Comments on: Netflix Penalizing Frequent Renters with Throttling

By: Jane Galt

Jane Galt — Sun, 12 Feb 2006 18:31:49 +0000

All you can eat buffets aren't quite an apt comparison; the food cost is so trivial for those places, in comparison to costs like labour and real estate, that they don't lose any significant amount of money on even their biggest eaters. There are other reasons that they aren't the same; Netflix's business model has the potential for an adverse selection phenomenon, where the heavy renters drive out the light renters by sucking up all the most popular movies. Even the piggiest eater is unlikely to eat all of a popular food, and while all-you-can-eat buffets have a geographically determined mix of customers, only a few of whom will be pigs, Netflix could easily end up with every movie fanatic in the country, which would drive up the price of their service beyond the amount normal eaters are willing to pay. Moreover, since those heavy renters are only a tiny proportion of the overall audience, the fine print is exactly the right place to put that information; the fine print is where you are supposed to put the information that only pertains to a tiny subset of the customer base.

By: CalDevil

CalDevil — Sun, 12 Feb 2006 16:00:31 +0000

They're protected. Reed Hastings is a Dem power broker. Cal's AG Bill Lockyer would never go after a major contributor like Reed. In fact, out of respect for Lockyer and Cal Dems, no other self-styled "watchdog" AG like Spitzer or Blumenthal will go after Netflix either. Netflix gets a pass, kind of like a mobster from a rival family - need to keep the peace. It's not about protecting the consumer. It's about protecting the interests of your contributors and cronies.

By: James Joyner

James Joyner — Sat, 11 Feb 2006 21:52:17 +0000

Anderson: You'll note that I've been pretty consistent on this point, including the enlistment contracts issue.

By: Anderson

Anderson — Sat, 11 Feb 2006 20:55:53 +0000

Hm. Netflix is engaging in "fraud," but if a 18-year-old fails to notice that his enlistment contract could keep him overseas on duty for an indefinite period, that's too bad for him?

Consumerist America is a strange place.

By: bryan

bryan — Sat, 11 Feb 2006 19:50:36 +0000

The all-you-can-eat buffet is an apt analogy.

By: DeWaun

DeWaun — Sat, 11 Feb 2006 18:17:16 +0000

I concur. What takes two days to send out and receive often takes 5 days. I could ride a bike to the distribution station in my area where NetFlix ships and receives DVDs. It's about...oh, maybe 15 miles away? My wife and I have noticed this on many occasions.

By: The Glittering Eye » Blog Archive » What’s the business model for DVD rental?

Sat, 11 Feb 2006 16:13:51 +0000

[...] Hat tip: Outside the Beltway [...]

By: McGehee

McGehee — Sat, 11 Feb 2006 13:47:34 +0000

When my wife and I adjusted our Netflix membership last year we were informed up front that there would be a maximum number of movies we could rent in a given interval, and on one occasion even bumped up against that limit. Were we unique in being properly informed, or just more observant than most in spotting the warning?