SkyTV, TV One and TV3 Ban Slingshot Adverts

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#1101923 4-Aug-2014 17:56

NonprayingMantis:

the keyword here is "or".
They aren't saying that Netflix is piracy. (they are implying it, which is a different thing)
They are saying that as part of being a business that pays people who create television, they don't support [list of things]
One of those list of things is "undermining intellectual property rights" which is exactly what global mode is doing (rightly or wrongly)

Not sure I quite agree. Accessing Netflix outside of the host country doesn't undermine intellectual property rights, it undermines exclusive distribution/licencing deals. Piracy undermines IP, but with Netflix the rights holder gets paid either way. Netflix could quite easily detect overseas users of their service in this way and block them - if they wanted to. Likewise, the IP owners could effectively force Netflix to do just that if they wanted to. In reality, it's all more money for the IP rights holder and they quite happily turn a blind eye to it. For the rights holders, it still allows them to give the likes of Sky the impression they are buying exclusive rights (which they pay dearly for), but at the same time increasing revenue from other paying customers.

I strongly suspect that rights holders know that they could make a lot of money by selling content direct to consumers via the internet and that exclusive distribution is technically redundant, however they are in a nice little sweet spot at the moment where they the likes of Sky, Foxtel etc haven't quite lost enough customers to start demanding lower licencing costs, yet many consumers are willing to use back channels to pay for the content directly. The rights holders will milk this for as long as possible before being forced to change their model. This is excellent for rights holders, and quite a terrible deal for Sky and for consumers. However, that doesn't give Sky the right to mislead and use anti-competitive behaviour just because their business is under threat from alternative technologies.

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#1101927 4-Aug-2014 18:06

ajobbins:
NonprayingMantis:

the keyword here is "or".
They aren't saying that Netflix is piracy. (they are implying it, which is a different thing)
They are saying that as part of being a business that pays people who create television, they don't support [list of things]
One of those list of things is "undermining intellectual property rights" which is exactly what global mode is doing (rightly or wrongly)

Not sure I quite agree. Accessing Netflix outside of the host country doesn't undermine intellectual property rights, it undermines exclusive distribution/licencing deals.

.

....deals that are based on intellectual property rights and the granting thereof.

Slingshot promoting global mode and providing a 'back door' into Netflix is undermining the IP rights of the rights holders who do not wish Netflix to sell to NZers.

Claiming that the rights holders still get their share when you subscribe to Netflix is also not true. Netflix pays for almost all it's rights on a flat fee regional basis e.g. they pay $Xm to sell to as many people in a region as they like. Selling outside that region means they are collecting more money, without paying the rights holder anything for those rights.

You can argue that it is morally wrong for the rights holders to do this (debatable), and that it is not illegal (which is true) but it most definitely is undermining property rights, regardless of whether the outcome is good or bad.

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#1101947 4-Aug-2014 18:28

NonprayingMantis:
....deals that are based on intellectual property rights and the granting thereof.

Slingshot promoting global mode and providing a 'back door' into Netflix is undermining the IP rights of the rights holders who do not wish Netflix to sell to NZers.

Claiming that the rights holders still get their share when you subscribe to Netflix is also not true. Netflix pays for almost all it's rights on a flat fee regional basis e.g. they pay $Xm to sell to as many people in a region as they like. Selling outside that region means they are collecting more money, without paying the rights holder anything for those rights.

You can argue that it is morally wrong for the rights holders to do this (debatable), and that it is not illegal (which is true) but it most definitely is undermining property rights, regardless of whether the outcome is good or bad.

SOME of Netflix content is purchased on a flat fee basis, but not all. Also, much like it always has been, the costs that rights holders charge for that right to sell content is at least partially based on the number of subscribers the service has. EG. Foxtel almost certainly pay more to licence a season of Game of Thrones from HBO that Sky does. The difference: subscriber numbers. As Netflix subscriber numbers grow, so will their (flat fee) licensing costs.

Also under that model - the rights holder is in effect no worse off. They get paid their fixed fee from all regions regardless. Again, it's hurting Sky (who paid the same but lose customers) and it's hurting customers (who get a bad deal and increased costs) but the rights holder themselves are no worse off (and again, likely better off as they can then negotiate a higher price to sell to Netflix who has a bigger subscriber base as a result of these back channels).

As I said before, if the rights holders (For example HBO) thought they were making less money this way, it would have been shut down VERY quickly. They know that a) They are getting paid either way and b) Any back channel Netflix subscriber is one less pirate who would have paid nothing at all.

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#1101949 4-Aug-2014 18:30

NonprayingMantis: ....deals that are based on intellectual property rights and the granting thereof.

For clarity - when the likes of Sky buys content, they are not being granted any IP rights. They are being granted a LICENCE for the content. The IP rights are wholly retained the licenser (e.g. HBO)

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#1101974 4-Aug-2014 18:49

ajobbins:
NonprayingMantis:
....deals that are based on intellectual property rights and the granting thereof.

Slingshot promoting global mode and providing a 'back door' into Netflix is undermining the IP rights of the rights holders who do not wish Netflix to sell to NZers.

Claiming that the rights holders still get their share when you subscribe to Netflix is also not true. Netflix pays for almost all it's rights on a flat fee regional basis e.g. they pay $Xm to sell to as many people in a region as they like. Selling outside that region means they are collecting more money, without paying the rights holder anything for those rights.

You can argue that it is morally wrong for the rights holders to do this (debatable), and that it is not illegal (which is true) but it most definitely is undermining property rights, regardless of whether the outcome is good or bad.

SOME of Netflix content is purchased on a flat fee basis, but not all. Also, much like it always has been, the costs that rights holders charge for that right to sell content is at least partially based on the number of subscribers the service has. EG. Foxtel almost certainly pay more to licence a season of Game of Thrones from HBO that Sky does. The difference: subscriber numbers. As Netflix subscriber numbers grow, so will their (flat fee) licensing costs.

Also under that model - the rights holder is in effect no worse off. They get paid their fixed fee from all regions regardless. Again, it's hurting Sky (who paid the same but lose customers) and it's hurting customers (who get a bad deal and increased costs) but the rights holder themselves are no worse off (and again, likely better off as they can then negotiate a higher price to sell to Netflix who has a bigger subscriber base as a result of these back channels).

As I said before, if the rights holders (For example HBO) thought they were making less money this way, it would have been shut down VERY quickly. They know that a) They are getting paid either way and b) Any back channel Netflix subscriber is one less pirate who would have paid nothing at all.

it would be based on the size of the market, not subscriber numbers. Otherwise one could startup your own streaming business and get all content for virtually nothing by way of having no subscribers.

There is a very good reason that the rights holders have these separate region deals - it makes them more money. Anybody undermining the regional deals means they make less money. If you think they make more money by letting Netflix sell globally you are just plain wrong. If they did, they wouldn't even be placing the geoblocking restriction on Netflix in the first place!

Up until now, the numbers using Netflix outside the regions have been so small as to not be worth chasing.
But with major ISPs promoting it (slingshot is third largest in NZ), you can bet your bottom dollar that they will start coming down on them.

And if they let slingshot get away with it in NZ, how long before iiNet do it in the states, or even other countries?
I'm pretty sure Sky UK, owned by the giant Newscorp, would be pretty miffed if other ISPs in the UK started promoting access to the vastly superior US netflix instead of the pretty average UK netflix, and taking $$$ away from Sky UK who has to pay big bucks to the studios for the exclusive content rights to stop UK Netflix having it.

I would be very surprised if global mode lasts more than 6 months now it is being promoted heavily above the line.

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#1101992 4-Aug-2014 19:19

NonprayingMantis:

it would be based on the size of the market, not subscriber numbers. Otherwise one could startup your own streaming business and get all content for virtually nothing by way of having no subscribers.

Except rights holders aren't going to be interested in selling to you without some kind of minimum volume that is worth their while. And as soon as they stop (or are forced via market forces to stop) selling exclusive content rights they lose their ability to change a premium for effectively selling a franchised monopoly. My point is right now, they are in a sweet spot where outside of the US they can effectively still change local providers that monopoly premium despite the fact some customers are using other paid methods to obtain the content. This is what Sky are really annoyed about. They lose customers to streaming, but still have to pay the premium for exclusive rights that they effectively don't get. As the rights holders aren't licencing anyone else to sell that content in the region officially (they are implicitly) they can still claim they can charge that premium. They wont be able to do this forever - at some point the market will force competition, but we aren't QUITE there yet.

There is a very good reason that the rights holders have these separate region deals - it makes them more money. Anybody undermining the regional deals means they make less money. If you think they make more money by letting Netflix sell globally you are just plain wrong. If they did, they wouldn't even be placing the geoblocking restriction on Netflix in the first place!

See above. It only makes them less money if the likes of Sky can negotiate a lower price for the content (that isn't offset by other revenue streams elsewhere). Again, this is what Sky is annoyed about - they aren't getting a better deal on the content. That's bad for Sky's profitability and bad for their customers, who may end up wearing higher costs to offset decreasing customer numbers but static licencing costs.

Up until now, the numbers using Netflix outside the regions have been so small as to not be worth chasing.
But with major ISPs promoting it (slingshot is third largest in NZ), you can bet your bottom dollar that they will start coming down on them.

You've addressed your own point from above. There wasn't enough market for them to bother. The market exists, but until the economics stack up (or are forced) to allow competition in the local markets (eg. NZ), they wont bother. For now, they get the benefit of both being able to charge the premiums for exclusive markets, but not actually having to enforce them.

And if they let slingshot get away with it in NZ, how long before iiNet do it in the states, or even other countries?
I'm pretty sure Sky UK, owned by the giant Newscorp, would be pretty miffed if other ISPs in the UK started promoting access to the vastly superior US netflix instead of the pretty average UK netflix, and taking $$$ away from Sky UK who has to pay big bucks to the studios for the exclusive content rights to stop UK Netflix having it.

I would be very surprised if global mode lasts more than 6 months now it is being promoted heavily above the line.

The likes of Sky in NZ, Foxtel in Australia and BSkyB in the UK really only have the following options available to them:
A) Lobby government to try and outlaw it
B) Lobby rights holders to do something about it
C) Negotiate better deals with rights holders as the result of an effective loss of exclusive markets.
D) Kick and scream and trash talk their competitors and make out they are doing naughty things when in reality, their business model doesn't work anymore (or not for long)

Option A is possible, although highly wrong (IMO). We've been seeing a lot of this kind of corporate purchase of laws recently, however the government's really should be turning around and saying actually no, what you are actually doing is anti-competitive, monopolistic behaviour and we're actually going to stop that. There is no good reason for exclusive agreement anymore. They used to be needed because we didn't have easy ways to distribute content, however now we do and they are on no benefit to consumers.

Option B will only work if the rights holders see some downside to the current arrangement and the Sky etcs. have some leverage over them. As I've mentioned, at the moment it's either neutral or of positive benefit for rights holders to have this kind of off the books secondary market. Only when Sky etc are no longer willing to pay those premiums but no effective alternatives exist for rights holders to make up the difference elsewhere will they take any action to stop such back channels.

Option C will come about once there is acceptance among the likes of Sky that they no longer have and cannot maintain exclusive distribution for their region, or governments step in to stop anti-competitive behaviour.

Option D is what we are seeing now. They realise that none of the other options above are workable right now, so they are attempting to discredit competition.

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#1102017 4-Aug-2014 19:51

Athlonite: I think it's an act of Piracy that Sky can hold all of us in New Zealand to ransom just to be able to watch our own teams compete in sports

I do not have any shareholding in any sports teams so dont care about having to pay to watch other peoples teams.

Or am I confused and you dont actually own any sports teams?

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#1102022 4-Aug-2014 19:57

NonprayingMantis:
....deals that are based on intellectual property rights and the granting thereof.

Slingshot promoting global mode and providing a 'back door' into Netflix is undermining the IP rights of the rights holders who do not wish Netflix to sell to NZers.

Netflix are selling the content within the USA, if someone then re-exports the content to another location which is perfectly legal then whats the problem? Parallel importation for personal use is legal in NZ. Even importation for resale is legal in almost all situations.

Sky have no more rights to complain about slingshot than coke do about united sweets bringing in the cherry stuff that coke choose not to supply here.

Claiming that the rights holders still get their share when you subscribe to Netflix is also not true. Netflix pays for almost all it's rights on a flat fee regional basis e.g. they pay $Xm to sell to as many people in a region as they like. Selling outside that region means they are collecting more money, without paying the rights holder anything for those rights.

You can argue that it is morally wrong for the rights holders to do this (debatable), and that it is not illegal (which is true) but it most definitely is undermining property rights, regardless of whether the outcome is good or bad.

And they are selling within that region, to someone from out of that region. If the studios were dumb enough to agree to a flat fee model then its their fault. People will buy where it is cheapest. Any other thinking is 70's protectionist crap.

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#1102042 4-Aug-2014 20:16

I like to compare this to real world stuff: imagine Whitcoulls complaining that buying a book in the USA and bringing it with you breaches their rights to resell the book in New Zealand? Or Imagine if Whitcoulls complains that buying a book via Amazon breaches their rights to resell the book in New Zealand?

Bullocks, because we all know that parallel import for personal use is not illegal.

I rather buy a well known wool brand jacket on Amazon for US$200 incl shipping than buy it in a New Zealand store for NZ$599. Does it affect local retail? Sure but it is still not illegal.

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#1102069 4-Aug-2014 20:44

freitasm: I like to compare this to real world stuff: imagine Whitcoulls complaining that buying a book in the USA and bringing it with you breaches their rights to resell the book in New Zealand? Or Imagine if Whitcoulls complains that buying a book via Amazon breaches their rights to resell the book in New Zealand?

Bullocks, because we all know that parallel import for personal use is not illegal.

I rather buy a well known wool brand jacket on Amazon for US$200 incl shipping than buy it in a New Zealand store for NZ$599. Does it affect local retail? Sure but it is still not illegal.

EXACTLY!

The only things this undermines are:

1. Piracy - as legit content is now available at a reasonable price (remember the content creators are getting paid), and
2. Overpriced distribution monopolies - as in the bad old days when there were cozy little exclusive distributorship arrangements, and NZers were gouged and had to pay 2-3 times the world price for books, magazines and cameras etc

We have been ripped off by cozy exclusive arrangements for far too long. It's not immoral to bypass these types of rorts and import for personal use at the international price - it's not even vaguely wrong, and many people are prepared to do it. Whitcoulls are discovering this with books and DVDs. Adidas discovered it for All Black jerseys during the recent world cup. And Sky is about to discover it for movie/TV content. The average NZ consumer benefits, and those who where profiting from holding us to ransom with absurd markups and control of distribution channels are finally having to face up to competition.

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#1102071 4-Aug-2014 20:48

richms: If the studios were dumb enough to agree to a flat fee model then its their fault.

Important to remember that the 'flat fee' has still been calculated on expected subscriber numbers. As Netflix subscriber numbers increase, the flat fee they can negotiate will increase too.

For example, say Netflix has 10m customers and can buy Game of Thrones Season 1 for $10m.
Next year comes around and they are now negotiating the rights for Season 2, however they now have 15m customers not 10m. Will they get season 2 for $10m again? More than likely the price will increase to reflect the growth in their market.

It's for this reason the rights holders aren't all that fussed. The aggregate market is increasing, and a customer moving from paying their local provider to Netflix doesn't matter at the aggregate level.
The Netflix option also helps grow the total market as there are some people who wouldn't have paid for Sky but will pay for the cheaper alternative.

The other element from the studio's perspective is that someone on Netflix is probably one less pirate. If they blocked people from accessing it, many wouldn't move back to Sky, they would just pirate instead. Sky doesn't win either way - but the rights holders would prefer a paying customer to a pirate. Ultiamtely they don't care how the money comes in, so long as it is and they are maximising it

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#1102121 4-Aug-2014 21:12

JimmyH: The only things this undermines are:

1. Piracy - as legit content is now available at a reasonable price (remember the content creators are getting paid), and
2. Overpriced distribution monopolies - as in the bad old days when there were cozy little exclusive distributorship arrangements, and NZers were gouged and had to pay 2-3 times the world price for books, magazines and cameras etc

We have been ripped off by cozy exclusive arrangements for far too long. It's not immoral to bypass these types of rorts and import for personal use at the international price - it's not even vaguely wrong, and many people are prepared to do it. Whitcoulls are discovering this with books and DVDs. Adidas discovered it for All Black jerseys during the recent world cup. And Sky is about to discover it for movie/TV content. The average NZ consumer benefits, and those who where profiting from holding us to ransom with absurd markups and control of distribution channels are finally having to face up to competition.

Too true. I pay "international prices" for my dairy products and no-one really gives a fat rats about it. Now I'm paying "international prices" for content and a bunch of people are getting up in arms about it... Corporates like Sky need to wake up or die in their sleep.

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#1102181 4-Aug-2014 22:19

freitasm: I like to compare this to real world stuff: imagine Whitcoulls complaining that buying a book in the USA and bringing it with you breaches their rights to resell the book in New Zealand? Or Imagine if Whitcoulls complains that buying a book via Amazon breaches their rights to resell the book in New Zealand?

Bullocks, because we all know that parallel import for personal use is not illegal.

I rather buy a well known wool brand jacket on Amazon for US$200 incl shipping than buy it in a New Zealand store for NZ$599. Does it affect local retail? Sure but it is still not illegal.

Following this analogy through, the factory making the jacket, and the farmer producing the wool all still get the cut they expect of the final product, only the extra middlemen lose out on their cut(s)...

I'm quite happy to pay what they expect US citizens to pay for a completely free market product, the only reservations I have are with things like BBC's iPlayer, as this IS subsidised by their Local TV licencing and so I feel that I MAY then be using a service I haven't paid for, and not contributing to the cost of the content provided.

the vilification of geoblock avoidance is the real issue, as this conceals both the good intent of the NZ BUYER of content, and the legality of what we're doing, leaving one more reason for the real pirates to keep justifying the piracy they still do.

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#1102186 4-Aug-2014 22:26

Section 226, Copyright Act 1994: http://www.legislation.govt.nz/act/public/1994/0143/latest/DLM346899.html

for the avoidance of doubt, does not include a process, treatment, mechanism, device, or system to the extent that, in the normal course of operation, it only controls any access to a work for non-infringing purposes (for example, it does not include a process, treatment, mechanism, device, or system to the extent that it controls geographic market segmentation by preventing the playback in New Zealand of a non-infringing copy of a work)

Now, IANAL, but I see that as that there's nothing legally wrong with Slingshot offering Global Mode in NZ.

Of course this is blowing up in Sky's face, and rightly so. Good on you Slingshot.

insane

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#1102239 4-Aug-2014 23:14

Is it really blowing up in their face, or just on GZ?

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