by Ellen Seidler | Ad Sponsored Piracy, Copyright, Film, Piracy
Facebook doesn’t give a damn whose ad goes where, so long as it means more cash in its pocket
If ever you needed more evidence to show just how irresponsible problem online advertising has become–or how totally tone deaf and blind Silicon Valley is-look no further than Facebook. Yet again, a Silicon Valley king is caught red-handed–yet again–profiting from online movie piracy.
Take a look below at the Facebook page for a notorious pirate site, Solarmovie. Not only does Solarmovie–with its 15,000+ likes–get to openly share hundreds of links to pirated movies, but Facebook–in an absurdly ironic twist–plops a paid advertisement promoting the MPAA website The Credits right alongside.
The Credits was a website designed to “to highlight the creative work that goes into making film and television,” but I can’t imagine that promotional (or educational) partnerships with online pirates was part of the plan. I understand that keywords are part of product placement, but this situation takes the cake for absurdity.
Of course in an ideal world the would-be pirates would notice the MPAA ad, visit The Credits website, and be transformed by reading the stories of all those who work behind-the-scenes to create the movies we love….but we don’t live an ideal world and the people visiting this FB page are there for one purpose, to find links to stolen movies. How exactly will the advertising “team” at Facebook explain why Hollywood’s ad dollars seem to be supporting the very pirates laying waste to its worker bees?
Of course Facebook, like its Silicon Valley brethren, cares little for the livelihoods of those working outside its realm and so continue to blithely pile up profits, redefining theft as innovation.
Facebook page promoting pirate website provides direct links to full copies of pirated movies
The other unfortunate fact is that there’s no way for me to report this page and get it removed from Facebook for its blatant illegal activity. Sure, I can report the link it posted to an illegal stream of my own movie, but ultimately doesn’t give a damn about me, or any other creator just so long as that cash keeps on a coming…
by Ellen Seidler | Ad Sponsored Piracy, Copyright, Film, Google, Law, Piracy
When searching for this film’s official website Google search instead lists a notorious pirate site at #1. It links to a full, illegal stream of the movie.
Google’s promise to fight piracy on its search engine is pure baloney
Click the #1 result and immediately you’ll find a full stream of our film
I was updating my film’s website earlier this week and so randomly went to Google to see where it would show up in search results. I figured that, given it’s the official website for the film, it would be at or near the top of the results. Boy was I wrong…When I used in the search terms And Then Came Lola website the first result was a pirate site offering pirated streams of the film with a single click. In fact, the actual website for our film was nowhere to be found. Instead the first page of results included several sites that featured pirated streams of our film.
Yeah Google, you’re surely doing everything you can to fight online piracy aren’t you?
Google’s convoluted web takedown DMCA form requires 8 steps
Google moves pirate links to a safe haven on the Chilling Effects database
I guess it’s time to visit that handy dandy DMCA online takedown form that Google–so graciously–makes creators whose work is stolen use. Of course, in order to get to the DMCA page, one must click through 7 pages of crap, then login to Google, before–at last– filling out a tedious online form, It would, of course, be much more efficient to send an email (since I already have DMCA template set up) but let’s face it, Google has NO desire (nor incentive) to make the process an easy one.
In the meantime, maybe the good folks at Google responsible for fine-tuning search algorithms to downgrade pirate sites in search results need to go back to the drawing board. Remember this B.S?
We aim to provide a great experience for our users and have developed over 200 signals to ensure our search algorithms deliver the best possible results. Starting next week, we will begin taking into account a new signal in our rankings: the number of valid copyright removal notices we receive for any given site. Sites with high numbers of removal notices may appear lower in our results. This ranking change should help users find legitimate, quality sources of content more easily
At the bottom of the first pages of search results Google offers users these suggestions for finding (pirated) copies of the film online
Google search results not only put a pirate result in first place, but at the bottom of the page offer these handy suggested search phrases that also offer ways find illegal streams or downloads of my film.
BTW the pirate site solarmovie (and its ever-changing cornucopia of domain suffixes) that pops up #1 IS a notorious pirate host, impervious to any direct DMCA requests. It’s been reported thousands of times to Google….Why does it still end up as a #1 result??? If this is punishing pirate sites one can only wonder what praising them would look like?
Google forces me to acknowledge that they will send my DMCA to Chilling Effects so that the pirate link will live in despite my efforts
Google’s search DMCA takedown process is a joke
Of course, even after I go to ALL the trouble of requesting that Google remove the links it won’t disappear. In a nifty sleight of hand the Google team will simply move it to Chilling Effects so that users can still easily find the pirated stream(s) online. This entire DMCA takedown scheme is a fraud makes a mockery of the DMCA and destroys creators’ ability to protect their work from online theft. Recently the USPTO organized a working group comprised creators and service providers to address inefficiencies in the DMCA takedown process. This past Tuesday the group released its findings in a document, “DMCA Notice-and-Takedown Processes”. While it could be considered progress that the various parties are talking, there’s still plenty of evidence that the DMCA is badly the broken and due for a major overhaul.
Here’s a sneak peek of Part II of this (never-ending) story illustrating how Google’s search suggestions, mentioned above, also point directly to stolen (pirated) copies of my movie.
by Ellen Seidler | Copyright, Google, Piracy, Tech
While Torrent Freak laments the fact that Google has already processed more than 100 million DMCA takedown notices this year, don’t shed any tears for the company. The massive number of takedowns is simply a sign that the internet giant’s nefarious business model (dependent on content theft) continues to chug merrily along. Per Torrent Freak:
A few days ago Google received its 100 millionth takedown request of 2015. The counter is currently at 103,218,572, which means yet another record. Last year it took a month longer to reach the same milestone.
If the numbers go up at the same rate throughout the year, Google will process half a billion allegedly infringing links during 2015.
In looking at these figures it’s important to remember that the vast majority of these takedowns are automated so it’s not as if thousands of Google worker bees are laboriously checking and removing infringing content from Google hosted sites. Operating takedown services (via online DMCA templates, content ID, and “trusted submitter” programs) is simply the cost of running a business that routinely allows (and encourages) users to upload and monetize infringing movies and music.
One should also remember that Google doesn’t really remove pirate links from its search engine, it just re-links to its partner, the Chilling Effects database so that users can still easily find the pirated movies, music, books, etc.
YouTube turns to licensing content to bolster its business model against increasing competition
Takedowns aside, it’s worth noting that Google’s YouTube nefarious business model is showing signs of decay. The Wall Street Journal recently reported that YouTube failed (again) to actually make a profit for Google despite revenues that grew by more than a billion dollars from 2103 to 2014 (3 billion to 4).
Google/YouTube is under increasing threat from other social media companies that promise content creators more favorable revenue deals for licensed content. According to a recent piece in the Wall Street Journal by by Shalini Ramachandran and Mike Shields:
Technology companies including Facebook Inc., Snapchat and streaming-startup Vessel are promising large TV-channel owners better terms for their video programming than Google Inc.’s YouTube, hoping to capitalize on mounting frustration with the Web giant in the entertainment industry.
The challengers to YouTube have been in talks with programming suppliers such asViacom Inc.,Time Warner Inc.,Comcast Corp.’s NBCUniversal and 21st Century Fox.They are all promising more generous revenue-sharing deals than YouTube, which lets content creators keep 55% of ad revenue, people familiar with the discussions say.
It’s a sweet irony that in order for Google/YouTube to remain at the top of its game its innovators have to turn to the very thing the company has spent the past ten years ignoring–licensing creative content. According to Variety, feeling the heat from competitors, Google has been forced to pony up to produce original programs in order to compete:
YouTube, too, is plowing bucks back into its most popular talent — a bid to keep its top creators from jumping to Vessel, Vimeo or others. With the YouTube Originals initiative, the Google subsidiary is paying its biggest stars to produce family and comedy programming, whether scripted or unscripted. That content is slated to debut in exclusive windows by the end of 2015.
Note the emphasis on “exclusive.” Of course, in order for (licensed) content to remain exclusive the sharing of unauthorized copies, i.e. piracy, will have to be squelched, otherwise the content quickly becomes non-exclusive, right?
How many DMCA notices Google will be sending to others when its own “original” content gets pirated?
One has to wonder how many new employees will Google have to hire to protect its “exclusive” content from online thieves? Will the anti-copyright apologists at Google ever eat crow and acknowledge that protecting creators’ work from online theft is important to sustaining one’s bottom line? If Google wants to succeed as a producer of content it’s likely that it will be sending a few DMCA notices of its own.
Meanwhile the DMCA safe harbor provision is out of date and due for a major overhaul
No matter how Google/YouTube’s business evolves moving forward, news of 100 million takedowns should serve as a (further) wakeup call for lawmakers to revisit the worn out “safe harbor” provision of the DMCA. Safe harbor was intended to protect online innovation, but instead has become a legal loophole routinely exploited by companies like Google to game the system at the expense of creators.
As I noted in my blog post, “Everyone Hates the DMCA,” safe harbor’s sell-by date is long past:
…this oft-abused language has served to shelter digital thieves at the expense of rights holders. “Safe Harbor” has enabled the growth of a criminal cancer and it’s a cancer–that as of now–cannot be beaten, only kept (marginally) at bay.
Where else, aside from the internet, is it OK to build a business around theft? If anything Google’s 100 million takedowns is a stark sign that its failed to effectively safeguard the rights of content creators.
While most creators have better things to do (like making more music or films), unless they act, Google and its partners in crime are free to monetize the stolen content. Basically it’s fill up the piggy bank until someone complains.
So, don’t feel sorry for Google’s 100 million takedowns–feel sorry for all those who continue to be ripped off by its innovative business model. As Google begins to view its business from the other side of the creative fence perhaps it will develop some innovations to better protect rightsholders. That would be a true, and welcome, innovation.
by Ellen Seidler | Ad Sponsored Piracy, Copyright, Google, Piracy, Tech
YouTube, its users, and shady certified “aggregators,” partner together to make money off pirated TV shows, movies & music
YouTube’s life-blood is advertising and by now it’s become pretty clear that Google doesn’t give a hoot about what videos it slaps ads onto. After all, why should vetting content BEFORE putting advertising on it get in the way of company profits right?
I wrote about Google’s tainted income scheme last December (Piracy for profit-YouTube’s dirty secret), but it’s a tale is worth revisiting at a time when Google faces more anti-trust allegations in Europe and embarrassing revelations that rather than take action, U.S. authorities at the FTC prefer to bury investigations that shine a light on Google’s sleazy, anti-competitive business practices.
Of course Google continues to publicly deflect criticism of its business practices by repeating the tired mantra that anything goes in the name of innovation. Susan Wojcicki, YouTube’s CEO penned a panegyric for Google’s thinkwithGoogle newsletter, The Eight Pillars of Innovation, in which she waxed on about Google “striving for continual innovation, but not perfection.” She also makes this observation about Google’s mission:
Google’s mission is to ‘organize the world’s information and make it universally accessible and useful.’ We use this simple statement to guide all of our decisions.
Sounds nice, but a more honest (and accurate) observation about what really guides (all) their decisions would read:
Google’s mission is to ‘organize the world’s information and make it universally accessible and useful and profitable for us.
Sure, Google is great at making stuff more universally accessible and useful, but its success comes with a heavy price tag….and Google isn’t the one paying. All these platitudes about innovation–and serving the common good–provide cover for what drives Google–the almighty dollar. The ongoing search for innovative income has given rise to a company all that too often operates in a shady, often illegal sphere, dancing delicately along the edge to create a dubious morality built amid prevarication and platitudes.
In Google’s world, tainted profits acquired through illegal acts are OK as long as one doesn’t get caught red handed. It’s all just innovation right?
A glaring example Google’s innovative profiteering was on display when news broke that YouTube slapped beer advertisements on ISIS recruiting videos uploaded onto the site. Outrageous yes–but it’s only one particularly jarring reminder that Google has a corporate habit of placing profits above all else. Remember too, that not only was Google placing ads on ISIS videos, but by doing so was putting money into the pockets of terrorist and its own coffers.
Dive deeper into the cesspool that is YouTube, moving past the beer advertisements on ISIS recruiting videos and you’ll witness an entrenched, well-oiled (and oily) business model that enables Google to rake in millions, perhaps billions, by creating partnerships with cash-seeking YouTube users and shady middlemen who routinely monetize content they don’t own.
- Who are these YouTube “certified” aggregators who are approved to work with Google who pave the way for users who knowingly make money off infringing content?
- Why is it OK for YouTube to earn money off stolen goods?
- Why don’t advertisers know (or care) where their ads are placed?
Let’s take a look at how this works. Let’s say I want to make some money by putting ads on YouTube videos. It doesn’t matter whether I own actually own them….what’s required is a way to get put my uploaded video onto YouTube, put ads on it and get paid based on the number of views it attracts.
How do I do this? I could try to get approved as an individual, but the easier way, if the pirate uploads I’ve checked our are any indication, is to partner with an aggregator. These entities are YouTube approved and give users an easy way to upload infringing content and get paid for it.
Sign up with them, upload a popular (pirated) TV show or movie via your aggregator account and ta-da!– you’re on your way to earning some easy money. Of course the aggregator will take a slice–as will YouTube–but hey, it’s free money right? Zero risk, and some reward–what could be better?
As is typical for YouTube, there don’t seem to be any safeguards to make sure these “certified” partners are on the up and up. After all YouTube isn’t so why would the company ask partners to behave better? As long as these partnerships bring in profits it’s best to look the other way right?
What it means to be YouTube Certified
YouTube Certified exists across several specific subject areas called “certification tracks.”
-
An individual may become YouTube Certified by successfully completing an in-depth training program and passing a final exam to demonstrate expertise.
-
A company may become YouTube Certified if a minimum of 3 employees have attended the training program and passed the exam. Company certification is valid for 12 months from date of issue. See below for a list of current YouTube Certified companies.
Note: YouTube does not make any promises or representations about the performance or quality of any YouTube Certified individual or company. YouTube does not guarantee you will get any specific results from working with YouTube Certified individuals or companies. It is always important to evaluate the companies you may work with and decide for yourself what makes the most sense for your business.
Hmmm, I wonder if that special “in-depth” YouTube training includes any mention of copyright law and/or ethical business practices? Doubt it… Ironic too that YouTube doesn’t do a better job “evaluating” these companies once they’ve been certified.
It seems that episodes of the Netflix hit starring Taylor Schilling, Orange is the New Black, is a popular show to upload and monetize. Below are four different episode uploads and FOUR different owners who claim worldwide rights.
Looks like Orange is the New Black has lots of different “owners” making money off episodes uploaded to YouTube.
Unfortunately this example is not the exception on YouTube, it’s the rule.
These YouTube approved aggregators pretend to have standards. Music Nations, a “certified” YouTube partner that has claimed one of Orange is the New Black episodes shown above, has an online application includes this disclaimer: Also please tick this box to confirm that you understand that uploading copyright material will cause your partnership to be cancelled. Of course they don’t vet the actual uploads…it’s only if you get caught. Meanwhile, uploaders get 70% of the revenue received from YouTube while Music Nations gets 30%. Of course in this case Netflix would receive ZERO.
Of course paying lip service to copyright doesn’t mean anything is actually done ahead of time to vet ownership or enforce compliance. In the graphic below is an example where a different Music Nations client, utmun dossa, has also uploaded and monetized multiple OITNB episodes (an ad for Secret adorns this playback, Pampers another). They’ve been online for more than a month. Google/YouTube makes money, Music Nations makes money and the user makes money but the rights holder gets nothing. For Google, this is innovation…
When I used the online customer “chat” at Music Nations to ask whether they required uploaders to prove ownership the agent I was chatting with didn’t know responding, “I don’t know if that is part of the process before a channel gets accepted but there is a team that reviews the application before they get accepted.” Seems like a pretty basic question, but there’s a reason customer support doesn’t have an answer.
Music Nations isn’t the only aggregator I’ve run across that seems to monetize stolen goods. Another “certified” YouTube partner is the Russia-based QuizGroup. I wrote extensively about their enterprise in my earlier blog post. They’ve also acted as the intermediary for monetized pirate uploads of Orange is the New Black, claiming worldwide rights. Note that all these uploaded episodes are altered (via letterbox or smaller frame size) in order to bypass any safeguards Netflix may have in place via Content ID.
If these were legit content claims, why would Netflix use multiple aggregators?
Another question worth asking is why do these aggregators stay on YouTube’s approved partner list?
QuizGroup remains on YouTube’s list of certified aggregators despite monetizing pirated content
One has to imagine, given the relative ease with which I discovered these examples, that both aggregators have had clients reported (repeatedly) for copyright violations. Why are they still allowed to do business YouTube? The answer is simple–because YouTube, and parent company Google, make millions. Go ahead FTC, look the other way and ignore Google’s bad business practices. Perhaps the Europeans will do the work you should be doing.
Part II-YouTube’s dirty money game continued, coming soon…
by Ellen Seidler | Copyright, Film, Law, Piracy, Tech
PayPal has finally ceased doing business with Kim Dotcom’s Mega site and he’s pouting about it. The man who has made millions be monetizing content stolen from others continues to assert that Mega is a legit cloud-based service and that its operations are legal. A statement posted on the site announcing that, “PayPal has ceased processing MEGA customer payments effective immediately…” also makes the claim that the cyberlocker site is being unfairly targeted:
MEGA has demonstrated that it is as compliant with its legal obligations as USA cloud storage services operated by Google, Microsoft, Apple, Dropbox, Box, Spideroak etc, but PayPal has advised that MEGA’s “unique encryption model” presents an insurmountable difficulty. The encryption models claimed by various USA and other entities apparently do not represent any problem to PayPal or the parties behind PayPal.
Nice try but even if you dress a wolf in sheep’s clothing he’s still just a wolf. It’s important to note that Mega rose from the ashes of Megaupload, the granddaddy of cyberlockers where the piracy for profit model was perfected and later copied by dozens of other online entrepreneurial thieves. 
After the feds shut the site down in January of 2012, Dotcom got busy working a better way to circumvent copyright law and a year later launched a more nefarious piracy for profit site named Mega. The site uses encryption technology to protect its users (and site operators) from prying eyes. Dotcom claims Mega is full of folks’ baby pictures and the like, but in reality its business model continues to provide pirates with a profitable, and protected, haven for their transactions.
Until PayPal’s recent departure, officials at Mega even pointed to the relationship with the payment processor as a sign that Mega was “legit.” In response to charges in a study published last September by NetNames and the Digital Citizens Alliance, Mega CEO Graham Gaylard told TorrentFreak:
“We consider the report grossly untrue and highly defamatory of Mega…Mega has been accepted by PayPal because we were able to show that we are a legitimate cloud storage site. Mega has a productive and respected relationship with PayPal, demonstrating the validity of Mega’s business…”
For the past few years payment processors like Visa, Mastercard and PayPal have come under increasing scrutiny for their role in facilitating (and profiting from) pirate-linked transactions. Following publication of the NetNames study, Senator Patrick Leahy, Chairman of the Senate Judiciary Committee at the time, sent letters to the head of both Mastercard and Visa urging that the companies sever ties with piracy operations.
I’ve been reporting on this issue since 2010, and while some progress has been made as processors have severed ties with many of the worst offenders, much work remains. According to the study, PayPal was singled out for its business dealings with Dotcom:
PayPal was offered as payment option on only one site (Mega). This represents a major change in the cyberlocker universe compared to just three years ago. The fact that the vast majority of cyberlocker sites do not attempt to take PayPal through hidden or disguised means demonstrates that the payment method is not even considered as an option for accepting subscription payments.
Dropvideo still depends on PayPal
Apparently PayPal officials finally decided that doing business with Mega was no longer an option. Unfortunately, aside from Mega, PayPal’s involvement with pirate sites persists and extends beyond offering subscribers a way to pay for services.
PayPal remains an important cog in the the flow of money that’s central to the business model Dotcom perfected on Megaupload. It was essentially a pyramid scheme as I explained in this blog post from 2011. Basically, cyberlocker affiliates provide the fuel that drive the piracy machine. Individuals sign who up to be cyberlocker affiliates earn money for uploading (stolen) content based on the number of times a file was downloaded. They can also earn commissions for attracting other to enroll in various cyberlocker account offerings. Affiliate payments continue to be the lifeblood that sustain the cyberlocker eco-system and PayPal continues a popular means for affiliates to receive payment for their role in bringing traffic to sites. According to the NetNames report:
…PayPal is still used by some sites for affiliate or reward scheme payments. Of the thirteen sites that offered an affiliate scheme, eight (61.5 percent) offered PayPal as a way for affiliates to receive their payments (other online payment systems such as WebMoney and Payza were also used but PayPal was the most popular).
This morning I took a quick look at Dropvideo.com, a cyberlocker I’d recently sent DMCA notices to. Sure enough, they use PayPal for their affiliate payments. So while PayPal has distanced itself from Mega, the company still has a long way to go to clean up its dirty piracy profits.
by Ellen Seidler | Copyright, Film, Law, Piracy, Tech
Netflix doesn’t pay for all the content it allows subscribers to stream
VPNs make it easy for Netflix subscribers to watch movies and TV shows that aren’t licensed in their country
source: http://www.nasdaq.com/
Netflix profits grow as its brand spreads around the world–but who’s paying the price?
In January the popular online streaming service claimed its subscriber base had grown to nearly 60 million worldwide. Although nearly 3/4 of those are in the U.S., Netflix has already extended its reach to 50 countries and by 2017 has plans to expand to 200. Just this past week Netflix opened up shop in Cuba.
As Netflix grows, so too should the amount of money filmmakers earn right? Well, no…not really. Enter the VPN, or virtual private network, a simple technology that allows internet users to access geo-blocked websites by providing access via a local IP address. Also known as “tunneling,” a VPN makes it easy to jump virtual fences.
How does it work? Let’s say I want to watch a movie that isn’t available via my Netflix account in the U.S. but it is available on Netflix’s Danish site. With the help of a free browser plugin that takes just seconds to install, I can click a button and surf the web from an IP address in Denmark. When I go to Netflix.com/dk/ and login using my U.S. account, and voilá–I can stream the program (see example above).
Why is this a problem? After all, I have a legit, Netflix account which I pay $8.99 per month for, so why shouldn’t I be able to watch content via Netflix portals around the world? It’s a problem because while I’m happy as consumer to watch a film via Netflix sites worldwide, those who actually paid to produce it are financially left out in the cold. For Netflix it can be viewed as a win, win. Netflix pays for U.S. rights, but forgoes purchasing rights elsewhere knowing full well its subscribers worldwide can still watch. Netflix profits grow at the creators’ expense.
This scenario also hurts smaller distributors of independent film who negotiate with Netflix to license titles for streaming rights in their territories. Why should Netflix worry about spending more money to (legally) acquire rights for from distributors operating in small territories when subscribers can happily watch their films on U.S. Netflix via a VPN?
As Netflix expands offerings to attract subscribers worldwide who pays the price?
How much of an impact might this type of VPN pirate viewing be? GlobalWebIndex, a UK firm, estimates that some 54 million people access Netflix via VPNs each month, 21.6 million of them from China alone. How do subscribers in China get Netflix accounts in the first place? It’s easy using PayPal or other payment method like a virtual credit card. Apparently Netflix doesn’t dig too deep–since it can pocket more cash and grow its brand to reach markets outside its realm. Why should the company crack down on a winning, albeit slimy, way to attract customers?
There was some speculation that Netflix was changing course when it reportedly tweaked its Android app to make accessing content via illegitimate VPNs more difficult, but according to the BBC company officials denied reports that it has changed its approach:
“The claims that we have changed our policy on VPN are false,” said Netflix’s chief product officer Neil Hunt.
…”People who are using a VPN to access our service from outside of the area will find that it still works exactly as it has always done.”
According to Variety, Netflix supposedly employs other methods to thwart subscribers who don’t belong:
Netflix has always tried to block such unauthorized access, via a multistep verification process that encompasses credit card info, mailing addresses and Internet addresses.
“You may view a movie or TV show through the Netflix service primarily within the country in which you have established your account and only in geographic locations where we offer our service and have licensed such movie or TV show,” the company’s terms of use say. “Netflix will use technologies to verify your geographic location.”
Despite company claims to the contrary, this morning, as I sat at computer to write this post I found it only took me seconds to login to Netflix sites in the UK, Denmark, Cuba and Brazil. Instead of blocking me, a pop-up window politely explained since I was “traveling with Netflix” I might notice a different offering of movies, etc. Of course, one could ask shouldn’t I be able to travel with Netflix? Of course that should be OK, but the problem is, using a VPN I can travel with them while seated at my home computer.
In fact, in order to confirm that I had full, unfettered access to geo-blocked content I searched for a TV series unavailable in the U.S. I chose the Danish series Den som dræber (Those Who Kill) I own on dvd. By selecting Denmark via the VPN (see graphic at the top of post) I was able to log into Netflix.dk and easily stream the program. Question is, are the producers of the program being paid by Netflix for viewers, like me, who watch outside of Denmark? I believe the answer is no.
Generally distributors receive a flat fee for programs/films Netflix adds to its catalog. Rights are given for specific territories and, while sometimes rights are worldwide, often they’re restricted. Why not just give Netflix worldwide rights? Well, easier said than done.
Contrary to the rhetoric promoted by piracy apologists, financing TV and films productions is not a simple task. In many cases foreign rights pre-sold as part of financing deals cobbled together to cover the costs of production. Without such agreements many of the films and TV shows we enjoy could never be made. So for now, when it comes time to distribute them, these financing packages are invariably part of the equation. It often means a single entity doesn’t hold all the (territorial) distribution cards, hence the complexity.
However, with VPNs, Netflix doesn’t have to make negotiating territorial rights a priority. By not restricting the use of VPNs and indirectly allow users to watch programming they aren’t paying for, Netflix can continue to grow its subscriber base and pocket more profit. Why pay the producers of Den som dræber for U.S. rights when U.S. viewers, using their VPN, can use their accounts to watch it anyway?
Emails uncovered in the Sony hack show that Netflix do-si-do around the geo-blocking issue is of growing concern to producers and distributors. As noted in a recent piece by Sean Gallagher in Ars Technica:
The latest data leaked from Sony Pictures Entertainment by hackers reveals that Sony executives had accused Netflix of breaching its licensing contract for Sony Pictures Television (SPT) shows by allowing customers in foreign markets to use virtual private networks to stream them, calling it piracy that is “semi-sanctioned by Netflix.”
Sony pressed Netflix for increased “geofiltering” control over its customers to prevent the practice, including restricting payment methods for the service to ways that would allow screening for customers living outside countries where Netflix had contractual rights.
Gallagher quotes a hacked email between Sony Pictures Television’s president, international distribution,Keith LeGoy and the division’s president, Steve Mosko that outlines concerns over Netflix’s tacit acceptance of VPN abuse:
Netflix are [sic] heavily resistant to enforcing stricter financial geofiltering controls, as they claim this would present a too high bar to entry from legitimate subscribers. For example, they want people to be able to use various methods of payment (e.g. PayPal) where it is harder to determine where the subscriber is based. They recognize that this may cause illegal subscribers but they (of course) would rather err that way than create barriers to legitimate subscribers to sign up.
…Netflix of course get to collect sub revenues and inflate their sub count which in turn boosts their stock on Wall St., so they have every motivation to continue, even if it is illegal…
So what to do? Clearly, there’s a problem. In certain situations VPNs can be a good thing, particularly for those who live in places like China where access to web services is routinely restricted by government firewalls. However, when tens of millions of Netflix subscribers are using VPNs to access unlicensed content it’s clear that the company isn’t doing enough to make sure that content creators receive fair compensation.
Netflix isn’t cracking down on VPN use because it’s good for (their) business
When Australian journalists attending the recent Consumer Electronics Show in Las Vegas tried to ask Netflix officials about a VPN crackdown reported by Torrent Freak, they were rebuffed–even though, according to an article on news.com.au, “An estimated 200,000 Australians pay for Netflix subscriptions, and access the service by masking their computer’s location so they appear to reside in America.” The story also notes:
The movie giant is due to launch its service in Australia this March, but many of its popular shows including Orange is the New Black and Better Call Saul, are unlikely to screen on the local service due to licensing agreements, potentially providing little incentive for existing subscribers to switch.
It’s yet another tangible example of how a program’s producers may be left holding the bag. Netflix gets 200,000 paid subscribers from Australia, but it doesn’t have to pay the filmmakers for rights to their films in that territory.
Some make the argument that overall, Netflix is a good online influence and has helped diminish the lure of piracy, because, as this piece in Billboard explains, it offers consumers, “Content, value and ease of use.” While that’s mostly true, it’s really a tangential issue and certainly doesn’t exempt Netflix’s business practices from scrutiny. Nor does the fact that Netflix has opened the door to new creative possibilities–both in terms of production and distribution. Creators are justified in demanding that the content Netflix subscribers stream is actually paid for–otherwise it becomes just another variant of (corporate) piracy.
What next? Well, as moves forward its with global expansion plans, either Netflix needs to spend some of its profit to find a way to begin effective geo-blocking, or–if that’s not possible–find another formula to calculate a fair price for content that factors in total (worldwide) views, VPN or no VPN. It might be a bitter pill for stockholders to swallow, but for now, it’s the only legitimate way forward.
