Netflix is not yet available in Australia but a Parliamentary committee there is tired of waiting. Last week, the committee spearheading Australian government’s Inquiry into IT Pricing recommended that consumers be allowed to circumvent geo-blocking measures that keep services like Netflix, Hulu and the BBC’s iPlayer out of the country.
If the recommendation is adopted it would punch a good-size hole in the long-standing system of licensing movie and TV content country-by-country.
The inquiry was launched over a year ago to investigate why many digitally delivered products, from streaming services to desktop software, cost significantly more in Australia than in other markets, particularly the U.S., where many of those products originate. Adobe’s Photoshop editing software, for instance, lists for A$1,062 in Australia even though it’s available in the U.S. for the equivalent of A$674 (U.S.$669). Microsoft products were 66 percent more expensive on average, while 3D animation software was more than 50 per cent more expensive. iTunes downloads also carry significant price differentials in Australia compared with the U.S.
Adobe, Apple and Microsoft were all dragged before the committee to explain their pricing practices, which prompted Adobe to drop the price of its products in Australia in February. Nonetheless, the committee recommended removing restrictions on parallel imports to allow Australians to buy software products directly from the U.S.
Yet while inconvenient (and possibly costly) for software makers, the committee’s recommendations regarding geo-blocking of streaming services could wreck havoc for movie and TV producers as well as music rights owners, who have long relied on territorial licensing restrictions to maximize revenue and enforce release windows. Under the committee’s recommendations, consumers in Australia would legally be able to access content that has not been licensed in that territory. The recommendations would also undermine streaming services based in Australia, such as Quickflix and Foxtel Play, the over-the-top streaming service launched recently by pay-TV provider Foxtel, which have exclusive licenses to some of the same content as on Netflix and BBC iPlayer in Australia.
Foxtel officials blasted the committee’s recommendations, calling them a “naive” approach.
“We think it’s a very naive view that the committee has taken and we’ll certainly be talking to both the government and the opposition to encourage them to take a more sophisticated view of the way these things work,” Foxtel director of corporate affairs Bruce Meagher told The Australian Financial Review. “The idea that Australia would unilaterally decide to change the way in which intellectual property rights are managed globally seems quite ridiculous to us.”
Perhaps so, but it’s an idea that is gaining momentum. In June, New Zealand’s third-largest ISP, Slingshot, introduced a service called Global Mode, which allows users to hide their physical location when accessing online services. The ISP markets Global Mode as a means to allow its subscribers to access Slingshot services from outside of New Zealand but the technology also works the other way, allowing users in New Zealand to access services not otherwise available in that country.
Even before the Australian committee issued its recommendations the government there all-but winked at a campaign by consumer advocacy group CHOICE to promote greater access to online video services, which included a tutorial on how to circumvent geo-blocking using VPNs.
The effort also recently got a shout-out from YouTube co-founder Chad Hurley.
“I think the business models are breaking down and the companies that are going to win in this new world are the ones that make it as easy as possible for the consumers to consume the content wherever and whenever they want.,” Hurley told the Financial Review. “Over time, all content is going to be distributed digitally and consumed on any type of device, so rights are a grey area.”
And they’re getting grayer all the time.