Archive for the ‘economics’ Category

Geoblocking is evil

December 16, 2013 Leave a comment

Geoblocking is when you go to a website such as netflix and it tells you that the service is unavailable in your country, or worse still you go to a website such as amazon, and you want to buy something there so you add the item to your basket, go through the tedious process of filling out all the details to place an order with them, enter your credit card details and that’s when, they look at your credit card details and tell you the item you’re interested in cannot be purchased from your country.

Now I believe this practice is evil because it is a lose-lose situation. The vendor does not make a sale, the prospective buyer does not make a purchase – the question is who wins? I can’t see anybody standing to gain anything in this situation and yet what totally blows my mind is that nine times out of ten geoblocking is introduced and enforced by the businesses themselves – WTF?

The worst geoblocking offenders are companies that sell content or access to content. Netflix’s already been mentioned here, then there’s services like Hulu and the like. And then the media/movie companies backing them have the gall to go after people who share that content on the Internet. Again WTF? Are they really that stupid that they can’t understand that if only they removed their stupid geolblocking Internet piracy would probably go down by as much as 90%? These days the bulk of content that gets downloaded ‘illegally’ is comprised of TV shows that come out in the US and that people want to watch on the same day or the next day.  Now what totally escapes me is why the companies that hold rights to those TV shows won’t simply sell access to them globally through the Internet?

Those guys really love to compute how much money they lose every time somebody downloads their content ‘illegally’ but have they ever tried to calculate how much money they lose every time someone wants to sign up for netflix from outside the US and they’re told they can’t do it?

The Internet gives them access to the global market and yet, in a fit of irrationality, they say, ‘we don’t want that, we only wanna sell in these little local markets.’ Again I do realise that in a situation with a lot of small local markets there’s opportunities for price gouging, in theory, but again when we’re talking about digital content that’s so easy to copy I’m fairly sure that all that extra profit they make from price gouging gets eaten up by the loss they make when they refuse to sell content to people thereby forcing them to go and get it on torrents or P2P networks.

The question is what am I missing here? Could it be that all my assumptions are wrong and that it’s still more profitable to lose money on people who are forced to get your content ‘illegally’ but make up for that loss by selling overpriced content to a handful of dupes who don’t know how to use the Internet?  Because to me it seems like geoblocking is totally more trouble than it’s worth.

Movie companies often cite staggered release schedules as a reason for geoblocking but that’s BS, imho.

For one staggered releases don’t really make sense for countries that speak the same language. I mean what’s the point to releasing a movie two weeks later in the UK than in the US? Especially in our day and age when you can download the digital copies to all the movie theatres around the world simultaneously, seeing how modern movie theatres use digital projectors and all, it’s not like you’re going to be shipping reels of film by boat across the Atlantic.

And as for countries that speak different languages: ok before an American movie can be properly ‘released’ in Russia, for example, it has to be translated and dubbed but what’s the point to blocking access to the original English language version of the movie from Russia. Those people who can speak English in Russia and know how to use the Internet will be able to watch it in English anyway if they really put their mind to it before it gets released in Russia so why not just let them do it legally for a reasonable fee? And those that can’t speak English are going to wait for the official dubbed release because watching it in English wouldn’t do much good for them – again we come to the same conclusion, geoblocking does not make sense.

And last but not least, one more reason why geoblocking is evil is because it’s part of a rather ominous recent trend where vendors are trying to control their customers more and more. I.e. instead of doing everything they can to allow people to consume their products where and when people want, vendors, and especially media companies, are increasingly trying to dictate people when, where and how they are supposed to consume their content.  What I can’t understand is why these media corporations fail to realise the simple fact that people don’t generally like to take orders and they won’t take them. In fact that’s the main reason because the media market is collapsing: media companies are trying to force people to consume their content the old way, the way people bought and consumed it when it had to be sold on physical media, like CDs or tapes before that, but people will have none of that – and why should they do things the old inconvenient way when today we have lots of far easier and more convenient ways to access and consume content?

Categories: economics, IT, Politics

everybody’s advertising everybody else

December 1, 2010 Leave a comment

How does one make money on the internet, or rather on the Web? One close friend of mine insists that the way to go is to make all content free and make money off ads included in the content. The problem I see with this approach is that if all content is free who’s going to be paying for the ads, who are going to be the advertisers willing to spend their hard earned cash to place an ad in your ‘free’ content’? The bottom line is who’s going to be footing the bill for the free ride that is the web?

The Internet is a unique communications medium that lets you, potentially, reach millions of customers all over the world, but what will you be offering them? What sort of product can you sell? Naturally if you have some sort of a real life product offering, like generic Viagra or some T-shirts or books or whatnot, the model kind of makes sense, you just create an internet presence for your company, your website becomes your retail outlet, you try and make it as easy as possible for the visitors to your site place orders and pay you and then you handle everything else in the real life back end, i.e. you actually ship the product to the customer.

But dealing with real life products is messy  and involves a lot of money, you can’t really bootstrap as you have to buy inventory which you have to store somewhere etc. Well potentially you could, for instance by getting in touch with the manufacturer of some product which you think is under-represented on the web and offering them to push their product on their behalf for commission, but that’s a different business model. (which is worth exploring btw.)

So, anyway, all those get-rich-quick books about how to make money online with no start-up capital, they basically all focus on one thing, the so called ‘information’ products. These may include e-books, or some audio seminars in other words you become a content creator and then you sell the content that you create. The web becomes your advertising vehicle and the Internet becomes your delivery system. There is one little problem with this approach and that is that with modern technology copying content is a breeze, any fool, literally, can do it and before you know it the very content that you created in the hope of making millions and that you’re charging for on your official website, becomes available for free on bittorrets or file sharing sites. I’m not aware of any research into what percentage of original digital content whose creators intended for it to be paid for actually gets consumed by people who pay for it and what percentage is used by people who simply get it free off file-sharing services or bitTorrents. My totally wild guess would be about 20% of paying customers versus 80% of free riders, I might be wrong though. It probably also depends on the price of your content and how easy it is to get it by paying a reasonable fee as opposed to spending time searching for a free download.

So if we know our content is going to get ripped off anyway, why not just offer it free of charge and pay for it by including ads in it? The problem with this approach is that if you’re a start-up, it’s very doubtful there’s going to find enough advertisers willing to pay for placing ads in your content. (well in time once your content has become really popular the situation may change of course). And then in a purely hypothetical situation where all content creators follow this route, would there be enough advertisers for everyone?

The purpose of this slightly incoherent piece is to pose some questions rather than provide ready answers