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.