The Great US Paywall

I was recently in Florida for a Vacation and purchased an Amazon Fire device. The device is very similar to the Barnes and Noble Nook I purchased last year but I thought the Amazon content and store would provide a better experience. The first thing I did was sign up for Amazon Prime Trial, with no problems. I purchased some music, no problems and much better prices than iTunes. I also purchased a magazine subscription to 2600, no problems again.

Then I went to get an purchase an app. Suddenly I was unable to purchase any apps. The error message indicated I couldn’t purchase any apps in the my region. My region? What does that mean? I was in Florida, are apps illegal in Florida? After searching for and finding the Amazon customer service contact I sent off an email asking what was going on. Amazon responded that I was unable to purchase apps with a credit card from a Canadian bank and billing address. Basically because I was a Canadian in the US I couldn’t purchase applications for the Kindle Fire. The Kindle was returned the next day.

Apple and iTunes have done something similar for years where you can’t purchase from the US iTunes without a US billing address. The easy solution to this problem is to use the iTunes gift cards exclusively with a fake address ( preferably in a state with no sales tax ). With the launch of iCloud and iTunes Music Match though the company has changed its policy to require a US credit card and matching US billing address to be added to the account.

Donations

Wikileaks recently had problems collecting donations via credit card and Paypal froze its funds, limiting it’s ability to fundraise online. The ban has been so sever the only option to donate is the BitCoins system or to purchase virtual goods.  The BitCoin system has limited support and but may offer the best alternative to avoid the Paywall.

Regretsy has recently encountered problems with Paypal and their donation support. The company seems to allow you to use and collect donations but then freezes the funds. The confusion with the Paypal donation process is outlined in great detail by The Green Geeks.

The Paywall is effectively controlling donations and deciding who can fundraise online.   I’m sure this policy is need for some legitimate cases to prevent terrorist funding etc… but these are US companies that enforcing these policies largely without government direction or oversite.

Like the Great Chinese Firewall, the Paywall is proving to be a fairly effective means to control online purchases. Its surprisingly difficult to make purchases that do not involve your bank, credit card or Paypal.  The best system to get around the Paywall seems to be BitCoin.  The BitCoin system uses encrypted coins can only one person can ‘own’ through cryptology.  BitCoin includes an exchange and a defined Coin generation process.  This process means that once you own a BitCoin it can be transfered or exchange to anyone.  Eventually BitCoin’s must be converted by to real currency, this is where the Paywall may still be effective and few conversion points exist today.

The goal behind these Paywalls seems to be to create online economies of different scales.  For example an iPhone Application that sells for $0.99 in the US might sell for $1.19 in Australia or $1.49 in Europe.  This allows Apple and the application vendors to receive significantly more revenue for the same content from international customer.   The DVD system attempted the same with the DVD region codes a few years ago  but the system was quickly cracked and different pricing regions were never fully exploited.  The digital stores have so far been fairly effective at enforcing these restrictions, largely because they can heavily control the follow of money.

While physically in the US I can purchase just about anything at US retailers using my Canadian credit card and billing address.  As soon as the transaction goes online the Paywall comes into effect and my purchases can be restricted.  A very interesting development given the state of the US economy and the need to consumer spending…

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