Tag: Netflix

Maybe the Internet IS Just a Dumb Pipe

“Content is king” was the catch-phrase of the 1990s and the heady (headless really) days of the Dot Com bubble.  And although that stopped being a slogan with the resurgence of Web 2.0, it was still true.  Content was still king except the would-be tech giants figured out that they didn’t need to create content but instead just make someone else’s content available.  Whether these companies had any right to exploit said content did not matter since the telecom giants who preceded them had conveniently negotiated a liability shield (DMCA §512) for copyright infringement before anyone quite realized how a YouTube could become a massive infringement machine that prints money for its owners.

When rights holders complained that these platforms were infringers (or at least beneficiaries of infringement), the answer was always some variation on the themes …  It’s not us.  Its the users.  We don’t control what gets uploaded. We’re just a neutral platform.  And so on.  Thanks to that liability shield negotiated by Verizon, AT&T, et al in 1998, Google and the other major platforms got away with the circular logic that “the internet” is simultaneously “just a dumb pipe” and also a network of such inestimable value that no cyber-policy may be altered—other than, of course, by Google and the other major platforms.  They are at liberty to alter the internet all they want because they do so many nice things for us—and all for free!

In 2012, concurrent with the not-so-grassroots defeat of SOPA/PIPA, Google’s lobbying expenditures went from negligible to competing among the top five in the nation; and the major platforms also formed the Internet Association to advocate policy in its interests.  That’s business as usual, and industries have every right to form such organizations, but this new coalition of tech giants was also contemporaneous with the anti-SOPA narrative in which the Motion Picture Association of America a) had allegedly tried to force legislation that would “break the internet”; and b) represented “old thinking” about content, copyright, and digital-age piracy. 

Let us now leap over the past seven years to the present—a time when the major internet platforms—most demonstrably Facebook—have revealed many of the darker consequences of their hands-off, disrupt-culture approach to platform moderation.  Amid this still-developing narrative, came the big news last month—though it should not have been the least bit surprising—that Netflix would leave the Internet Association and join the MPAA.  Because content is still king.

As described in my post of October 2015, Netflix is not an internet company; it’s a motion picture studio that happens to distribute via the internet.  New opportunities to measure viewer data notwithstanding, the simple reality is that the more “tech” companies invest in original programming, the more they will naturally find common ground with the policy interests of the MPAA et al. In that regard, a January article in Variety speculates that Amazon—with its slate of multi-award-winning shows—could be next to join the big studios.  Either way, the swing of this pendulum does suggest a new premise:  that perhaps the internet industry does not have (to use the technical term) jack-shit to teach content creators about copyright or piracy—and let’s not even talk about whatever the hell the “economics of abundance” means.

In fact, if one looks at YouTube’s Copyright Match response to the realization that their own creators do not like having their videos infringed by other YouTubers, maybe the “new” industry actually has something to learn from the “old” one about protecting creative works.  Meanwhile, as the traditional media/entertainment companies continue to migrate toward streaming and other contemporary models of distribution, they will surely learn much from a pioneer like Netflix.  But this will not change the raw investments of time, talent, labor, and money required to produce new works, and so it will not diminish any producers’ interest in protecting and enforcing copyrights.  

In this context, I am reminded of a story from January of last year in which songwriter/performer Blake Morgan found himself having to explain to Spotify executives that music was in fact the product they were selling.  One might think this is not a very high mental hurdle to clear, but Morgan describes that some in the meeting became rather heated in their defense that, no, Spotify was the product.  Because, of course, we launch that app just to look at the interface?

Time will tell if there will be any significant future defections from the Internet Association, though its members are not without vested interest in a range of policy areas.  But to the extent that union was formed in response to proposals like SOPA and to advocate against copyright enforcement, the departure of members who are now major rights holders serves as a long-overdue reminder about the difference between creative works and the technological means to access or distribute those works.  As the platform owners love to repeat in their own defense against liability, the internet doesn’t produce anything; it’s just a dumb pipe.

Dragon Box Sued by New and Traditional Film Studios

Picking up on the piracy-doublespeak theme of my last post, let’s highlight a favorite talking point among piracy advocates and apologists, the one that goes like this: If the major producers were just smart enough to make works available conveniently and affordably, people would stop pirating. That was always a lie. And it’s been proven a lie by the filmed-entertainment industry because a huge volume of content—more than any normal person has time to watch—has been made conveniently and affordably available, and yet piracy continues to increase. More than that, piracy has become so sophisticated that potential new users of pirate sites don’t have to be sophisticated at all.

Until fairly recently, a user generally had to be aware that he was visiting an infringing site to illegally download or stream a motion picture or TV show. If he was committed enough to his piracy, he’d have to follow some of the trends, know which pirate sites are doing what, invest in a VPN to hide his tracks, and spend some time searching for specific titles. Now, the process is made much easier with device-based piracy, often referred to generically as “Kodi Boxes,” after the name of one of the first products to enter this market. Essentially, these devices work like an AppleTV or Roku, but because they’re built on open-source operating systems, third-party “add-on” software was made available almost immediately to turn these devices into piracy boxes.

With add-on software, the user gets a Neflix-like graphic interface offering nearly any title he can think of for free. What the device does in the background is locate the target material on a pirate site’s server somewhere in cyberspace and then stream it from that infringing location via the box to the user’s screen. It’s all very clean and prettied up just like a legit product, requiring no more savvy than the use of a TV remote. It’s so easy that a small child can steal cartoons in her pajamas on Saturday morning without waking Mom and Dad for help.

Enter Dragon Box

On January 10, a complaint was filed in California District Court against developer Paul Christoforo and reseller Jeff Williams of Dragon Box—a device pre-loaded with piracy software and which is overtly advertised to consumers as a substitute for paying for cable, Netflix, Hulu, or any legal supplier of filmed entertainment, including online gaming. Plaintiffs, which comprise Netflix, Amazon, and six major motion picture studios, allege that Dragon Media Inc. intentionally facilitates and induces mass infringement of their works via the function of Dragon Box and the manner in which it is marketed to the public. Here’s the sample ad cited in the complaint:

That ad alone is sufficient to imply that this case probably won’t last very long—meaning Dragon Media Inc. won’t last very long because they don’t seem to have a claw to stand on. Advertising a device that delivers on a promise to enable consumers to watch subscription-based content without said subscription is about as clear-cut as selling bootleg DVDs out of a warehouse. I’m frankly surprised the defendants imagined they’d get very far with this one, operating out of Carlsbad, CA and blatantly promoting illegal access to just about every kind of media content available. Beyond the eight plaintiffs in this litigation, Dragon Box’s advertising implicates the sports and news interests, the cable and satellite providers, and so much more! Their interface even offer a menu selection called “In Theaters,” thus facilitating and promoting access to pirate streams of movies weeks or months ahead of their release on digital platforms. Because freedom I guess.

I imagine this case will conclude rather quickly with a summary judgment for the plaintiffs. It’s very hard to imagine Dragon Media sustaining a reasonable defense, let alone a prolonged one against basically the entire film and TV-producing universe, both large and small. In fact, because these devices are sold as a for-profit venture, providing a product designed to enable mass copyright infringement, the defendants should be glad not to facing criminal charges, rather than a civil suit. Of course, this probably won’t stop the piracy advocates from concocting some theory as to why Dragon Box is perfectly legal.

Piracy Boxes Change the Landscape

One of the reasons, piracy advocates convince themselves and others that their actions are harmless is that the damage done thus far tends to be relatively obscure. When piracy causes an independent filmmaker to lose the margin between profit and loss, her story is dwarfed by reports that Hollywood’s millionaires are still making millions. Or when producer Martha de Laurentiis blames piracy as a major factor in the cancellation of a hit TV show, and it’s just one anecdote in a market that is clearly replete with content.

The big picture gives lie, the pirates will say, to the premise that piracy does much harm at all. And this conclusion then justifies the claim that copyright enforcement in the digital age is inherently draconian. These are the climate-change deniers among piracy advocates—the ones who cannot imagine how relatively small examples of harm imply that piracy, like all forms of harm, has a tipping point. Clearly, the millions of dollars invested in new production depend on a substantial majority of the market not pirating.

Meanwhile, we are currently witnessing an expansive and speculative period when companies like Netflix and Amazon are spending a lot of debt capital to produce new works and grow market-share, with only their subscription/rental platforms as revenue sources. I stands to reason that if a piracy-box market attained a certain volume, this would be an even greater threat to the digital-only producers than it is to the traditional studios releasing movies in theaters etc.

And, no I don’t care about Jeff Bezos either. In fact, I’m not a fan. But I do care about the creative professionals Amazon has to hire to make the recent Golden Globe winning The Marvelous Mrs. Maisel, or whatever else they produce next. And it’s patently absurd to assume that production will simply continue to grow and innovate if piracy continues to increase toward the tipping point, wherever it may be.

In this regard, devices like Dragon Box have tremendous potential to accelerate piracy toward the threshold of more demonstrative market harm because these boxes make access to pirate sites so easy, seamless, and invisible. Presumably, a plug-and-play device marketed in this way will draw consumers who would not otherwise engage in piracy. And if it were allowed to mature, this is a dragon that could easily burn up all the crops. Fortunately, I predict this case will conclude rather quickly and serve as a deterrent to the next “entrepreneur.”

Netflix Is Not An Internet Business

With the release this month of Netflix’s first official feature film Beasts of No Nation, the rental-turned-streaming service continues to prove itself a fierce competitor in the filmed entertainment industry—not only as a producer of award-winning projects, but as the preeminent, game-changing distributor having a dramatic influence on both traditional distribution models and viewer habits. This is particularly true with works we would normally call television programming, but it should be no surprise to see Netflix, Amazon, and other streaming services jump into the production of feature-length motion pictures. Still, even as Netflix reshapes the producer/distributor landscape, it would be a mistake to call it an “Internet business.”  It’s not. It’s a filmed-entertainment company—one that has followed almost the exact same business model as most cable networks, which built revenues on syndication (very similar to rentals) until they had the resources to begin producing original programming. Hence AMC makes Mad Men.

Naturally, the most profound change in TV viewing effected by streaming technology is the ability to “binge watch,” which is itself a neologism with an unnecessarily negative connotation. Speaking as a guy who abandoned “by appointment” television more than 25 years ago, I have to say that I now do watch TV shows again because of the opportunity to view an episode or two in sporadic moments of free time, though I wouldn’t really describe this as “binging” per se.  It’s really just a more dynamic and more convenient version of time-shifting (first made possible by the VCR), hence it’s easy to see the business logic in releasing whole seasons on a single day rather than one episode per week.  In a subscription model using on-demand technology, time no longer matters to the distributor as a point of access in order to retain revenue from viewers, but this is really the only distinction between a Netflix and an HBO as producer/distributors. And assuming HBO replicates the same model in the near future, this will not make it suddenly an Internet business.

But what is an Internet business anyway?  It may seem obvious, but not if we pay attention to both the colloquial, and even some of the formal ways in which we talk about the Internet. For as long as I can remember, friends and colleagues have been referring to the Internet when it isn’t quite what we mean at all. And I am sure I have been guilty of this lapse in clarity more than once on this blog, though I do try to use the expression Internet industry when writing about behaviors, motives, or agendas of a specific group of major corporations as subjects distinct from the technology itself.

Consider the expression Don’t believe everything you read on the Internet, a cliché that predates our digital times, but one that seemed to take on a new connotation during the dot com days when those bubbly, revenue-free business ventures were grist for a justifiable mill of cynicism.  Of course, neither then nor today would it make sense to dispute the veracity of information that comes through any particular set of wires. If a 20-year news veteran writes a story, it certainly does not matter if her work is published in print, online, or both. In this sense, there is no the Internet, there is only the journalist, her integrity, and her talent.  But that doesn’t stop us, it seems, from occasionally thinking of the Internet as a subjective noun, which can entertain, produce, deliver, swindle, amuse, enlighten, or lie; rather than as something more akin to a prepositional phrase, which creates an association between the individual and one form or another of human enterprise, action, or even folly and predation.  Still, we often say in casual conversation, I got this off the Internet, Look it up on the Internet, or Buy it from the Internet, and so on, entirely dissociating the information, content, or product from the extraordinarily complex, capital and labor-intensive processes behind the ephemeral page.

We talk about connections and awareness in the digital age, but real awareness is often not a byproduct of the consumer-convenience and ad-driven design of Web 2.0. Consider the reductive nature just in the act of buying a smart phone online.  A single click represents mining five metals in at least four countries as well as eight rare earths found mostly in China; international trade agreements; human labor working in conditions of varying degrees of quality; global shipping protected by multiple state navies; and a legal framework of mind-boggling proportion. In the same way many schools and parents have in recent years found it worthwhile to teach children that food doesn’t come from the supermarket, it is perhaps even more necessary to teach them that absolutely nothing comes from the Internet.

With entertainment media, it clearly does not matter whether HBO’s True Blood transmits to a viewer’s TV via one type of signal while Netflix’s Orange is the New Black uses a different transmission technology. This has absolutely nothing to do with the viewer enjoying either program and even less to do with the process of producing these hit shows. And this is perhaps an oversimple, yet relevant, example as to why I think it’s about time we stop reporting the story of the copyright debate as one of Internet businesses vs legacy media producers, or Hollywood vs The Digital Age, or most especially as Creators vs Technology.  As with the smart phone example, copyright is just one component of a legal framework that enables the production of Orange is the New Black and, by the way, the Google search algorithm that makes it convenient to look up information about author Piper Kerman.

It should be abundantly clear that for all the shiny newness of the “Netflix effect” on the industry overall, none of these developments imply any clear mandate for substantive change with regard to a producer’s copyright interests in the works—or with their interest in mitigating the influence of illegal distribution networks (piracy). To the contrary, the fresh diversity of programming and flexibility of viewing options advanced by these new producer/distributors may be even more dependent upon protecting their distribution, derivative, and merchandising rights than with so-called traditional media business models.  Whether the cable plugging into your TV is coaxial or ethernet, the legal foundation that enables production of the shows and films you watch remains fundamentally unchanged—to say nothing of the fact that the technologies themselves are dependent on many of the same legal frameworks.

Nevertheless, the ideological battle rages on, attracting “Internet activists” toward a broad anti-copyright, anti-IP agenda, perpetuating the myth that there is a central conflict between technological or creative innovation and the purpose of protecting intellectual property. The rhetoric of these squabbles distracts from the more subtle—easily misunderstood—points of actual conflict among leading entities. Meanwhile, technological similarities among major players seem to cloud some very important distinctions in business strategies and practices.

Netflix built its business entirely within the regime of licensing existing works, providing a better rental service, staying ahead of consumer demand as high-quality streaming became technologically feasible, and then migrating into original programming.  That’s called being competitive and innovative. And with its production of excellent works in just the past few years, the company has grown its number of paying subscribers to nearly 60 million; it now has a market value just behind that of CBS; and it is rapidly expanding into multiple markets around the world.

The bottom line is that neither individual creators nor major media producers have any quarrel with technology, the Internet, or the future. To say otherwise is just silly. Filmed entertainment in particular is a medium driven from its inception by a robust cycle of technological innovation. Moreover, the major players in the changing market are simultaneously symbiotic and competitive.  Hence nothing about the IP interests of a Disney should be misrepresented as a generic rebuke every line of business in which Google has an interest, let alone as a rejection of technology in general.  It ain’t the tools, it’s how you use them.