based service introduced me to a lot of interesting concepts. The biggest of which was geocoding, an imprecise science of transcribing a user’s IP address into a real world location. I say imprecise because there’s really no good way of doing it and most of the geocoding and reverse-geocoding services out there rely on long lists that match an IP to its location. These lists aren’t entirely accurate so the location you get back from them is usually only good as an initial estimate and you’re better off using something like the HTML5 location framework or just simply asking the user where the hell they are in the world. Unfortunately those inaccurate lists drive a whole lot of current services, most of them with the intent of limiting said service to a certain geographical location.
I’ve written about this practice before and how it’s something of a hangover from the times of DVDs and region locking. From a technology standpoint it makes little sense to block access to certain countries (whether they block you is another matter) as all you’re doing is limiting your market. From a business and legal standpoint the waters are a little murkier as most of the geo-restricted services, the ones of note anyway, are done simply because it’s either not in their business interests to do so (although I believe that’s short sighted) or there’s a lot of legal wrangling to be done in order for it to be made available globally.
A clucky New Zealand ISP, FYX, was attempting to solve this problem of geoblocking and whilst they have withdrawn the service from the market (but are looking to bring it back) I still want to talk about their approach and why its inherently flawed.
FYX is offering what they call “Global Mode” for their Internet Services which apparently makes their users appear as if they’re not from any particular country at all. Their thinking is that once you’re a global user services that were once blocked because of your region will suddenly be available to you, undoing the damage to the free Internet that those inaccurate translations lists can cause. However the idea that no location = geoblocking services ineffective is severely flawed which would be apparent to anyone who’s even had a passing encounter with these services.
For starters most sites with geoblocking enabled do so by using a whitelist meaning that only people of specific countries will be able to access those services. For things like Hulu and netflix they are hard coded to IPs residing within the USA boundaries and anything that’s not on those lists will automatically get blocked. Of course there’s some in-browser trickery that you can do to get around this (although that’s not at the ISP layer) but the only guaranteed solution is to access them through a connection that appears to originate from an IP they trust. Simply not updating the location on those lists won’t do the trick so you’d need to do something more. It’s entirely possible that they’re doing something more fancy than this but the solution I can think of wouldn’t be very scalable, nor particularly proftiable.
It also seems that they might’ve got the attention of some rights holders groups who put pressure on their parent company to do away with the service. Legally there didn’t seem to be anything wrong with the idea (apart from the fact that it probably wouldn’t work as well as advertised) but that wouldn’t stop media companies from threatening to take them to court if such a service was continued to be offered. It really shows how scared such organisations are of new technology if a small time ISP with a not-so-special service can be a big enough blip on the radar to warrant such action. I’ll be interested to see how FYX progresses with this, especially if they detail some more info on just how they go about enabling their Global Mode.
The reality of the situation is that we’re trending to a much more connected world, one where the traditional barriers to the free flow of information are no longer present. Companies that made their fortunes in the past need to adapt to the present and not attempt to litigate their way to profitability. Eventually that won’t be an option for them (think BlockBuster vs Netflix) and I really can’t wait for the day that geoblocking is just a silly memory of when companies thought that their decades old business models still worked in an ever changing world.
For over 100 years rights holders have resisted any changes to their business models brought about by changes in technology. From a business perspective its hard to blame them, I mean who wouldn’t do everything in their power to ensure you could keep making money, but history has shown that no matter how hard they fight it they will eventually lose out. Realistically the world has moved on and instead of attempting to keep the status quo rights holders should be looking for ways to exploit these new technologies to their advantage, not ignore them or try to legislate them away. Indeed if other industries followed suit you’d have laws preventing you from developing automated transport to save the buggy whip industry.
The copyright system that the USA employs is a great example of where legislation can go too far at the request of an industry failing to embrace change. At its inception the copyrights were much like patents: time limited exclusivity deals that enabled a creator to profit from their endeavours for a set period of time after which they would enter the public domain. This meant that as time went on there would be an ever growing collection of public knowledge that would benefit everyone and not just those who held the patent. However unlike the patent system copyrights in the USA have seen massive reform in the past, enough so that works that would have come into the public domain will probably never do so.
Thankfully, whilst the copyright system might be the product of an arms race between innovators and rights holders, that hasn’t stop innovation in the areas where the two meet. Most of this can be traced back to provisions made in the Digital Millennium Copyright Act (DMCA) that granted safe harbour to any site that relied on user generated content. In essence it put the burden of work on the rights holders themselves, requiring them to notify a site about infringing works. The site was then fully protected from legal action should they comply with the request, even if they restore the offending material after receiving a counter claim from the alleged offender. Many sites rely on this safe harbour in order to continue running on the web because the reverse, them policing copyright themselves, is both technically challenging and resource intensive.
However just like all the technologies and provisions that have been made for the rights holder industry previously those safe harbour provisions, which enabled many of the world’s top websites to flourish, are seen as a threat to their business models. Rights holders associations have said that the DMCA as it stands right now is too lenient and have lobbied for changes that would better support their business. This has come in the form of 2 recent bills that have dropped in both houses: the PROTECT IP Act (PIPA) in the senate and the Stop Online Piracy Act (SOPA) in the house of reps. Both of these bills have attracted heavy criticism from the technology and investment sectors and it’s easy to see why.
At their core the bills are essentially the same. Both of them look to strengthen the powers that rights holders have in pursuing copyright infringers whilst at the same time weakening the safe harbour provisions that were created under the DMCA. Additionally many of the mechanisms described in the bill are at odds with the way that the Internet is designed to work, breaking many of the ideals that were set out in order to ensure ubiquitous access. There’s also many civil liberty issues at stake here and whilst bill supporters have assured everyone that they don’t impact on them in any way the wording of the bill is vague enough to support both interpretations.
The main issue I and many others take with these bills is the shifting of the burden of proof (and thus responsibility) away from the rights holders and onto the web site owners. The changes SOPA advocates mean that web site administrators will be responsible for identifying copyrighted material and then removing it from their website, lest they fall prey to having their domain seized. Whilst this more than likely won’t be the downfall of the sites that made their fame inside the safe harbours of the DMCA it would have a chilling effect on start-ups looking to innovate in an area that would have anything to do with a rights holder group. Indeed it would be the sites that have limited resources that would be hit the hardest as patrolling for copyright infringement isn’t a fully automated process yet and the burden could be enough to drive them under.
It’s also evident that SOPA was put together rather haphazardly when some of the most known copyrights infringement sites, like The Pirate Bay, are actually immune to it. Indeed many sites that rights holders complain about aren’t covered by SOPA (just by the current laws which, from what I can tell, means they’re not going anywhere) and thus the bill will have little impact on their activities.
You might be wondering why I, an Australian who’s only ever been to the USA once, would care about something like SOPA. Disregarding for the moment the principle argument and the fact that I don’t want to see the USA technology sector die (I could justify my point easily with either) the unfortunate reality is that Australia has a rather liberal free trade agreement with the USA. What this means is that not only do we trade with them free of tariffs and duties but we’re also obliged to comply with their laws which affect trade. SOPA is one such bill and should it pass it’s highly likely that we’d be compelled to either implement a similar law ourselves or simply enforce theirs. Don’t think that would happen? A leaked letter from the American ambassador to Spain warned them that not passing a SOPA like bill would see them put on a trade blacklist effectively ending trade between the two countries. This is just another reason as to why everyone, not just Americans, should oppose SOPA in its current form.
The worst part of all of this is the potential for my site, the one I’ve been blogging on for over 3 years, to come under fire. I link to a whole bunch of different places and simply doing so could open me up to domain seizure, even if it wasn’t me putting the link there. I already have limited time to spend on here and the additional task of playing copyright police would surely have an impact on how often I could post and comment. I don’t want to stop writing and I don’t want people to stop commenting but SOPA has the very real potential to make both those activities untenable.
So what can be done about SOPA and its potential chilling effects on our Internet ecosystem? For starters if you’re an American citizen write your representative and tell them to oppose SOPA. If you’re not then the best you can do is help to raise awareness of this issue, as whilst it’s a big issue in the tech circles, even some of the most versed political pundits were unaware of SOPA’s existence until recently. Past that we just have to hope we’ve made enough of an impression on the USA congress critters so that the bill doesn’t pass, at least in its current form. The hard work of many people has made this a very public issue, but only continued pressure will make it so it won’t damage the Internet and the industries it now supports.
EDIT: It appears that the strong opposition has caused the American congress to shelve SOPA indefinitely. Count that as a win for sanity.