Aus Gov't report advises banning geoblocking

[Lynx-lynx]

Yipppeeee ...... 'The Harper review wants this remaining [geo] restriction removed unless it can be shown it is in the public interest. And it backs a recommendation of a parliamentary inquiry that the government educate Australians about the extent to which they can get around geoblocks and the tools they can use to do it.'

'It sees geoblocks as a restraint on trade, a block on competition, artificially imposed red tape. While companies such as Apple are quite rightly able to shop around the world for cheapest parts and labour, they design their products to make sure that we can't.'

Full article: Sydney Morning Herald: http://www.smh.com.au/comment/netfli...06-12i74u.html

Spoiler:

How's this for rewarding loyalty?
Netflix is about to come to Australia and as a thank-you to the 200,000 Australians who have been devotedly buying its content for years it is reportedly about to pull the plug. The unacknowledged reason such companies charge Australians more is because they can. It's called price discrimination and is one of the most effective ways of turning a profit.

Until now $US8.99 a month has bought unlimited access to as many 100,000 movies and TV shows for any Australian able to trick the Netflix computer into thinking they're in the US.

It's been easy, and it's been legal.

The High Court declared in 2005 that it was legal to circumvent geoblocks. A geoblock is a technological device designed to limit someone's access to a product or service depending on where they live.

The region codes on DVDs are geoblocks. They are intended to stop viewers in some parts of the world watching DVDs intended for viewers in other parts. They cause heartbreak for travellers returning from overseas attempting to play what they've bought, bemusement for workers who move between countries and are required to nominate a single region code, and embarrassment for international figures such as President Barack Obama, who once gave then UK prime minister Gordon Brown a gift of 25 classic American movies that were unwatchable in Britain.

Sony PlayStations were designed so that games bought in some parts of the globe weren't playable on PlayStations sold in others, an absurd restriction that encouraged a Sydney engineer named Eddy Stevens to develop a $45 computer chip that turned any PlayStation into a device that could play any PlayStation game.

Sony took him all the way to the High Court, where it lost in a unanimous judgment that held it was legal for Australians to circumvent attempts to prevent them accessing products they had bought.

He was backed by the Australian Competition and Consumer Commission and later by the Howard government, which took care in implementing the Australia-US Free Trade Agreement to ensure Australians remained free to jump around geoblocks.

The Howard government had an excellent record in fighting geoblocks in whatever form they took - until record companies misused the copyright law to prevent retailers from sourcing legally produced CDs from overseas. They had to buy them from the Australian distributor at the Australian price regardless of how cheaply they could be bought elsewhere.

Howard made imports legal – fending off claims from Labor and such musicians as Peter Garrett that Australian music wouldn't survive if Australians were able to buy it cheaply.
Now the draft report of Tony Abbott's competition review wants to go further.

At the moment, in many circumstances it is still illegal for retailers to source books from overseas without the permission of the local distributors. They divide the world into regions, giving each a local monopoly and the right to charge monopoly prices. The Australian Digital Alliance says that, on average, Australian libraries pay 58 per cent more for print books than they would in the US.

The Harper review wants this remaining restriction removed unless it can be shown it is in the public interest. And it backs a recommendation of a parliamentary inquiry that the government educate Australians about the extent to which they can get around geoblocks and the tools they can use to do it.

It sees geoblocks as a restraint on trade, a block on competition, artificially imposed red tape. While companies such as Apple are quite rightly able to shop around the world for cheapest parts and labour, they design their products to make sure that we can't.

The Apple website prices the latest Taylor Swift single at $US1.29 on iTunes. But use an Australian credit card to buy it and you'll be told it's $2.19. That's a surcharge of more than one-third at the current exchange rate.
Submissions to the Parliament's 2013 information technology inquiry found music was typically 67 per cent more expensive than for customers in the US, games were 61 per cent more expensive and e-books 13 per cent more expensive. Professional software was 49 per cent more expensive and hardware 26 per cent more expensive.

Apple, Adobe and Microsoft refused to take part in the inquiry and so were summonsed – forced to appear. They tried to muddy the waters by talking about the GST, which can only explain a portion of the differences and isn't applied to many internet purchases in any event.

The unacknowledged reason they charge Australians more is because they can. It's called price discrimination and it's one of the most effective ways of turning a profit. The method is to find a group of customers not particularly resistant to high prices (in this case Australians), isolate them and charge them a premium.

The inquiry went further than the Harper review proposes and recommended that the government consider banning geoblocking if other measures didn't bring prices into line. Adobe warned the move would hit business confidence, but Canada has just announced plans to prohibit unjustified cross-border price discrimination and New Zealand has embraced a new internet service provider that disables geoblocks by default.

Even Australia Post is getting into the act, setting up ShopMate, a service that gives Australian customers a US address they can use with a prepaid credit card to buy whatever is offer overseas at the price charged overseas.

It's why Netflix's Australian customers are keen to hang on to their US subscriptions even after the local service launches in March – not necessarily because the local service will be more expensive (the price hasn't been announced) but because it will offer many fewer movies and shows than the one in the US.

The film industry divides the world into regions, doling out rights as if by decree. It's a practice that goes back a century, and for books much longer. It's time it stopped.

Peter Martin is economics editor of The Age.

This bit may interest you:
The inquiry went further than the Harper review proposes and recommended that the government consider banning geoblocking if other measures didn't bring prices into line. Adobe warned the move would hit business confidence, but Canada has just announced plans to prohibit unjustified cross-border price discrimination and New Zealand has embraced a new internet service provider that disables geoblocks by default.

Even Australia Post is getting into the act, setting up ShopMate, a service that gives Australian customers a US address they can use with a prepaid credit card to buy whatever is offer overseas at the price charged overseas.'

[gmw]

Of course it will hit business confidence - it will hit their confidence in being able rip off people with impunity.

Thanks for the link.

[burnafterreading]

haha! good point - the specific word is that it'll hit BUSINESS confidence, but not CUSTOMER confidence.

Vulgar language deleted

[HarryT]

Moderator Notice
Please read our Posting Guidelines. Vulgar language is not permitted at MR.

Thank you.

[HarryT]

Originally Posted by gmw

Of course it will hit business confidence - it will hit their confidence in being able rip off people with impunity.

Geographical restrictions are often a matter of contractual obligation, not "ripping people off". Eg, if an author has only sold a publisher the right to sell a particular book in, say, the UK, the publisher is not allowed, under the terms of the contact they've signed, to sell that book to someone outside the UK.

[Barcey]

Originally Posted by HarryT

Geographical restrictions are often a matter of contractual obligation, not "ripping people off". Eg, if an author has only sold a publisher the right to sell a particular book in, say, the UK, the publisher is not allowed, under the terms of the contact they've signed, to sell that book to someone outside the UK.

... and if the laws are changed the contracts will have to be changed. The reality is that it is being used to rip off consumers, you just have look at the Australian ebook prices for confirmation.

[HarryT]

Originally Posted by Barcey

... and if the laws are changed the contracts will have to be changed.

No they won't. The Australian Parliament can make whatever laws it wants to, but it has no impact on the contract between an author and publisher in another country. No government can dictate what happens in another country, unless some kind of international treaty or law is being violated, which doesn't appear to be the case here.

When it comes to ebooks, geographical restrictions are, more often than not, the result of restrictions imposed on publishers by the author. Authors can often make more money by signing several single-country publishing contracts, than a single world-wide one (because they get a separate advance for each deal).

[Barcey]

Originally Posted by HarryT

No they won't. The Australian Parliament can make whatever laws it wants to, but it has no impact on the contract between an author and publisher in another country. No government can dictate what happens in another country, unless some kind of international treaty or law is being violated, which doesn't appear to be the case here.

When it comes to ebooks, geographical restrictions are, more often than not, the result of restrictions imposed on publishers by the author. Authors can often make more money by signing several single-country publishing contracts, than a single world-wide one (because they get a separate advance for each deal).

If they can't legally enforce the artificial contractual constructs they are worthless and nobody will pay anything for them. The Australian Parliament doesn't have to be concerned about what companies have written in their contracts.

[burnafterreading]

Originally Posted by HarryT

No they won't. The Australian Parliament can make whatever laws it wants to, but it has no impact on the contract between an author and publisher in another country. No government can dictate what happens in another country, unless some kind of international treaty or law is being violated, which doesn't appear to be the case here.

... but a gov't CAN dictate what is NOT allowed to happen in its OWN country. and that's mostly what this is about.

if the gov't has a law that says you can't murder someone, but you have a contract between you and your neighbour that allows you to murder someone, then do you actually have the OK to do as per the contract? i know, a bit extreme, but it gets to the point.

putting in the law may not have any direct effect on past contracts, but it would probably affect new ones and it might force old ones to be revised if there are no customers signing up to buy stuff under the old contract.

[Phogg]

Originally Posted by HarryT

No they won't. The Australian Parliament can make whatever laws it wants to, but it has no impact on the contract between an author and publisher in another country. No government can dictate what happens in another country, unless some kind of international treaty or law is being violated, which doesn't appear to be the case here.

When it comes to ebooks, geographical restrictions are, more often than not, the result of restrictions imposed on publishers by the author. Authors can often make more money by signing several single-country publishing contracts, than a single world-wide one (because they get a separate advance for each deal).

The Australian Government just recomended that certain restrictions which may be in some contracts will not be enforced in Australia. To save time, might as well write those restrictions on toilet paper so they can be useful for something.

[pdurrant]

I expect the idea is that there will be an Autralian law that says that Australian companies cannot sue anyone when foreign companies sell things to Australians.

That is, Australian companies with 'exclusive' sales rights in Australia will no longer be able to enforce that exclusivity.

But I haven't seen any draft legislation. I'm just guessing.

[JSWolf]

It is a rip off in the UK when a product is priced at say 10 pounds and in the US, $10. And on top of that 20% VAT for the UK product. That's a rip-off. I'll shop in the US to get a lower price and less tax. By removing georestrictions, this will force higher prices like in the UK to be lowered. I see this as good for the consumer.

It isn't fair that these big companies such as Apple can shop around for the best prices for their parts regardless of where they are made from int he world and we cannot do the same thing. They then enforce georestrictions to be able to chanrge more in some countries and give the people who live there no choice but to pay up.

Let's take back the ability to shop for the lowest prices. Maybe that would get rid of these silly overinflated prices in some countries. And it would also do away with the it's not available where I live.

[HarryT]

Originally Posted by Phogg

The Australian Government just recomended that certain restrictions which may be in some contracts will not be enforced in Australia. To save time, might as well write those restrictions on toilet paper so they can be useful for something.

That can, however, only have validity in Australia. ie, an author could not sue for breach of contract in an Australian court. The contract would still remain perfectly valid elsewhere.

[fjtorres]

We've been down this road before.
Local prices depend on local business conditions: taxes, wages, rent, utilities, sales volume...
If they are being sold by aussie subsidiaries then the price will be a function of the cost of running that operation, which often is a function of the *size* of the market. As Harry pointed out, a digital content operation will only be able to sell content from the publisher licensed for that region at local prices.

If the local publisher charges Apple or Amazon or Kobo higher than US prices (which might be because *they* have higher costs) the retailers can't be expected to eat those higher costs just because a politician says so.

Not sure how high the overall business costs are in the antipodes but I doubt they are as low as in the US. If nothing else, the minimum wage down under is twice the US minimum. And I doubt that is an aberration. Not when Sydney is the fifth most expensive city to live in in the world.

http://www.independent.co.uk/news/wo...n-9167514.html

So if you combine higher local wages with smaller market size (driving up the per unit license cost) then a higher price might be inevitable.

There is a lot more going on than just wanting to rip off customers for the hell of it. You may be looking at a chicken-and-egg scenario. The law of unintended consequences works in mysterious and often annoying ways but it can't be legislated away any more than the speed of light can.

[Lynx-lynx]

Unrestricting geo blocking iS about our being able to access products tht foreign companies want to sell us at rip off prices because they can (as stated in the Article) eg Apple, Adobe, Microsoft etc. Those companies don't manufacture their products here they just sell here.

And another example is access to digital content eg movies. Our gov't actively encourages us (by not discouraging it) to go ahead and get around foreign geo restrictions.

And Canada and NZ are also taking steps along those lines.

Good!