Did you ever see that episode of Trailer Park Boys where the guys cook up a scheme to steal lawn furniture without breaking the law? One of the boys moves a neighbour's chairs off the porch to the front of the property where his accomplice can pretend to believe they have been put out as garbage.
There is a lot of Trailer Park logic to current justifications of content theft and copyright abuse. Torrent sites and purveyors of geo-spoofing software shift movies and TV shows to the curb, where shoulder-shrugging consumers can pluck them up for free.
The latest scheme is to use a virtual private network, or VPN, to trick Netflix into believing you are located in the United States and can thus subscribe to the video-streaming service's American catalogue. TorrentFreak started a great deal of media chatter this week with a report that suggested Netflix was finally going to drag itself off the porch and shoo geo-spoofers from the property. (The piracy blog cited several instances where subscribers outside the United States found they could no longer work the tools that normally circumvent Netflix geo-blocking and give them access to the video-streaming service's U.S. site.)
It's a topic of burning interest to some Canadians: A survey last spring estimated that a third of Netflix's English-Canadian subscribers are using VPNs to access the much richer U.S. offerings. In Australia, where Netflix will launch in March, consumers have been using VPNs to sign up as U.S. subscribers.
Netflix responded to the report with a dampening statement that reiterated its standing policy that subscribers should not stream content that is not licensed in their country. That bolstered the conviction of many in the industry that Netflix lacks the resolve to put any real roadblocks in the way of subscribers for fear of losing them altogether. In one of its notorious hacked e-mails, Sony Corp. has described Netflix's position as "semi-sanctioned" piracy.
Why does Sony care? Because selling multiple territorial licences is the way producers maximize the revenue from a television show or movie, and Netflix is undercutting that business. Cases in point: Both the biker drama Sons of Anarchy and the Zooey Deschanel sitcom New Girl are available on Netflix in the United States, but not on the Canadian service. They are, however, available on the new Rogers and Shaw streaming service, Shomi. The price that those two Canadian distributors are willing to pay for the rights to these shows must depend greatly on how real their Canadian exclusivity actually is.
Shomi, and Bell's recently launched equivalent, CraveTV, are not going to kill Netflix's Canadian business in any hurry. So far, they are only available to cable and satellite subscribers and have less-impressive catalogues. They are, however, offering a good number of Canadian titles – 30 per cent on Shomi and 12 per cent on Bell – perhaps because Canadian consumers will demand them, but also perhaps because the distributors might want to stave off any notion that one needs to impose Canadian-content regulations on these services.
It certainly makes Rogers, Shaw and Bell look like better corporate citizens than Netflix Canada, a free-rider on the Canadian broadcasting system that competes with conventional broadcasters without contributing to the production of Canadian programming.
Eventually, Shomi and CraveTV may help build a healthier Canadian marketplace for Internet TV where subscribers have a choice of legitimate services, Canadian producers find a new distribution channel and U.S. producers get properly paid for the content they provide to Canadians. Critics argue that the lumbering entertainment industries should get hip to the Internet as a global, rather than territorial, platform. But if a licence to Netflix U.S. is, in effect, a licence to every citizen on the planet with a computer and the five minutes it takes to set up a VPN, it's only fair that producers be paid accordingly.
The Netflix debate is just another example of the way the online distribution of digitized content has broken the cultural marketplace so that distributors rake in money while producers struggle to maintain workable businesses. Spotify thrives while musicians are paid pennies; Amazon grows while publishers struggle.
Consumers may not care much as long as they can watch Sons of Anarchy. In the short term, they are getting access to lots of cheap or free content. The reality, however, is that content creators at the end of the industrial chain are already feeling the effects and closing down careers. If the mighty Sony is peeved that it can't get fair treatment from Netflix, imagine what it might be like to be a small production company in Canada or Australia?
Internet advocates love to preach choice, diversity and freedom – after all, a VPN can also be used by citizens in China to access content censored by their government – but the great irony of the digital age is that it is killing the economic incentive to create, even as it unlocks the content. At the rate we are going, all the stuff sitting at the curb really will be garbage.
A previous version of this story incorrectly suggested CraveTv was only available to Bell's existing subscribers. It is available to a variety of satellite and cable subscribers.