Netflix elasticities

Big Content surely has somebody estimating the relevant elasticities, surely?

Netflix is getting a bit louder about that using Hola!, Unblock-Us, or other VPN options to ungeoblock Netflix context breaches the terms of service; they may also be running a few experiments on knocking out folks who are accessing via VPNs.

Absent the geounblocking option, some current Netflix subscribers would flip over to local distributors. Others would flip over to Popcorn Time.

Netflix claims that its service reduces piracy.

I'd love to see some decent diff-in-diff estimation looking at what happens to file sharing as titles move onto and off of Netflix's catalogue: that's the intensive margin. This U Georgia Masters thesis takes an initial stab at it.

The extensive margin is that having a Netflix subscription means you'll generally find something else to watch if the one that you were particularly keen on isn't available - so long as the base catalogue is big enough. When I couldn't watch Marathon Man because it isn't on Netflix, I watched something else rather than head over to the video store or to PopcornTime. To measure that effect, you'd probably need to track something like changes in by-zip-code copyright notices along with by-zip Netflix subscriber rates. The time trends on their own probably aren't enough.

You can also get it by looking at what happens to torrenting rates when Netflix opens in new markets, but that'll suffer from attenuation bias where the high demanders were already accessing Netflix via VPN.

Chris Keall worries that when Netflix officially launches in New Zealand, its content offerings will be pitiful by comparison to the American ones we're already getting, and that the launch will be accompanied by crackdowns on VPN-based users.

I worry that they could do one worse and start checking the addresses on the credit cards used for payment; the workaround for that is harder. I have every confidence that tech will outpace VPN crackdowns. But getting US-based payment methods where the anti-money-laundering regs mean you have to give a social security number to get a US cash debit card - that's harder to route around, and Netflix doesn't take Bitcoin.

There's a current workaround, but it depends on Netflix's continuing to have gift cards. And I'd likely also lose the ability to flip to Netflix UK, Canada, Brazil, or elsewhere to get content.

I wonder how many people will flip to Popcorn Time if Netflix makes it too hard to access a decent range of content.

Previously:

• In praise of Netflix - in which Paula Browning fails to explain why there's any difference between parallel importing shoes and parallel importing films.
• Netflix and fixed costs - in which I reckoned, wrongly, that Netflix wouldn't bother starting up here.
• Netflix Premium - in which I wished that Netflix would offer a quadruple-the-cost subscription with more content.
• Copyright Chilling Effects - in which Sky's lawyers didn't like my posting on how to geounblock.

DotBets

There not yet being iPredict markets on Kim DotCom's yet-to-be-registered political party, I've been reduced to bilateral bets.

I figure there's an 80% chance, or thereabouts, that there will be some new political party with which Kim DotCom is affiliated. 

I also put even odds on that there will be substantial Snowdon GCSB revelations during the election campaign. Our election is coming up this year. The Snowdon releases thus far haven't said much about New Zealand, but he and Greenwald seem to be timing things for best media effect. So why wouldn't they have saved any of the good NZ stuff for the election? 

Conditional on this party's being established, and conditional on there being substantial GCSB stuff coming out during the election, I expect that Kim DotCom will be exceptionally well placed to capitalise on it. And so, in that state of the world, I put even odds on that DotCom gets 5% of the party vote.

So 0.8 * 0.5 * 0.5 = 20% chance that DotCom gets 5%. One chance in five.

@BKDrinkwater and @kiwipollguy reckoned that overstated DotCom's chances. So they each put $80 up against my $20. If some DotCom party gets in at 5%, they each owe me $80. If some DotCom party doesn't get in at 5%, I owe each of them $20. @ClintVSmith did a bit of yapyapyap about how my numbers were wrong, but wouldn't put any money on it. 

That both Drinkwater and Heffernan took the other side of the bet suggests that I've likely overestimated things somewhere. I'm not sure which parts of the combinatorial they figured I'd overestimated. I suppose iPredict will let me know sooner or later. 

I've reckoned that there's space in the NZ political market for a party that's strong on civil liberties but is also friendly to free markets. The Greens own the "civil liberties, except around smoking tobacco and eating, plus heavy state control of the economy" space. ACT has the free market spot but isn't credible on civil liberties when it comes to surveillance issues: ACT's enthusiastic support of the GCSB power extension means they've no chance on that issue, regardless of any leadership change. No new party, or at least no successor to ACT, can come up in the traditional liberal "free minds, free markets" space while ACT is still there. 

But a civil liberties party that stays basically neutral on economic issues other than favouring whatever makes internet better could do really well. 

Chris Keall over at Ars Technica provides a nice summary of last week's cancelled DotCom party. Kim DotCom planned an album release party and everyone was invited. The Electoral Commission thought it might count as "Treating" - providing of gifts in hopes that those so-gifted would reciprocate with votes. This application of the law doesn't make any darned sense to me. Suppose that, at your party's annual convention, a band played. Would that be treating? How about if you have a hospitality suite with free drinks? What if the party's meeting is held in an exclusive spot that's otherwise hard to get into, and the fee for attending is way less than the venue would normally charge out at? And if the distinction here is whether the event is members-only, surely DotCom could have signed up each and every attendee as a $1 member of his new party and called it members-only too. 

Rob Hosking figures that DotCom's potential party is frivolous and that DotCom's main interest is in making himself extradition-proof. 

At its core there is an adolescent mindset here: uncritical fandom with all the depth and maturity as a bunch of screaming teenagers at a Justin Bieber concert on the positive side, and on the negative side, a pubescent screech of "you're not the boss of me!" directed at both the current New Zealand government and the US authorities.

I'm not sure that changes much of the reckoning above. Sure, he doesn't have a slate of policies. But, at least for now, that ambiguity is a major advantage for him. Without policies, every fan of DotCom, adolescent or not, can project their idealised policies onto him. Any policy he announces will disappoint some faction. Staying quiet on everything other than surveillance and internet policy gives him flexibility for any post-election negotiations. 

And a "You're not the boss of me" party could crack 5% if we get Greenwald/Snowdon revelations that, hypothetically, the NSA's Waihopi spy base is being used to scrape down and store each and every text message sent within New Zealand, monitor all our phone calls, and that NSA has taps on the cables running into New Zealand.