Friday, July 2, 2010

Content Without Borders

Since the early days of the World Wide Web, we have understood that the Web transcends national borders. It is not governed by any country and it is open to anyone, anywhere and in any language. We have believed that even a small company can compete with the big ones on the Internet, using it to reach customers anywhere in the world. The Internet has no borders which is what makes it so appealing and which is perhaps the key reason why the Internet has changed everything.

But not everyone sees it that way. I will not dwell on oppressive governments that filter the content or outright prevent their citizens from accessing certain sites. While I decisively condemn this kind of censorship, it is at least not surprising given the agenda of such dictatorships. What really puzzles me is to see such actions from for-profit companies in the free world – the media companies.

In the history of entertainment, the media companies followed a flawed logic according to which they can reduce piracy and increase profits by preventing content from crossing borders. That's relatively easy with physical goods and with content that is language specific. Books are hard to move between countries because they are relatively heavy physical goods and their transport is a major cost factor. Movies on VHS were available only in one particular language which kept them effectively from crossing borders.

But since the dawn of digital content, the situation became a bit more tricky. First, the media companies failed to prevent CDs from traveling. CDs were relatively cheap to transport and they are not language bound. That got even worse since the invention of the MP3 format that made the audio content easy to transport at no cost. And we all know what happened next. The Big Media won the Napster battle but they have lost the music war. Today, Apple makes money on music and the media companies are relegated to be the low cost suppliers.

But Big Media has sworn a revenge. The next battlefield became movies. The emergence of the digital video disk (DVD) created a disruption that prompted an action. Just like CDs, DVDs are relatively cheap to transport and unlike VHS tapes, they are not bound to a single language. In fact, many DVDs in Europe are published in as many as 10 audio and 20 closed captioning languages to lower production cost. DVDs could easily cross borders and to prevent that, media companies invented something new – DVD Regions which make it impossible for DVDs from one region to be played on DVD players in another region. As a result, Europeans can't buy the relatively cheap DVDs in the US and the pirates in China have much more overhead dealing with multiple zone formats. This technique has been somewhat effective even though you can buy a region free DVD player on the Internet for about the same amount as a regionalized one at the store.

The DVD regions are enforced also on the computer DVD drives, which makes DVD ripping more difficult. But there are tools available on the Web that allow you to circumvent this restriction easily. And of course BitTorrent has rendered this problem obsolete – by avoiding DVDs altogether as you can download movies already ripped. Whether or not this is legal has been a subject of an ongoing debate. As consumers, it is our right to digitize our own DVDs to play them on a computer or a mobile device. It is also unacceptable to prevent us from buying content from foreign countries. Today, we can order German DVDs from and have them shipped to the US. But we cannot order those same movies online on iTunes? That's not right and this artificial border only promotes piracy. All in all, the media companies lost again.

But they have not given up on their revenge. Their next frontier is the streamed content. This is the future of personal entertainment and a new set of players are becoming powerhouses in streaming content such as movies and TV shows: Netflix, Hulu, ABC, etc.. However, this time, the content stops at the border. If you try to access your Netflix subscription from abroad, even from Canada, you get an error message saying that “Due to international rights agreements, we only offer this video to viewers located within the United States and its territories.” Yikes!

This is completely unacceptable. It's basically like disabling your iPod when you cross the border. No matter that you pay for your Netflix subscription – you only get the streamed content while in the US. It is only a question of time before users find a way around this. Already today, you can VPN into a US network from abroad or use a Slingbox which circumvents this restriction. The media companies are doomed to lose again, because they simply don't get it. They are in denial of technology and the changes it causes. They have proven it with every innovation, from early phonograph, to VHS video to Internet music on MP3. Each time, they fought the innovation and each time, they had to accept it and lose a ton of money while someone else makes out in the end. They will lose again, again, and again, until they finally accept that the Internet knows no borders and that content needs to be available everywhere.

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