Hey, if you're one of my subscribers, this is just gonna be a rehash of my previous dives into intellectual property, just targeted to a wider audience. You can skip this one if you want, but you know, I'll try to make it funny for you so you don't hurt my viewer retention too badly. And again, I don't ask for shares except when I need to signal boost in important issue. So give me a share :) Have you been using Netflix less? You're not the only one. Piracy has been going up Sandvine's Internet Phenomena Report over the years has been tracking BitTorrent usage as a percentage of upload, and after years of steep decline it's on the rise again, but why? 'Cause the weird part is Netflix used to be really great It was the absolute peak of convenience despite the fact that it was the only online streaming service out there and dominated the market with zero competition. Everyone was super happy with the streaming experience But now, I mean, people aren't angry, but there's definitely a mellow frustration and every time a new service pops up or especially grabs something old and popular like "Lost" There's a hint of annoyance for sure. (actually upon doing research, there's a bit more than a hint) But no no no, no, our streaming services are better than what it used to be. Now Netflix has competition So it must be better right? Except consumer satisfaction seems to be dropping in line with the rise of competition and there's very little innovation or even product improvement that is often indicative of a competitive market. Like Netflix have added, I think, about one new innovation a year and it's been over a year since the last one and don't even get me started on HBO Go and Offline downloads Like, like is HBO support run by Hodor? Because it keeps saying the same damn thing! It's baffling how slow streaming services have been even picking up the one or two innovations that have been already made Here are the innovations Samsung have made over the years in just its camera Here's the stuff Lyft and Uber have been doing Hell, just go down to your local bubble tea store. There's like new experimental flavors every week So why? So unfortunately, we're about to get a little heavy into Economics 101 I'm gonna try and keep it as simple as I can but to encourage you to stick with it (because it's kind of important) I'm gonna entice you by saying.. Streaming services don't want you to know what I'm about to tell you. The industry is fundamentally BROKEN. Everything is going to COLLAPSE I'm gonna start with a brief overview so you roughly know what I'm talking about and then explain the individual things. So as you might've guessed, this is not a real competitive market. There has been a wrench thrown into it–that wrench being exclusivity. See, a good competitive market is about raising your products above your competitors but buying the exclusivity rights to a show has no function other than to make it ILLEGAL for your competitors to match you, and that's a serious problem. But why is this a thing in the streaming market and not others? Well, it's a little government intervention called intellectual property that allows you complete exclusive control of an idea. Yes, this exclusivity is possible because these intellectual property rights mean that there are literal monopolies being fought over. Yes, you heard me right. I'll explain in a bit. Each and every show is its own monopoly, and when you add a monopoly to a functioning competitive market that thing becomes a monopoly itself or technically an oligopoly, a market with limited competition. This is why streaming is getting worse and annoying more and more people with each new "competitor" and why innovations in this market are so sparse compared to others. You can have all the amazing features in the world But it doesn't matter if you're on a monthly subscription For like two shows a year :( Wouldn't it be cool If your streaming service kept a record of your watch history and would integrate with YouTube and social media and let you add spoiler warnings for individual episodes? What if every time you pause, your streaming service would face scan the image and tell you the actors and what they've been in? What if every time you paused, it would read the subtitles and give you appropriate wiki articles for the proper nouns with spoiler warnings based on the episode you want? That would be amazing for something like "Game of Thrones"! All these are great innovations and you'll never see them because competition has purely been taking the form of fighting over exclusivity rights to as many of these monopolies as possible. Alright, that was a lot of jargon. But now you should have an idea where I'm going with this, so let me explain. So a real competitive market works like this: Say I make a mobile phone I am the only one making mobile phones I could provide the best product I can Or I could treat my customers like garbage as long as I don't treat them so badly that it's not worth having the product. So I jack up the price, sell people's lock screens as advertising space and demand people buy my phones with other irrelevant failed products I made and that I couldn't sell and as an added bonus, I'mma start talking about the Jewish question on Twitter, you know Why not? Free country, certainly not a free market In any normal situation, consumers would boycott, but boycotts become a whole lot less effective when you have to give up the product entirely Sure, you might not like my politics or "HoT BAbEs In YoUr ArEA" on your lockscreen But you also kind of need the ability to talk to people remotely. You know, when people boycotted United Airlines they didn't quit flying, they switched to a different airline. If United Airlines bought the exclusive flying rights to Australia, people will be a lot less inclined to boycott because it means giving up something rather than just switching to a better alternative. That's a terrible analogy. Everyone knows Australia doesn't exist. But this is the power of competition: If I'm the only one selling phones, I won't be for long. Another entrepreneur will eye my abusive business like a hawk If they can make profits while still providing a better product than me, they will start up their own business and take all my profits away as people switch. And you should be able to see one of the immediate problems with streaming with this [analogy] No one switches when they buy another streaming service because as much as people tell you that these are "competitors", they're not. Because by switching, you actually lose a lot of the things the so called alternative cannot legally give you an alternative for. There's no sense in switching from HBO GO to Netflix because Netflix is not legally allowed to provide you an alternative for "Game of Thrones" unless HBO lets them. This is the derpy part of intellectual property and why it's a monopoly, but we'll get to that in a moment. Point is, that if you're buying multiples, by definition they are not competing. And there you go. So if you've ever thought to yourself that one of these services was kind of crappy or that the buffering is so bad on Amazon it feels like the servers were actually installed there, that's why. What I mean is, returning to the phones, if my customers switch to my competitor, this in turn forces me to step up my game. Instead of treating my customers like garbage, I start lowering prices and offering innovations and when the war for innovation gets too expensive, competition will just take the form of "how can we make our products for cheaper without losing quality?" Sometimes businesses will try to be sneaky. Yes, but if they're caught they get crucified, and no one trusts them anymore. So there's fair incentive to not do that. Not only is this good for consumers, but it drives industries in huge upwards directions. Two decades ago, smartphones were inconceivable, but now they're so cheap that I don't even know where you can buy a brick phone anymore Maybe hardware stores sell Nokia tip drill bits now... So, cool. So what makes streaming services like Netflix different? Well, it's intellectual property. And the easiest way to explain IP is that the government gives you the right to keep an idea for yourself, and no one else can use it without your permission. And that's where you hit your main problem The idea behind IP is that is designed to incentivize the creation of other things that are very easy to copy but hard to think of. Like, in a normal competitive market without IP laws JK Rowling would write Harry Potter and then someone else would just copy or rewrite it and then just sell it for themselves for a lower price without needing to have spent the hours of brainstorming its creation. Because of that, the theory is that without intellectual property here wouldn't be anywhere near as many inventors or authors because it wouldn't be profitable. This is why you can own an idea. But here's the problem: by definition, this is a monopoly because you're not allowed to copy it. Hence the name "Copyright" and like literally that's what IP was designed to be, look at any documentation on it It's a government-granted monopoly. In a competitive market, you can copy anything so long as you're using your own things to do so. But intellectual property was designed to protect things where the vast majority of labour was thought. But I think the important takeaway is this: Intellectual property gives you a monopoly out of necessity, not because lawmakers wanted IP holders to not strive to make the best product they can. This is why I usually say that if you have intellectual property and you're not doing the best you can for consumers, it is already an abuse of your monopoly because there is no competitive market to keep you from doing what is best for consumers, and this is why I think streaming services are abusing IP laws because these exclusive rights mean each streaming server gets to be the only streaming option for consumers for any given show, Rather than compete fairly by trying to provide a better product than Netflix, they monopolize individual shows in attempt to get consumers to buy their service too, not instead of. When Disney rips all its licenses off of Netflix for its new Disney Plus and Netflix is like, "Well, why would I give you our licenses then?" Then the bottom line is that both of these services just got worse. Do these companies care? Nope! But consumers are wising up so, uh, someone should tell Disney that just 'cause they made WALL-E doesn't mean he's gonna clean up the mess they made. This shouldn't be happening with true competition, and none of the companies are trying to do right by consumers. So what we're getting is multiple products rapidly declining in quality and a broken competitive market that's not inspiring any innovation because no amount of features matters when a big company can waltz in with a big pile of money and make it illegal for your company to provide the intellectual property to use those features on. And that's the other thing! This destroyers niche market streaming and small startups. Anime streaming service have been getting eviscerated by Netflix ever since anime hit mainstream. Its binge-watching strategy where everything comes out at once might work for casual fans of anime, but hardcore fans who know the show is currently airing in Japan have to wait until the whole thing's out to watch it legally. In proper competitive markets, we'd see small streaming services create niches for dedicated fans: documentaries, anime, maybe even sub-genres of anime They'd pick up all the stuff the big services wouldn't think is worth it and provide features specifically designed for them. But the second something popular comes out that would fit on one of those niche services The big streaming service is just gonna go, "Oh, cool thanks! I'll take that." This is why the only streaming services that have entered the market since Netflix have been publishers with their own IPs or giant corporations like Amazon. In a non-exclusive system, like I'm suggesting, you'd still have a top dog fairly reliant on having the most money to get the most licenses. But niche systems with good ideas suited to those niches could slowly rise and pick out more niche audiences until they're big enough to challenge the big guys, but here small startups simply don't exist. And this whole encompassing problem is broader than you think. In both the worlds of anime and video games, we're seeing this problem more and more. The Epic Games controversy revolves around a competitor to Steam locking exclusives on their platform even though they are vastly inferior to Steam and seem to have no interest in changing. If I want to have reviews on my game, I can't just buy them on Steam instead because Epic Games has jumped some of them. They own the individual monopolies. Likewise, if you adore Netflix, a terrible service can still force you to buy them as well because they could have a monopoly on certain shows that Netflix could have if not for exclusivity. I'm part of a growing group of people calling for an end to exclusives for this reason, but this comes with a couple of questions. One of the biggest concerns people have with this is that many people believe that if the streaming service itself makes the intellectual property, it should have the right to keep it on its own platform, and that makes some sense. Morally speaking, I don't agree. I think the government has granted you a monopoly under the pretense that you're not going to abuse it, and tying it to a streaming service so that you don't have to compete, I see as abuse. If you want to manage both production and distribution, then you should earn that from consumers by making both these things the best they can be and letting them choose your platform over others. That sounds fair to me. But, the other side of this is more practical. Another argument is that since intellectual property was designed to create new shows, and exclusive licenses are providing any incentive for the funding of new shows. then intellectual property is doing its job just fine. From this perspective, are exclusives actually providing something we wouldn't have otherwise? Most people would agree, but is that really true? Here's the part where I start getting to the doom of this industry. Let's say, for sake of argument, that you're getting more new shows now because of originals. Let's also say that, for the sake of argument, that third party exclusives have been banned and that law is somehow been implemented in a way that distinguishes between true originals and something that has been funded. However the hell that works, because however you define it is going to be vague and prone to abuse. But acfdkldsdhfu alright, what happens? Well, first off, every big publisher is going to get its own streaming service as they have already been beginning to do right now. Fox, Hulu, Netflix, HBO, Amazon, CBS all access–Warner media is making one. There's also one for Disney coming out, so that means you can expect DreamWorks and other movie companies to make their own. Basically, it looks a lot like cable TV But again, let's say they're all making more originals now, so there's more shows being funded So first off, Disney was already making its own originals and basically just fragmented the market for nothing In fact, every production company that makes service won't actually be making more shows because of this Furthermore, what we know so far about originals, or even TV channels, is that is that everything usually has something popular the idea of a true original is kind of weird when you have a company with many people in a hierarchy making progressively smaller decisions. Ultimately, every show has a different writer and a different execution. Those writers are appointed by Netflix, but that doesn't necessarily mean the CEO. Ultimately, some stuff lands and some stuff doesn't. Even in companies that have been doing it for years. I've heard rumors of there being good stuff on a lot of platforms, in fact. "The Good Fight" on CBS, "The Handmaid's Tale" on Hule Empire has been pretty popular on Fox, that, I mean, it used to be for the right reasons *laughs* but what I mean is that there's gonna be a fairly wide degree of things you want to watch across all services. Again, these are not competitors. You're going to want to watch something from every one of these at some point meaning you either buy like ten services, or you pirate. And with 10 fucking services, piracy looks pretty appealing. No one wants to jump through this many hoops! It's jumping through Hulu hoops! And if you're thinking, "Well what's wrong with it being like cable TV?" Cable TV was a product of its limitations. Streaming on demand didn't exist, and the most practical way to deliver shows to people would be on individual channels with 24-hour schedules and no user input. A lot of time you'd have to buy a whole service just for one show, and that sucked. But the only reason it didn't collapse was because that was the only option. We live in the internet age now, and if piracy provides consumers what's technologically possible and legal means don't, consumers are just going to pirate. Again, piracy was down with Disney movies were on Netflix, and it's up when they're not. Chances are, even with third party exclusives banned, first party will still push people to piracy. I mean, it's it's already bad enough as is I got to people and I'm like, "Hey, isn't it weird how there's like one thing to watch on Netflix? I bet you can't even like give me a list of the things you'd want to watch." and they're like, "I don't dude, there's Stranger Things." And I'm like, "Yeah, that's IT! Since none of these are truly competing and just pumping money into originals, we're not going to get the niche streaming services or innovations that will actually revolutionize how we watch, which is actually possible now 'cause each application has a limitless potential of code rather than cable TV which just shot a bunch of images through a wire. Anyway, within this model, there is no reason to think that piracy won't become more and more popular with more people cutting their subscriptions, those originals stop being as profitable because the overall convenience has died. This is how the market collapses, or at least runs itself into the ground long enough to realize that this model needs to change. This is your "Doom of Netflix." On the flip side, see things my way. You kill exclusives now and suddenly you're getting high demand shows on every service and services are competing for quality. But you've lost the incentive for originals. So there's less shows right? Well, not necessarily. 'Cause the things outlook misses is that not having to dick around with 10 different services means having a streaming service is super convenient especially for the majority of people who just want to see the popular stuff. Combine that with innovation and instead of piracy going up, it goes down, and streaming services are pretty much a must-have for every household. This means entertainment is far more profitable than what it was before, and you'll get a plethora of new investors looking to make hit new shows to sell to streaming services. Boom. You still get more shows even without originals, and you only need to look as far as YouTube to see truth in that. Back in the day, there wasn't as much content or innovation on YouTube, and there was just a lot of people with webcams. But the bigger YouTube got the more you start to see high budget productions and lots of them. Very simple equation: the bigger the audience, the higher the number productions I mean, I mean technically YouTube has its own originals But let's be real no one gives a shit about those, and that's not even accounting for the extra niche services people will pick up just to get to the shows no one wants. Like I would no doubt buy one of the big services, but I'd also get an anime one Maybe someone else will get one for indie productions. Hell, I'd– What if there was a niche streaming service that did fun shows, but they were all incredibly risky and experimental? It would be like a B-movie novelty factor to having a subscription, and if anything hit it off and got put on the bigger service it would mean both advertising for the creator and the service that funded it. I don't know, maybe. Point is, there's potential. Holding onto exclusives has a spiraling down We we know what's down there: DVD players, piracy, and the same old streaming service you've been using for years. No, wait, I take that back. It'll be worse! But my way well that's going up. We don't know what's next, but what we do know is that it'll be better. Because that's how true competition works, and if all this sounds a bit crazy, it shouldn't. Have you ever wondered why you can find every movie in every brand of movie theater? Well, it's a result of a famous anti-trust case that dealt with a similar issue called Paramount v. United States It used to be the case that Studios owned theaters just like how Studios now own the streaming services, and it led to a bunch of the same anti-competitive, anti consumer issues like releasing to only their own theaters and within geographically advantageous positions first and only selling to independent movie theaters if they buy the high demand movies with their shitty ones too. A practice called "block booking." It was solved when anti-trust came in, but I'd be lying if I said it didn't hurt the industry at the time. Anti-trust required them to split their businesses development and distribution entirely, and I'm not a big fan of that, especially here. I'd like it if they were still an option for streaming services to fund, and sell them to other streaming services for a reasonable price. But then, like, it's like, what is a reasonable price? How do we know they're not going to just be like, "Oh this costs three trillion dollars" and it ends up as an exclusive anyway, ya know? so maybe the solution is to just bite the bullet and simply break things up. After all, as damaging as the antitrust case was to film back in the day, look at it now. It functions perfectly fine And there are plenty more movies now than before. So my prediction of a booming industry is probably accurate. Or maybe the solution rests in piracy as form of boycott. Consumers deciding when companies operate in bad faith for their originals and punishing them for it without restrictive hardline government regulations–at least in the temporary. It's potentially at least a good way to send a message, but I'll leave you off with a couple of things. Here is my previous video on this topic. It's mainly about anime streaming, but it covers the core argument of intellectual property, piracy as form of boycott, and is also a massive response to all the counter-arguments I've heard for this in the past. Here's a gal called be kind rewind who did the clearest, most concise overview I've seen of the Paramount v. United States case if that interests you, and here, finally, is an affiliate link to Private Internet Access, my personal choice of VPN And that's actually true by the way, I turned down like a 1k USD flat rate sponsor for a VPN because I wasn't happy with them But this one I am. Use it to get like cheap flight tickets, or, you know, other things. and if you want to support me in other ways just show this video to someone. My last video on this topic was demonetised, and while making money is important to me, I'm not gonna lie, it also grinded in views. So this is my main way of getting the message out about this. Thanks in advance. It's a not much of an open marketplace of ideas if I've got no one to sell my ideas to and it certainly wouldn't be if my detractors didn't know I existed either. That would be a monopoly, and I'm not a hypocrite.
"Convenience has died" is a pretty harsh statement. It might have suffered a bit, but it is mostly the higher price of having to pay multiple subscriptions that drives people back to piracy, not that it is annoying to switch between 3 or 4 of them.
Shows are the innovation. Streaming services can deliver content to you in many different ways and they all do it. The innovation is what results from funding a bunch of otherwise unworkable shows and having something pan out.
Netflix invests billions into content that often fails but the gems stick around and get more investment. That's what I pay Netflix for and it's working out great. I sure as shit don't need a streaming service for something generic like Big Bang Theory. I get it so that I can watch Love, Death and Robots or Altered Carbon style shows that normal networks never funded.
If you make exclusives illegal you remove innovation and you go back to the most generic crap being made for the lowest amount of money possible.
This is such wild confirmation bias BS. His evidence that there's no innovation because wildly difficult, silly feature ideas haven't been implemented? Do you have any idea how innovative it is to have 4k streaming over our current internet infrastructure? Do you know how many insanely expensive, intelligent engineers Netflix employs? This guy is about 13% as smart as he thinks he is.
Edit: typo
this was good except I feel like the creator really over emphasized "government" granted monopolies. As if to say this is somehow government's fault.
The reality is that this is a case where private property is at odds with markets. Its an instance where two fundamental components of capitalism are at a contradiction to one another. Government/intellectual property law is only a tool of capitalism to enforce private property rights.
edit: also the idea that "this isn't true competition" is kinda meh, this is exactly what true competition would look like regardless of government because people would still find ways of enforcing their private property rights with or without government.
I don't think this guys' comparisons make any sense.
How is this different than before? Each channel/movie studio/book publisher/game studio had to create something new to compete with their competitors proprietary product.
Just because Harry Potter is the most popular, doesn't mean it doesn't have competition in young adult/fantasy. Same thing with super hero movies, looter shooters, and the like.
Streaming shows don't compete with novelty features, they compete with the shows they have available. People don't subscribe based on having a skip intro button or a watch offline button, they subscribe for the shows they want to watch. If Netflix no longer offers enough for it to be worth paying for, people will unsubscribe from it.
There is never going to be one cheap streaming service that offers every single show. Shows cost too much to make for that to happen.
I understand the point here, and the proliferation of streaming services is fast turning into the cable/satellite industry under a different name, but the author is wrong in some places.
Calling intellectual property government intervention:
Let’s say there was a free-market with absolutely no regulation. Laws would still have to be enforced to some extent, contract law at the very least otherwise you’d have total chaos. So there’s nothing stopping a creator from signing a contract guaranteeing the rights of a particular show or movie to one company, even if they didn’t “own” the idea. Because if IP didn’t exist, no-one would own the idea, and anyone would be free to sell the winning product to whoever they like, or to whoever is willing to buy it.
IP being a hinderance to competition:
This is true is some cases, but with streaming media the IP is the innovation, and the competition is mostly between different shows and movies, not with added and possibly extraneous features.
The platform with the best things to watch will be the winning platform, at least for a time. Much like the movie industry for nearly a century the whole market ebbs and flows. For a time a studio is on top, then another takes its place, and afterwards often vice-versa. Competition isn’t a zero-sum game, it doesn’t mean that everyone else has to lose permanently, otherwise you’re just aiming for a monopoly.
I don’t like what’s happening to the streaming market at all because of the saturation point at which people will turn back to piracy and media will suffer for it. Not because the market isn’t free enough, IP law needs an overhaul but under a system of private ownership it exists for a very good reason.
I'm almost nine minutes in and the only thing he's said is that "monopolies exist in this form of media." Yeah. Duh. We know. It's a problem. Is there a point somewhere in here? Because I'm not willing to wade much further.
What about a soft-exclusivity solution. Allow services exclusivity rights to content they created, but only for a year.
I just see the end of exclusivity destroying HBO. They're built on the idea that they make high quality, curated content. They wouldn't really benefit from streaming Modern Family next to Silicon Valley, because it's just not the service they're trying to provide. Most HBO subscribers I know love it because it's all killer no filler. But if you could also get their content elsewhere, they would need to radically change their business, which would mean focusing less on the content itself.
The upshot of timed exclusivity is that HBO is still running on old school TV culture. Services like Netflix are dropping entire seasons of shows at midnight and letting people figure out when to enjoy them. HBO airs its content on a strict schedule, and builds this massive hype machine. If they were able to be the only gig in town for the year their new content airs, they'd still be able to focus exclusively on original content, because their service would be practically a necessity to fans. Meanwhile, other services still get the benefit of being able to buy all of The Sopranos and Entourage.