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Does it really matter if you watch American Netflix?

In case you haven't heard, Canadians are crossing the digital border in droves and streaming U.S. content from Netflix. Most of us just want to watch our favourite shows, but do we really know what's at stake when we unblock ourselves?

It's hardly a new issue – a July report suggested one third of Canadian viewers were already masking their IP addresses in order to access Netflix's American library – unblocking made headlines this week after reports the site was cracking down on the practice.

Netflix has denied the rumours, saying nothing about its policies has changed. However, regardless of their veracity, the reports have sparked a debate about the merits – and ethics – of circumventing regional restrictions online.

The issue stems from the licensing agreements Netflix negotiates with rights holders and media studios. While Netflix is a global company, the right to show certain content remains tied to geography.

"Rights holders have licensed their work to be streamed by Netflix in a particular country, and the assumption is that if Netflix wants to make it available in another country, then they should be paying for that," said Michael Geist, a law professor at the University of Ottawa.

Netflix is notoriously secretive about its metrics, but some in the entertainment business worry unblocking makes their content appear less valuable than it is. Canadian users disguised as Americans could be watching hours of Trailer Park Boys, for example, but Netflix may not see the show as popular among its Canadian audience and could even choose to cancel it.

While Netflix's terms of service forbid accessing content "anywhere other than within the country or location authorized by Netflix," industry observers have accused the streaming service of turning a blind eye to customers who log in from Toronto one minute and Seattle the next.

"Unless the backlash from rights holders reaches the point that they're unwilling to license to them, it's not clear to me that there's a huge downside for Netflix," Geist said, noting the site can attract more customers by tacitly offering their entire catalogue to anyone savvy enough to make a few Google searches.

While some studios have complained about unblocking, Geist doesn't believe the practice is having an adverse effect on rights holders.

"For the most part it's a case where consumers are paying for something, Netflix is being paid and content providers are being paid," he said.

In Canada, Bell and Rogers are launching competing services to Netflix, and the debate around unblocking could heat up if they decide Netflix's lax enforcement constitutes unfair competition.

"They might think they have a better product than Netflix Canada, but not Netflix U.S.," Geist said.

However, even the two big telecommunications companies could be reluctant to tackle unblocking head-on. Both are also Internet service providers and, as Geist observed, they benefit from Netflix customers shelling out for faster downloads and larger data caps.

For Fenwick Mckelvey, a communications professor at Concordia University, unblocking is just the latest in a long "cat and mouse game" between those who own content and those trying to consume it.

"People have been putting up antennas to get American signals since the invention of radio," he said.

Mckelvey said Netflix is also caught between "download culture," where users are accustomed to finding content they want through piracy, and more established business models.

The struggle for Netflix, then, is to be able to offer a legitimate service at a price that can compete with file-sharing.

"There's a compromise trying to be struck, and Netflix is trying to become the vehicle of that compromise," Mckelvey said. "They're saying that if you pay $8 a month, then everyone's happy."

A brief history of piracy and unblocking

1. Cable pirates

In 1960s Canada, so-called satellite pirates performed their own version of unblocking, creating reception antennae and retransmitting U.S. television broadcasts via cable, often for a fee.

2. Concert bootlegs

Throughout the late 1960s and 70s, bootleg concert recordings helped launch the careers of numerous rock and roll acts, including Bob Dylan and the Grateful Dead.

3. Home Taping

"Home taping is killing music" was the slogan 1980s anti-piracy campaign by the British Phonographic Industry. Widely parodied, the campaign prompted the U.K. band Bow Wow Wow to release a cassette single with an empty side designed to allow fans to record their own music off the radio.

4. Software Piracy

Concerned by users illegally copying software programs, the Software Publishers Association launched a campaign called "Don't Copy that Floppy" in 1992. The unintentionally hilarious video was rediscovered in the 2000s and became a viral sensation on YouTube.

5. Music Piracy

Launched in 1999, the Napster file-sharing service was short-lived, but paved the way for the widespread online piracy that continues today.

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