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Comment by mason55 | Hacker News Reader

Are you saying it shouldn’t be legal? Or that the business practice doesn’t make sense?

Let’s say you’re a French movie distributor. You know the French market, you know which movies will sell, you know how to market to French audiences. Because of this you can bid more on the rights to distribute movies in France than a global company that doesn’t have any specific knowledge about the French market (your return is likely to be higher and you’re liekely to have fewer failures). Same in the Czech, Romanian, etc markets.

But let’s say this movie conflicts with the release of some other movie you’re distributing so you want to hold it back for three weeks.

What’s your proposed solution? Tell the studio they can only sign deals with global distributors? Tell them to accept less money?

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> What’s your proposed solution? Tell the studio they can only sign deals with global distributors? Tell them to accept less money?

Stop signing exclusive deals with regional distributors. If you're going to put something on Netflix, put it on Netflix world-wide. That doesn't mean you can't also put it on a streaming service based in France that concentrates on French language movies -- do both. Let them each pay you for non-exclusive global rights.

You get paid more per service for an exclusive deal, but you also get paid by fewer services. Which is increasingly looking like a bad deal as the many different services proliferate. Having a hundred buyers is more profitable than having only one buyer that pays ten times as much.

It's the same game they're playing with regional exclusivity to begin with -- get more buyers by dividing up the rights. Rights in one country aren't worth as much as rights world-wide but you can sell them to more people.

The difference is that regional exclusivity makes customers angry and non-exclusive licensing makes customers happy.

Distribution rights for huge back catalogs were sold to third party local to a given country/region distributors long ago. There's a lot of entropy there, and each has exclusivity to control distribution for the given region.

It's not that easy to work away from. Which is why Netflix has been paying more to create or co-create content (most Netflix content isn't world-wide exclusive it seems).

> Distribution rights for huge back catalogs were sold to third party local to a given country/region distributors long ago. There's a lot of entropy there, and each has exclusivity to control distribution for the given region.

Which is another reason not to use regional licensing going forward, and pass laws to disfavor it in general. It increases transaction costs -- then when Netflix or any of your hundred other buyers wants global rights to a particular film, they have to negotiate with a hundred regional distributors instead of just the original creator. The transaction costs go from "N" to "N times M" where N and M are both large. And transaction costs make otherwise profitable transactions either less profitable or not happen at all.

> Which is another reason not to use regional licensing going forward, and pass laws to disfavor it in general

I'm curious what your proposed legislation would be. Just outlaw exclusive licensing? Would you prohibit vertical integration between content producers and distributors or just force vertically integrated companies to license content to competing distributors?

How about a distributor that has an inherent market advantage and so can bid higher on the rights than other distributors? Would that be allowed? Or would you require producers to charge some lowest common denominator fee so that you can't create releases that are effectively exclusive?

I just can't imagine how you would ever effectively police this without taking away a lot of free market rights from participants.

BTW, just so it's clear, I fully support the current EU Digital Single Market rules that try to enforce the fact that you should be allowed to watch your content while you are traveling. I think that's much easier on all sides of the equation because you're not forcing anyone to make additional deals that they don't want to make (i.e. distributing content to other companies when they want it to be exclusive). I just think it's a big step from that to actually legislating away exclusive distribution deals.

> I'm curious what your proposed legislation would be.

A big thing would be to just discontinue legislative support for it. Get rid of any law preventing third parties from circumventing region locks, so that major companies can overtly thwart them.

Then you can get a "tell Netflix I'm in..." selector from your ISP or bank and the problem gets solved by the market itself.

Correct. I've used Netflix accounts in Canada, the US, Taiwan/HK, Japan, and the UK. They all have different content. But access the content is tied to the account's home region rather than your location (at least for the short term on trips).

yes, it shouldn't be legal. EU single market and all that.

http://europa.eu/rapid/press-release_IP-17-4781_en.htm

The single market helps with physical media (e.g. DVDs) and the digital single market helps with electronic sell through (e.g. the Apple model where you buy a movie digitally and download it).

But there are still two big gaps

1. Even for physical or download to own media, you can still strike distribution exclusives and you can make them based on language. I can make a deal with a German distributor that they're the only ones that gets to distribute the German version of my movie. They can choose to delay the release of the German version for as long as they want. If you only speak German then you can't watch the movie even if the French, Italian, Spanish and Polish versions were released 6 months ago.

2. This really doesn't help with SVOD (e.g. Netflix-style) services. I can make exclusive deals with an SVOD provider in Germany and one in France. If the French provider decides they're going to hold back the release of the movie on their service then, sure, with the EU single digital market the German provider has to let you sign up, but now you're signing up for SVOD services all over the place.

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