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Geo-Blocking Sites a Business Rather Than Legal Issue

By Michael Geist

The Internet was once viewed as a "borderless" world that had little regard for the physical location of users.  That sentiment likely seems outdated today to many Canadian Internet users who have grown accustomed to clicking on links for audio or video services only to be advised that the content, site or service is not available in their area.

My weekly technology law column (Toronto Star version, homepage version) notes that "geo-blocking" has become standard practice among broadcasters, sports leagues, and music services that use technologies to identify the likely location of an Internet user in real-time and block the content in some circumstances.  From World Cup broadcasts to Hulu.com (a popular U.S. video site) to Spotify (a European music service), Canadians often find themselves unable to access content and unsure who is to blame.

While some have misleadingly suggested that outdated laws are the reason behind the blocking, the reality is that geo-blocking is invariably a business issue, not a legal one.  Indeed, geo-blocking occurs worldwide - U.S. residents are similarly unable to use Spotify and are blocked from accessing the CBC's streaming coverage of the World Cup. Rather than a reaction to older laws, the geo-blocking approach is actually an attempt to preserve an older business model, namely content licencing on a country-by-country or market-by-market approach [note that I say older, not outdated - territorial licencing obviously makes financial sense in some situations].

Canadian broadcasters have for years purchased the exclusive rights to air popular U.S. programming in Canada.  This approach led to the simultaneous substitution policies that allow Canadian broadcasters to compel cable and satellite companies to replace the U.S. broadcast of a particular show with the Canadian feed (complete with Canadian commercials).  

As video streaming on the Internet emerged as an increasingly popular method of distribution, Canadian broadcasters began bargaining for both the over-the-air and Internet rights to U.S. programs.  With those rights in hand, broadcasters streamed their own version of the programs exclusively to their Canadian audiences.  This explains why Comedy Central streams programs such as the Daily Show in the U.S., but Canadian users trying to access those streams online are redirected to CTV's Comedy Network site.

The same geography based licences arise with live sports programming and music services. World Cup matches are available on the Internet in countries around the world, yet the national broadcast rights holder (CBC in Canada, ABC/ESPN in the U.S.) limits their streams to a domestic audience.

Music services and book publishers face many of the same licencing hurdles.  Apple iTunes arrived in Canada nearly two years after the U.S. edition not because of copyright laws, but rather because a new round of negotiations was needed with copyright owners to obtain the necessary approvals.  

These delays continue until today, with Pandora - a hugely popular music service - blocked to Canadian users and Spotify's North American launch the victim of successive delays (Spotify owners have indicated they would like to launch the service simultaneously in the U.S. and Canada).

Canadian Apple iPad owners have found the same licencing limitations apply to the electronic book market.  Owners of the popular device can choose from among thousands of public domain books, but the electronic book store supported by the major book publishers in the U.S. has been slow to migrate its way north to Canada.

While frustrated Canadians may be inclined to call on the government to "fix" the problem, the reality is that this is a business issue.  Geo-blocking will only disappear if the business models they support give way to global approaches that make the borderless Internet a reality.

Full post as published by Michael Geist on July 08, 2010 (boomark / email).