Regulating Content? Or Price Gouging?

You’re settling in for a night of binge-watching television. You’ve got your snacks, your blanket, and you’re ready to get started with the evening’s entertainment. That’s when you see the dreaded error message, “This video is not available in your country.”

You’re probably wondering what this is, and why it’s happening. Well don’t worry, everything will be explained.

 

 

What you have just encountered is known as geo-blocking, the practice of restricting a user’s access to content based on their location. Using your IP address, content providers can determine your location and geo-block you accordingly, only allowing you access to certain content under specific rules depending on where you are. Geo-blocking is done by video streaming services, online music stores, and even digital PC/console game stores.

In terms of online video streaming services: certain YouTube users will geo-block some of their content, ABC’s iView won’t let you watch any shows from outside Australia, and Netflix provides separate libraries for users depending on their location, allowing some access to content before others.

Online music stores can geo-block in a different way. iTunes was found to be charging some users more for the same product. When comparing the prices of Sia’s 1000 Forms of Fear, Australian buyers were paying 82% more than their US counterparts. You will also find it impossible to purchase any albums from Amazon unless you live in the US.

Finally, on to digital stores for buying video-games. Digital retailers were found to be charging Australians customers more than customers in the US for the same product, and hardware suppliers including Lenovo are doing the same thing. In 2012 Lenovo sold their latest ThinkPad at a significant mark-up for Australian customers.

You might notice that it seems like Australians aren’t getting a fair deal in a lot of these cases, and you’d be right. Australians have been paying more for the same content and products for some time now, thanks to what’s generally known as the “Australia Tax”.

So why is this done? Well there are several reasons that companies may engage in geo-blocking, and not all of them are ridiculous. Licensing agreements are one of the main cause of geo-blocking, particularly when it comes to video streaming websites. For example, Netflix may be unable to provide a particular show to their Australian customers because another distribution company has already bought the right to distribute the show in this region.

For the sale of digital goods which are identical there really isn’t a good reason for a distributor to charge one person more than another for the purchase of the same product. In 2013 the Australian government looked into the apparent discrepancies in the pricing of digital products. When it comes to the sale of video-games, users found significant price disparities imposed on Australian gamers when purchasing through digital distribution services like Steam. They cite the example of Diablo 3, released in 2012. At the time the government report was published, Australian customers were paying 30% more than those in the US. The report noted that there was no difference in the way the game was delivered (by download) or played (on a US based server as there were no Australian servers) that could account for the difference in price.

The report went on to state that in regards to the sale of video games, there were no transport costs (delivery is by digital download and the consumer is footing the bill for transport through a contract with their ISP), nor were there costs related to production of packaging or disks that could explain the inflated prices Australians are paying for identical goods.

No representatives from the games industry addressed this issue.

 

 

In an increasingly connected world, it really doesn’t make sense to restrict users’ online browsing based on their physical location, but that’s exactly what’s happening. Users want to be able to purchase what they want when they want to, without paying an inflated price because of where they live.

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