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The Internet wants a Netflix Without Borders

Netflix is planning to prevent VPN users from accessing its service. Here’s why that’s such a bad idea.

Last week, Netflix sparked outrage when one of its VPs casually blogged about how the company would be looking into new ways to stop its users from using Virtual Private Networks (VPNs) when accessing Netflix.

It’s worth noting that this isn’t the first time that Netflix has made news after announcing a policy to limit users from altering their IP etc. to access regionally-restricted content. But up until now, Netflix’s enforcement has been rather toothless; to users, this appeared as de facto approval of their behaviour.

For those of you who are unfamiliar with VPNs, here’s your one-sentence primer: they’re a secure, private way to connect to the Internet to help protect your activities from prying eyes. But that’s not the only reason to use a VPN, as we’ll see.

The big controversy around VPNs and Netflix is that the technology masks your IP address, one of the ways that services like Netflix use to tell where users are connecting from.

What this means in practice is that users are able to tell Netflix that they are connecting from a different country than they actually reside in, and in doing so get access to content from outside of their region, a practice that’s colloquially known as ‘content tourism.’ It’s also a practice that content rights-holders and license-holders hate.

What’s the big deal with VPNs?

So why is it that media giants and content rights-holders hate VPNs so much? The short answer is that they allow Netflix customers to bypass the regional restrictions and access the catalogue from whichever country they want, getting around the insane patchwork of territorial licensing agreements that have been negotiated by these organizations to maximize profits.

But there’s also an underlying reason for this fight that’s even more insidious. Traditionally, content providers and rights-holders have been fearful and suspicious of online streaming services, in large part because the Internet has managed to find a way to deliver what people want at a lower price. To boot, broadband Internet is clearly growing into a far more convenient delivery mechanism than legacy models like cable TV or landfill-bound $25 Blu-Ray discs.

Responding to these changes in global media consumption, content providers resort to the only thing they know how to do: pressuring businesses like Netflix with their piles of cash, and trying to force legislators to cripple new technologies through regulation.

A quick example of this (an oldie but a goodie) is from 1982 when then-head of the MPAA Jack Valenti went a little ballistic in describing the threat posed by the VCR, saying, “the VCR is to the American film producer and the American public as the Boston strangler is to the woman home alone.” ...Yowza. And this is far from the only example of this: think, video killed the radio star.

Netflix and the global Internet

Netflix recognizes that this isn’t the conversation we should be having. Understandably, as a business they are beholden to the existing mess of regional content licensing that predates them. Content providers and rights-holders are incentivized to keep selling their wares in this fragmented manner thanks to the current exclusivity deals they have with broadcasters.

But this licensing scheme begs the question: why not just license content globally? Netflix, to its credit, is already aiming for this, as stated by their chief product officer Neil Hunt: “Our ambition is to do global licensing and global originals, so that over maybe the next five, 10, 20 years, it’ll become more and more similar until it’s not different.” All told, encouraging rumblings from Netflix.

What this means for us is that we really need to sway the rights-holders and the content providers who are trying at every opportunity to regionally-restrict content, holding paying customers hostage.

Because what’s the real choice for people who want to watch a TV series or a movie that’s not available in their region? Well, they could try to buy it one-off on iTunes or another streaming service, but the alternative that many turn to in cases like this is simple: they pirate, putting their computer security at risk and delivering zero revenue to the creators they want to support.  

In fact, geo-blocking content has been consistently shown to increase piracy, and supporting data shows that when you make a legitimate streaming alternative available, users flock to it. (Just look at the overall drop in piracy rates when Netflix opened up shop in Australia.) So not only does geo-blocking stop paying customers from accessing the content they want to see, but it also pushes people to illegal alternatives, which means less money for creators and more piracy.

It’s key here to recognize that Netflix is stuck between a rock and a hard place: it wants users to be able to stream and enjoy the content they’re looking for, but it’s stuck negotiating with broadcasting bullies who have shown little interest in updating their outdated business models to suit the digital age.  

But what about our privacy?

Not to be overlooked is the fact that many Internet users seek out and pay for VPNs to protect their privacy online. What does it say about a Web-based company when they’re encouraging users to disable privacy tools, or even outright blocking the use of those tools? The significant subset of people using VPNs to protect their privacy will be faced with a choice: either protect their private data or support creators.

In a recent blog, a Netflix exec admitted that even users who have a VPN running for privacy reasons would not be able to access Netflix, or would be asked to turn off the service before they can continue to watch. What this behaviour indicates is that there is a disconnect on the business side of the equation, and that solutions need to be sought there. More on this from Michael Geist here.

And for those of you who are now saying “but do you really need privacy protections to watch Netflix?” consider the Net Neutrality angle: we know that Internet Service Providers in many countries sometimes throttle certain types of traffic, Netflix included.

One of the benefits of using a VPN is that it encrypts your Internet traffic. Not only does this restrict prying eyes from knowing where you’re coming from and who you are, but it also hides traffic type and content from the ISP.

Why does this matter? Well, under the circumstances we’re discussing, your ISP won’t be able to see that you’re watching Netflix and won’t be able to throttle your connection, making your viewing experience slow and frustrating, like in this article from 2014 where Verizon was caught throttling Netflix. In countries without official Net Neutrality protections, this becomes even more important, especially with Netflix’s recent expansion to over 130 more countries.  

Let’s recap

So, let’s recap. Netflix is promising to crack down on users who are accessing their service through VPNs. This sucks for users, but it also sucks for Netflix, which is ostensibly stuck between a rock (paying customers who want to use their service how they see fit) and a hard place (unrelenting broadcasting bullies who want to shore up an outdated business model by creating a new class of ‘streaming pirates’).

The idea of blocking users from using VPNs is a threefold policy failure. How?

  1. It blocks paying customers from seeing the content they want, and stops them from using the service they paid for in the way they want.
  2. It actually pushes people to piracy. Users who can’t find a legitimate way to access the content they want are more likely to turn to illegitimate streaming services or torrenting. This is borne out by hard data.
  3. It undermines our privacy.

And for the reasons above, we’ve launched a new campaign calling on Netflix to stand up to broadcasting bullies and say “NO, we won’t block our users from using pro-privacy tools when accessing Netflix.” As a fairly new tech giant, Netflix has a golden opportunity to take a firm stand on users’ rights. With content offerings in more than 190 countries, and a service that accounts for a third of all Internet traffic, Netflix can step boldly into the game as a service that respects its users and refuses to cave to outdated businesses trying to crush innovation online.

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