Netflix Says Piracy Helped It Succeed In The Netherlands, And Will Help When It Launches In Spain

from the gain-in-spain dept

Mon, Jun 8th 2015 5:53am — Glyn Moody

Back in 2013, Techdirt wrote a story about how Netflix was using piracy as market research -- an approach that is as obvious as it is rare. The copyright maximalists doubtless hoped that would fail dismally, and that Netflix would see the error of its ways and join the industry chorus condemning piracy as a terrible scourge that impoverishes artists and causes society to collapse. Neither has happened, as an interview with Netflix's CEO, Reed Hastings, in El Mundo makes clear (original in Spanish, via TorrentFreak). Hastings confirms that looking at pirate sites to find out what people were interested in did indeed work out well in the Netherlands, and that this gives him confidence Netflix will thrive when it launches later this year in Spain -- a country that has traditionally had a high level of piracy:

I think that Spain is going to be one of our most successful countries. It has a population with a high level of [Internet] connectivity, which is accustomed to e-commerce and has given indications of being interested in our product. We are very optimistic.

He expands on why piracy is a help, not a hindrance, and how Netflix will manage to sell its services in the face of these free alternatives: What's certain is that [piracy] has created a public that is accustomed to viewing content online. We will offer an alternative that is much simpler and immediate than looking for a torrent.
That's also what Hastings said in 2013, so clearly he has not found any reason to change his mind since then. These are exactly the kind of ideas that Techdirt has been promoting for years, but it's hugely refreshing to find a successful media CEO willing to say them on the record not once, but twice. It's a pity that so many other copyright companies still insist on fighting piracy, rather than learning how to turn it to their advantage.

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Filed Under: innovation, marketing, netherlands, piracy, spain, streaming video
Companies: netflix

22 Comments

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Ninja (profile), 8 Jun 2015 @ 5:29am

Amusing. This is exactly what many others (including this very site) have been saying for years. Most digital piracy is just a result of the easier, more available nature of the goods. Netflix has proved without a doubt that if you provide stuff people want at a reasonable price in an easy, reliable channel people will pay.

I'll leave an open offer to the MAFIAA (because Netflix probably already suggested it): do away with your geo restrictions and stupid release windows (my huge TV is better than a stupid cinema) and I'll completely stop downloading any movies and I will offer you extra money. I'm willing to throw up to 6 (SIX) times the money I pay for my flix today if this happens. (Any bets I will be saving that extra money for years?)
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PaulT (profile), 8 Jun 2015 @ 6:15am

About damn time. The status quo that's been created here seems to be that locals often can't afford to buy new content, tourists get annoyed at not being able to access the content they already pay for and ex pats get frustrated over lack of availability of original language options when they buy legally. But, every tourist area has a few guys happily selling pirated DVDs on the street, and everyone with an internet connection knows where to download for free.

Actually enabling a legal service that's easy to use for locals and foreigners alike is what's needed, and I'm glad that Netflix are finally able to service this market. I hope they realise they already have a large subscriber base here (accessing via VPN, of course, since that was the only legal option) and that selection and playback options are of vital importance, but hopefully they've learned from their other launches what's needed.
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DannyB (profile), 8 Jun 2015 @ 6:19am

Correlation IS Causation
Examples:

When Ice Cream sales are highest, the temperature goes up as a result.

Any idiot can plainly see that the tides obviously cause the moon.

And this...
What's certain is that [piracy] has created a public that is accustomed to viewing content online. We will offer an alternative that is much simpler and immediate than looking for a torrent.

It would be just silly to think that:
* People buy ice cream because it is hot outside
* The moon causes the tides due to an unseen, odorless, colorless magical force called gravity
* The public WANTED online viewing. The lack of anyone providing it led to piracy. So blame Hollywood. (Just like the rise of open source was ultimately caused by Microsoft's crushing monopoly.) They did it to themselves.
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Anonymous Coward, 8 Jun 2015 @ 6:44am

Crunchyroll does this (or did) with anime. Crunchyroll also has the most amazing way of paying content creators.

Tldr: subscriber pays $5 a month. If the subscriber only watches one show that month the show creator gets the entire licensing cut of that $5. If they watch two shows the two shows split the cut based on percentages (watch ten of each and they split 50/50).

If Netflix/Hulu adopted this method there would be zero reason for studios NOT to license their content for streaming. Techdirt should contact crunchyroll and write an article.
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Anonymous Coward, 8 Jun 2015 @ 7:19am

Hey. Might want to mention that it will be a very limited Netflix
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PaulT (profile), 8 Jun 2015 @ 7:26am

Re:
Source? Unless you just mean that (like every other country launch), there won't be as many films in these countries at launch as there is in the US, in which case duh, that's how the rest of the world gets screwed over by Hollywood deals on a regular basis. Still better than what's offered now, which is somewhere between "nothing" and "you're evil pirates because you pay a premium to access the selection available elsewhere".
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Anonymous Anonymous Coward, 8 Jun 2015 @ 7:26am

Re:
You are probably right, but make sure the blame goes on the studios, not Netflix.
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PRMan, 8 Jun 2015 @ 7:35am

Re:
6 × 0 = 0
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Anonymous Coward, 8 Jun 2015 @ 7:38am

Hey Paul yes you are very right, This time they just made a point out of telling it would be limited. Sounds like it is more limited than usual, would make sense om spain
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Anonymous Coward, 8 Jun 2015 @ 7:43am

Unfortunately, the above article is missing some new information. Apparently, if you're in Canada, and you pay for a Netflix account and use VPN services, that you'll be labeled as a pirate, a criminal:

http://torrentfreak.com/criminals-when-you-pirate-criminals-when-you-pay-150407/
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PaulT (profile), 8 Jun 2015 @ 7:47am

Re:
"would make sense om spain"

Why? There's a piracy problem, so the answer is to offer them an inferior product that's not as valuable and not as compelling to pay for? How does that make sense?
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PaulT (profile), 8 Jun 2015 @ 7:51am

Re:
"Apparently, if you're in Canada, and you pay for a Netflix account and use VPN services, that you'll be labeled as a pirate, a criminal:"

You'll be labelled this and worse by idiots who don't understand the situation. Hey, at least Canadians have long had a local version to choose if their VPN stopped working, unlike the Australians, Dutch, Spanish and many other countries who had no legal option until recently.

I do, however, love that the meaning of "pirate" has now expanded to include not only paying customers, but customers who pay an additional premium on top of their regular subscription to allow more access. If that's not an indication of how broken the windowed business model has become, I don't know what is.
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mike, 8 Jun 2015 @ 8:28am

Too flowery for me
I guess I'm stupid, but I have no idea what you say in the first paragraph.

It's like you just took some kind of creative writing class?

Whoever taught it is terrible. Real waste of my time.
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Michael, 8 Jun 2015 @ 9:43am

Re: Correlation IS Causation
When Ice Cream sales are highest, the temperature goes up as a result.

All those refrigeration units running is probably contributing to global warming.
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John Fenderson (profile), 8 Jun 2015 @ 10:39am

Re: Correlation IS Causation
"When Ice Cream sales are highest, the temperature goes up as a result."

I know the owners of two ice cream shops, and they both told me a similar story: that ice cream sales go down when the temperature exceed a certain point (around 90F).

Whatever the causal relationship between ice cream consumption and temperature, it's much more complicated than a straight linear one!
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Gary Mont (profile), 8 Jun 2015 @ 11:23am

When the Merchant is King
"It's a pity that so many other copyright companies still insist on fighting piracy, rather than learning how to turn it to their advantage."

I think in the end, we will learn that these companies that demonize peer to peer file sharing, are doing so not because they think "piracy" is a terrible scourge that impoverishes artists and causes society to collapse, but because they want to place legal restraints on the internet that will prevent the free flow of information between citizens globally, especially information pertaining to their various products and services.

Television is their goal - all commercials on TV are lies to some extent and telling lies on TV is 100% legal and without any sort of consequence in a totally controlled environment. This is what they want for the Internet, and the copyright laws are the means they have chosen to use to produce the legislation necessary to end the fledgling public hive mind.

By associating file-sharing with "piracy" and making it illegal, they have given themselves a fresh slate upon which to draw laws that will - with a few deft re-interpretations - allow them to control the internet content and usage in the same fashion they control the television content and usage.

The so-called "free trade negotiations" are the vehicle they are using to install these new laws, which is why they must remain secret.

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Gary Mont (profile), 8 Jun 2015 @ 11:30am

Re: Re: Correlation IS Causation
Silly hoomunz,

Have your friends offer ice cream home delivery when the heat reaches 88 degrees and watch those numbers reverse themselves.

Once the temp reaches the "too hot to leave the air-conditioned living room" level, ice cream shops need to bring the ice cream to the customer. :)

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James Burkhardt (profile), 8 Jun 2015 @ 12:09pm

Re: Re:
This math ignores the implication Ninja made that he pays for Netflix already. 6/7.99=47.94/month. That's actually more then I would consider increasing my Netflix by, but then again, I don't pirate.
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John Fenderson (profile), 8 Jun 2015 @ 2:33pm

Re: Re: Re: Correlation IS Causation
Most people in my part of the country don't have air conditioners in their homes, so one might expect that they would rather travel to the air-conditioned ice cream shop instead.

(BTW, the reason ice cream sale start to fall off when the temperatures get too high is because ice cream makes you thirsty and when you're hot, you want the opposite of that.)
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PaulT (profile), 9 Jun 2015 @ 12:39am

Re: Re: Re:
"6/7.99=47.94/month. That's actually more then I would consider increasing my Netflix by, but then again, I don't pirate."

Neither do I, but I'd pay that for a service that actually allowed access to a full catalogue including current cinematic releases. If you compare that to a weekly theatrical outing, especially for multiple people int he household, it's actually quite a bargain. As long as they kept other tiers for people who can't afford that kind of premium and just want the current kind of lineup, there'd be no problem on the consumer end.

Of course, that would never happen, but we can dream.
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Not an Electronic Rodent (profile), 9 Jun 2015 @ 2:04am

Who's Fail?
and that this gives him confidence Netflix will thrive when it launches later this year in Spain -- a country that has traditionally had a high level of piracy
If Netflix fails, it will be little to do with piracy and lots to do with the content lobotomy forced upon it by the studios. Even though I rarely bother to watch the trash Hollywood puts out these days, I'd pay for a service like Netflix if I could watch what I want, whenever, wherever... but I can't so I don't.

It seems pretty likely from the user end, that the studios hate the idea of services like Netflix and are trying to kill them, whether they find piracy useful or not. Of course, the old saying might apply; "Never attribute to malice what can adequately be explained by stupidity"
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John Fenderson (profile), 9 Jun 2015 @ 8:00am

Re: Who's Fail?
I think it's malice. Things like Netflix pose a greater threat to the studio system than piracy ever could. The major thing that studios provide is access to a major distribution network. Netflix and such threaten to destroy that distribution monopoly (as does the internet in general, which is why they want to cripple it as much as they can.)
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