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Geo-Blocking Sites a Business Rather Than Legal Issue

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Thursday July 08, 2010
The Internet was once viewed as a "borderless" world that had little regard for the physical location of users.  That sentiment likely seems outdated today to many Canadian Internet users who have grown accustomed to clicking on links for audio or video services only to be advised that the content, site or service is not available in their area.

My weekly technology law column (Toronto Star version, homepage version) notes that "geo-blocking" has become standard practice among broadcasters, sports leagues, and music services that use technologies to identify the likely location of an Internet user in real-time and block the content in some circumstances.  From World Cup broadcasts to Hulu.com (a popular U.S. video site) to Spotify (a European music service), Canadians often find themselves unable to access content and unsure who is to blame.

While some have misleadingly suggested that outdated laws are the reason behind the blocking, the reality is that geo-blocking is invariably a business issue, not a legal one.  Indeed, geo-blocking occurs worldwide - U.S. residents are similarly unable to use Spotify and are blocked from accessing the CBC’s streaming coverage of the World Cup. Rather than a reaction to older laws, the geo-blocking approach is actually an attempt to preserve an older business model, namely content licencing on a country-by-country or market-by-market approach [note that I say older, not outdated - territorial licencing obviously makes financial sense in some situations].

Canadian broadcasters have for years purchased the exclusive rights to air popular U.S. programming in Canada.  This approach led to the simultaneous substitution policies that allow Canadian broadcasters to compel cable and satellite companies to replace the U.S. broadcast of a particular show with the Canadian feed (complete with Canadian commercials).  

As video streaming on the Internet emerged as an increasingly popular method of distribution, Canadian broadcasters began bargaining for both the over-the-air and Internet rights to U.S. programs.  With those rights in hand, broadcasters streamed their own version of the programs exclusively to their Canadian audiences.  This explains why Comedy Central streams programs such as the Daily Show in the U.S., but Canadian users trying to access those streams online are redirected to CTV's Comedy Network site.

The same geography based licences arise with live sports programming and music services. World Cup matches are available on the Internet in countries around the world, yet the national broadcast rights holder (CBC in Canada, ABC/ESPN in the U.S.) limits their streams to a domestic audience.

Music services and book publishers face many of the same licencing hurdles.  Apple iTunes arrived in Canada nearly two years after the U.S. edition not because of copyright laws, but rather because a new round of negotiations was needed with copyright owners to obtain the necessary approvals.  

These delays continue until today, with Pandora - a hugely popular music service - blocked to Canadian users and Spotify's North American launch the victim of successive delays (Spotify owners have indicated they would like to launch the service simultaneously in the U.S. and Canada).

Canadian Apple iPad owners have found the same licencing limitations apply to the electronic book market.  Owners of the popular device can choose from among thousands of public domain books, but the electronic book store supported by the major book publishers in the U.S. has been slow to migrate its way north to Canada.

While frustrated Canadians may be inclined to call on the government to "fix" the problem, the reality is that this is a business issue.  Geo-blocking will only disappear if the business models they support give way to global approaches that make the borderless Internet a reality.
Comments (25)add comment

Andrew Butash said:

...
The fact that it's a business issue and not a legal one is exactly why the content industries fail to grasp how the Internet works. People point to services like Hulu and Spotify as legal alternatives to downloading, yet this geographical blocking garbage says otherwise. This is a big reason why people continue to use P2P sharing, despite legal alternatives. It's absolute crap. The Internet doesn't have geographical boundaries, companies. Either sort this garbage out, or fail.
July 08, 2010

Beastmaster said:

...
What these horseshit filled heads of the media companies don't understand is...for $5 a month I've got myself a VPN and I can use their websites anywhere I damn well please. Geo-blocking is just as fail as DRM.
July 08, 2010

Jeff M. said:

Can't stop progress
I still prefer downloads to streaming sites but heres a guide to get Hulu working in Canada

http://www.reddit.com/r/canada/comments/ckfcp/hulu_breakthrough_i_am_watching_hulu_in_canada/


July 08, 2010

Un-Trusted Computing said:

Stating the obvious
I regret the fact that I have to be the first to say that I pirate TV shows precisely because I can't access them in a timely manner from Canada.
July 08, 2010

Joe said:

...
As for electronic books it wouldn't surprise me if feet were being dragged because they won't be able to charge the lopsided prices they do for Canadians vs US prices. Last book I purchased was $7.99 US or $10.99 Canadian. Even accounting for future fluctuations in the exchange rate it shouldn't be more than $8.50-9 Can. E-books would be expected to be much closer in price. Granted people are probably just opting for the simple solution of piracy.
July 08, 2010

IamME said:

Here's one for a good laugh
I'm with ya Un-Trusted Computing...

The year before last, I got a couple notices from my ISP that I had been caught downloading a Dexter episode and some Stargate Atlantis season 1 stuff that I had missed. In the letters I received from the "watchdogs", they provided me "legal" pay aternatives to get the material I was downloading. Each letter had 3 different options and I think there were 4 distinct options between the two letters. NONE of the options given were available in Canada...not one. What a joke.

Joe, compare prices between amazon.com and amazon.ca...it can be quite scary, espeically considering the strength of the Canadian dollar right now.
July 08, 2010

phillipsjk said:

I was just going to say MG was stating the obvious...
...But the commenters bring up a valid point: Geofencing of online "free" services echos the Region-coding of DVDs. It is all about market segmentation.

I think part of the problem is that the Music Industry's (to use and example) business model has always been a little contradictory. They give away thousands of CDs every year as a promotional expense to get air-play. The problem is the the "digital" world allows consumers to hold onto or copy those promotional tracks. For a business relying on selling copies or broadcast rights, there are no obvious or easy solutions.

The easiest solution is probably to treat all non-commercial piracy as a promotional expense or loss-leader. However, DRM is a solution being entertained as well; for example many game demos include DRM, despite being free to distribute.
July 08, 2010

Glenn said:

...
Joe said:
...
As for electronic books it wouldn't surprise me if feet were being dragged because they won't be able to charge the lopsided prices they do for Canadians vs US prices. Last book I purchased was $7.99 US or $10.99 Canadian. Even accounting for future fluctuations in the exchange rate it shouldn't be more than $8.50-9 Can. E-books would be expected to be much closer in price. Granted people are probably just opting for the simple solution of piracy.


That is why I refuse to buy books in Canada.. Even when our $ was at par (or even above) we were being gouged.

So Instead I get them from the US and have them mailed to a friend just over the border. The looser in that case is the moron retailers here that refuse to grow a clue.
July 08, 2010

Joe said:

...
Glenn...

I've not gone your route, but I certain avoid buying new books at retail for the same reason. Quite often I shop at local mom & pop used book stores, as far as I'm concerned the book is cheaper, in good enough condition and the money ends up in my local economy. Other than that I shop at Amazon because their discounts either put the price on par of exceed what the US price is with the exchange rate.

(I've never posted my captcha because I don't see the point with most of them, except for... "thieving often" at this particular moment.)
July 08, 2010

ACB said:

Gouged
Glenn said: "... That is why I refuse to buy books in Canada.. Even when our $ was at par (or even above) we were being gouged."

I read about 100 novels and 30 non-fiction books a year. When I see a title or author I like in a bookstore or on Amazon I add it to a list on my iPod Touch of those I will buy on my next New England trip (2 - 3 per year). I have a cabinet full of books to be read and I get them at a fair price. My "it's a gyp" nerve has a hair trigger.

I wouldn't mind the necessity of watching something from Comedy Central on the Canadian site if the site weren't so abysmally designed. I just want to watch a few minutes of John Stewart and it takes longer than that to get what I want.
July 08, 2010

Eric L. said:

RE: ACB
"I wouldn't mind the necessity of watching something from Comedy Central on the Canadian site if the site weren't so abysmally designed. I just want to watch a few minutes of John Stewart and it takes longer than that to get what I want."

Especially since they use Silverlight. My computer doesn't have SSE, and therefore I can't use Silverlight. Great going, CTV.
July 08, 2010

Anarchist Philanthropist said:

@Dr. Geist
I know your trying to put a good spin on this, but lets face facts. The business models may be one of the reasons for it, copyrights another reason, but this whole situation actually extends outside of the internet.

For example MP3 players such as the MS Zune and now MS ZuneHD were always delayed coming up to Canada. The 80 gig model was almost a year and the 30 gig was over a year and a half. The 120 gig was only a couple months. The news version the ZuneHD has been out over a year and MS still says it won't send it to Canada at all.

The iPhones, the ipad. Apple is no different. I don't know how many companies on Amazon.com and other american "shopping" sites are the same way esp when regarding technology.

If it was just over the internet I wouldn't argue in the slightest, but when large numbers of companies refuse to sell things to Canadians, physically as well as on the internet, this is more than just old business models and copyright issues, this is Canada getting screwed by the states.

What is your opinion on this?
July 08, 2010

james said:

...
I very rarely come across this, but I do remember it happening with Chris Andersons Free. Which was very bizarre. I've experienced the Comedy Network block as well.

While I cannot know every single strategic reason for a product launch r a content block. I can suggest that some Canadian content simply will not make it into America without being heavily taxed, so there is sometimes a reason to block Americans.

Why show a commercial for product which is only available in one model in one country?

Why allow local content which is educational leave a limited area which has paid through taxes or tuition fees for that content.

I could imagine scenarios up for a while. I do believe you when you say it is a business issue.

I am not entirely sold on the fact that it is a legal issue however. Especially when it comes to reporting. Should only demographic have access to partisan news sources? I am not a lawyer...
July 08, 2010

Brent said:

www
sites that block content based on a geographic location shouldn't be using www since they really aren't on the "world wide" web.
July 08, 2010

jv said:

Missleading
This story while technically right. Completely misses the point. The reason why CTV and others are able to buy those rights and then start geo blocking is because of the oligopoly that they are given in the broadcast realm. If there was no simsub rule these companies wouldn't be wholly dependant on US programming and certainly wouldn't have the money to buy all the rights.

What you would have is the US creators making this content available from the US. The broadcast act gives the Canadian companies the power to not innovate. Instead it is 1950 in Canada and or technological standing is falling like a rock.
July 08, 2010

phillipsjk said:

/me in nit-pick mode
Brent: "www" is a sub-domain that many sites have dropped since they don't offer corresponding "Gopher" "Ftp" or "wais" servers; and even if they did, they can all be hosted on the same machine with the same IP address. The most common top-level domain is probably ".com" I agree they should not use a ".ca" domain name if they are blocking Canadians based on IP Address.

Eric L. said:
"Especially since they use Silverlight. My computer doesn't have SSE, and therefore I can't use Silverlight. Great going, CTV."

While I agree the design of the CTV "broadband network" is stupid, I would be very surprised if your computer doesn't support SSE. Most (personal) computers made in the past 10 years support SSE. The feature was introduced by Intel in the PIII. Some niche processors like the Atom may have dropped it, but my relatively old AMD Sempron based computer supports: "fpu vme de pse tsc msr pae mce cx8 apic sep mtrr pge mca cmov pat pse36 mmx fxsr sse syscall mp mmxext 3dnowext 3dnow up ts" (That includes SSE, but not SSE2 or SSE3.)

My main problem with these streaming sites echos your concern: They use sliverlight or flash instead of an open format your third-party video player may have a hope of accelerating using the Video card. It is 2010 people, there is no technical reason streaming video should be jumpy and take up more than 50% of the CPU time; even for "high" resolutions like 640x480 or even 1152x720.

They use a proprietary player as a weak form of DRM. They also don't want you caching the video to play later; whether by necessity (playing over dial-up) or for convenience. (Downloading the video once for a home, school, or office.) Using a proprietary player also lets them count AD impressions and force you to watch an AD not actually embedded in the video.

July 08, 2010

Yuval Levy said:

not a legal problem, but maybe a legal solution?
Dear Dr. Geist

You are right: the cause of the frustration are business models, not laws. These business models discriminate based on geographical location. They are used beyond licensed content - try buying consumer electronic goods in different countries.

Failing enlightenment of the concerned business actors, however, the solution may be indeed of legal nature, along the lines of the Robinson-Patman Act of 1936.
July 08, 2010

IamME said:

"WWW"
It's a small thing, but I also agree that geo-blocking sites should be forced to use something other than WWW (Since their sites are NOT world wide) or at least have some form of identifier in thier doamin name so that such sites can easily be identified. As others have stated, it can be likened to DVD region coding. I can't go to their web site solely because I'm Canadian. I consider it to be more of a form of censorship based on race which is descriminitory, and that iritates me to no end.
July 08, 2010

Eric L. said:

RE: phillipsjk
"While I agree the design of the CTV "broadband network" is stupid, I would be very surprised if your computer doesn't support SSE. Most (personal) computers made in the past 10 years support SSE. The feature was introduced by Intel in the PIII. Some niche processors like the Atom may have dropped it, but my relatively old AMD Sempron based computer supports: "fpu vme de pse tsc msr pae mce cx8 apic sep mtrr pge mca cmov pat pse36 mmx fxsr sse syscall mp mmxext 3dnowext 3dnow up ts" (That includes SSE, but not SSE2 or SSE3.)"

Trust me, it doesn't. It's one of those particular AMD processors (Athlon 2100+) that didn't support SSE, despite being comparably modern in all other respects. QuickTime 7.3 also didn't work for me because of its own SSE requirement. At least Apple had the common sense to drop this unnecessary requirement in 7.4+.

"My main problem with these streaming sites echos your concern: They use sliverlight or flash instead of an open format your third-party video player may have a hope of accelerating using the Video card. It is 2010 people, there is no technical reason streaming video should be jumpy and take up more than 50% of the CPU time; even for "high" resolutions like 640x480 or even 1152x720."

Indeed. I hate the frequent comparing of Flash to Silverlight because they are BOTH equally BAD. I can only hope that HTML5 video becomes dominant in the not-so-distant future, or Gnash or another Free software reimplementation of Flash matures significantly. I try to download the source video as much as possible so I can play it reliably.

"They use a proprietary player as a weak form of DRM. They also don't want you caching the video to play later; whether by necessity (playing over dial-up) or for convenience. (Downloading the video once for a home, school, or office.) Using a proprietary player also lets them count AD impressions and force you to watch an AD not actually embedded in the video."

Oh yes. I had to actually screen-record a CTV news story because I couldn't get the content. Ironically, the station that was the source of the clip caught on fire some time later, and all their archives were destroyed. Had they allowed people to download their content, the loss would have been significantly offset.

Stupid proprietary player schemes also give rise to "plugin variations" that are just repackaged, garbage versions of the otherwise-identical proprietary plugins. The "Turner Media Plugin" (essentially a glorified Flash plugin) comes to mind. Yeah, I really want to add this to my browser...
July 08, 2010

a.martin said:

controlling industry
The longer they do not update their business practices the more ppl will be accustom to downloading content for free, quickly, efficiently, commercial free, true on demand and you can store it. It will be harder and harder to win people back to be abused.


July 08, 2010

Anarchist Philanthropist said:

...
@a.martin
"It will be harder and harder to win people back to be abused. "

No truer words were ever spoken.
July 08, 2010

Russell McOrmond said:

Copyright not problem, outdated business models are.
I believe that regional restrictions and misunderstood/misapplied DRM has a greater negative impact on the bottom line of copyright holders than non-commercial infringement http://BillC32.ca/5126

On regional restrictions I continue to ask http://twitter.com/margaretatwood why the Audio Book for Oryx and Crake http://bit.ly/cSaofq is available in the USA, but not in Canada. That clearly has nothing to do with copyright, and has everything to do with outdated business models that need to fixed. Probably when/if that audio book is made available to me I will have lost interest.... and yet again I'll be falsely added to the "infringement" statistics which don't differentiate lawful and unlawful reasons for not paying for (or even accessing) content.

July 09, 2010

Bill Wittur said:

Digital Marketing Strategist
Michael,

This is a great reminder that most of the issues that face Canadian content consumers are not necessarily related to regulatory framework.

To augment this argument, let's not forget that marketing and advertising are critical components of these business decisions. Billions of ad dollars are used to target millions of Canadians annually. Historically, the only organizations that could afford this advertising were large corporations, governments and the occasional major non-profit. Without the facade of regulatory obstructions, certain groups are losing the ability to monopolize the 'media mindshare' of Canadian consumers.

In fact, there's a growing risk of redundancy with the advent of online buying models, consistent standards across the US and other countries where products are cheaper, peer-influenced social networks, better postal delivery and people's ability to bypass mainstream advertising messages.

In the online world, tools like Google Adwords and other self-serve online advertising platforms are making it easier for smaller businesses and organizations to reach out to potential customers, bringing about something that can almost be called a 'revolution' in competitive micro-economics.

All of these trends are forcing a lot of media companies in Canada to come to terms with their business models and it seems many of them are trying to figure out ways to limit the influence of the web and content distribution as opposed to embrace the opportunities.

It's actually exciting to be a part of this and my hope is that at some point in the future, the Canadian government will recognize that digital opportunities for one-on-one conversations far outweigh traditional broadcast methods.
July 09, 2010

W. Fiske said:

Copyright does matter with geo-blocking
You will find that sites like the Internet Archive and the Hathi Trust are blocking books that are in the public domain in the U.S. but may be protected elsewhere in the world. This particularly harms Canada, which has a shorter (c) term than many other countries. Jane Ginsburg is arguing, based on some decisions in France, that providers must customize their offerings on a country-by-country basis in order to make sure that they do not conflict with local laws and practices. Copyright lawyers are doing their best to destroy the global internet.
July 14, 2010

bkeefe said:

What if you pay for the content?
What I don't understand is why my fiancee can't access her Canadian iTunes account to buy music from the Canadian iTunes store because we are physically in Hong Kong. Her citizenship is Canadian; her credit card is Canadian; the store is Canadian. She does not have a Hong Kong credit card, so she can't access the Hong Kong store. Apparently, Apple doesn't want her to buy anything. The business model definitely has its flaws.
September 08, 2010

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