Netflix cracks down (cough, cough)


Ivor Tossell

Special to The Globe and Mail


Published Wednesday, Jan. 07 2015, 3:00 AM EST

Last updated Wednesday, Jan. 07 2015, 11:53 AM EST

Netflix would like you to know that Canadians tapping into the company’s American catalogue is a very definite no-no. Maybe not a crime. Maybe not a big no-no, even. But definitely in finger-wagging territory.

“Virtually crossing borders to use Netflix is a violation of our terms of use because of content licensing restrictions,” the service said in a statement to news outlets, crossing its arms and shaking its head gravely.

Then Netflix sat down on its recliner and conspicuously went back to reading its newspaper, coughing loudly and raising the paper up so that it couldn’t see you.

The statement, which has been reprinted in various media outlets, came after reports that users who were accessing American Netflix from abroad were encountering error messages, telling them that such behaviour was now being blocked.

The reports were sporadic, and for now, it doesn’t seem like there’s any large-scale blocking effort under way. But the mere suggestion that such a move was afoot was enough to send Canadian Netflix users into a tizzy.

Let’s acknowledge something that many users cheerfully admit in the comfort of their living rooms: Canadian Netflix is essentially a grey-market service. It’s a false storefront, a post-office box we use as a tool to access the far superior American catalogue without resorting to out-and-out piracy. In this case, the tool at hand is the Virtual Private Network: a kind of encrypted tunnel that lets you burrow through the Internet and virtually pop up in a different location, as if emerging from a portal in Ohio to scoop up American content.

Is this illegal? Not exactly. Canadian lawyers have called it a grey area. The practice is against Netflix’s terms and conditions, but a breach of contract is not a crime.

Nor is it ethically compromising the way pirating content can be. If you torrent a piece of video, nobody is getting paid at all (except perhaps the pirates). Netflix, on the other hand, rents the rights to its videos on a time basis, not on a per-view basis. So a Canadian streaming a show from American Netflix isn’t depriving creators of anything: Netflix has paid the creator and the user has paid Netflix; the money’s down.

Netflix catalogues are different in different countries because licensing deals are split between different countries. A media owner might have sold the rights to broadcast a piece of video to a Canadian media company. If Canadians watch that content on Netflix instead of through the channel that paid for the Canadian rights, that channel loses out on the putative revenue it would have generated – say, from advertising on its own site.

Canadian consumers, however, don’t seem too concerned with these nuances. Taking the backdoor into Netflix’s American store meets a standard of legitimacy that many feel comfortable with. And perhaps the most legitimizing factor is Netflix’s apparent complicity in the scheme.

Computers are capable of a great deal of sophisticated analysis, including computing orbital trajectories, decoding the human genome and noticing that my Netflix account has logged in from Toronto one minute and Boise, Idaho, the next – the moment I turn on my VPN.

The company’s tut-tutting statement is more significant for what it doesn’t say than for what it does. There is no threat of sanctions to users, no hint of sabre-rattling about cancelled accounts, let alone legal action or damages. Nor is there any suggestion that its experiments in geoblocking are going to turn into anything more substantial.

We can guess why: Any hint that Netflix was about to shut down the American buffet would be met with Canadian subscribers stampeding to the exits. Canadians have a particular sore spot about being treated like second-class citizens in the global media market. Netflix knows this, and it’s no longer the only game in town when it comes to video streaming, especially as Canadian media companies get their acts together with offerings like Crave TV, which offers existing subscribers to cable packages unlimited streaming for $4 a month. Canadian dollars, no less.

There is a reason Netflix has calibrated its response to the question of geoblocking to “not mad, just disappointed.” The slightly dodgy status quo seems to be satisfying many parties, and any attempt to upend it would be taken as the company changing the rules of the tacit agreement it’s made with Canadian users – even if that tacit agreement contradicts the written agreement those users signed.

Consumer expectations, once established, are hard to revise. It’s a grey market, and Netflix and its Canadian subscribers are in it together.