On Price Raises and Stupid Names

I really, really like blogs and Twitter feeds. At one point, I had so many blogs on my Google Reader that I was sometimes getting a thousand new items a day. I called a lot of them and I'm gradually adding them back, making cuts as needed to keep things manageable. Today, I only had 76 new items.

Since I usually subscribe to multiple blogs in each of my areas of interest, I frequently see that same story posted multiple times. That makes sense and it's fine, although it sometimes gets annoying when an items that is news (like Verizon getting iPhones) merits a post in nearly every blog I read, especially over multiple posts on the same blog over several days and even moreso when an item is not only big news in a certain field, but gets mainstream news coverage as well.

Enter Netflix.

As most people know, Netflix announced in July that it would be separating DVD rent and streaming and would start charging $7.99 each. Previously, one-DVD-out with streaming was $9.99 (raised from $8.99 in November 2010) and streaming only was $7.99. What this meant for customers that wanted both streaming and DVDs was that they would go from paying $9.99 to $15.99. That meant a 60% price increase.

Predictably, a lot of customers cried foul. I use Netflix primarily for streaming, so I had only taken advantage of the DVD service a few times. I decided to switch to streaming only, which meant that I'll actually save a dollar due to the price changes, since it's forcing me to make an active choice and not pay an extra $12 per year for DVD insurance. ("Oh, I never get DVDs, but what if I really want to watch something that isn't streaming?") However, while a Netflix price increase made sense, anyone should have been able to predict that such a drastic increase would upset customers. I don't understand why they didn't raise it gradually over a longer period of time. Or offer a bundled rate with at least some discount for getting both.

Because this, customers were outraged, subscriptions were canceled, and blogs were flooded with commentary. Fortunately, a few amusing things came out of it, like First World Problem of the Day with Jason Alexander.

September finally rolled around, prices increased, and somehow the world didn't end. Instead of breathing a sigh of relief, Netflix's CEO decided to capitalize on the dearth of satisfied customers by making a blog post and a video that not only offered a non-apology apology, but also announced that the DVD rental side of Netflix would become Qwikster, which feature a separate website (including separate queues), separate credit card billing, but would keep the red envelope...which I'm pretty sure no one cared about at all.

Once again, there was plenty of snark regarding the decision, such as Landline's great parody video of Blockbuster's decision to split popcorn sales and DVD rentals and this comic by Brad Colbow.

Unfortunately, there's been a lot of serious coverage, too. Basically, a company that was pretty good made a really poor decision on pricing, then decided to make an even worse decision about splitting operations and using a really bad name. Oh, and did I mention that they don't even have the @Qwikster Twitter account? Turns out that their lack appreciation of creative spelling is shared by someone with a penchant for a pot smoking Elmo. (He's since changed his Twitter picture at least.)

To make a long story short, I'm just at a loss as to why so many people are taking this seriously. I understand being annoyed at the sudden and drastic price increase, but at this point, it's stopped being annoying or even mildly frustrating and started being downright hysterical. And really, given all the problems today, don't we all need to embrace humor wherever we find it? Even if it's just the schadenfreude of knowing that the leaders of a major company are capable of levels stupidity that most of us couldn't approach if we tried.

Netflix Subscription Changes

I had already heard that Netflix was going to drop add a DVD-only plan and charge $7.99 a month. Today, though, I found out that Netflix is doing some major restructuring of their subscription plans. Starting September 1, the plan that I currently use (1 DVD out with streaming for $9.99 a month) will end. I can choose between a $7.99 DVD-only plan, a $7.99 streaming only plan, or I can pay $15.98 for my current plan.

Not surprisingly, Netflix has some annoyed customers. The blog entry announcing this change has 5000 comments, mostly from people complaining about what amounts to a 60% price hike, despite the fact that Netflix is presenting it as "offering [their] lowest prices ever." (As a side note, while a lot of people may indeed end up paying less for Netflix now, saying that it's a price drop is just as much of a logic fail as when AT&T and Verizon got rid of unlimited internet packages and offered less data for a lower price. The fact that you're offering a more bare bones option that means that some customers will save money by paying less money for less product doesn't mean that you've actually dropped prices.)

Personally, I don't care. I joined Netflix about five years ago with the 3 DVD out plan and barely used it until streaming came to the Xbox 360. Now I use it pretty much daily and I have a streaming device on every television I own. I still rarely get DVDs. I've had The Godfather since last June and I still haven't watched it. I should have dropped down to streaming when the option came out, but I've essentially been paying $2 a month for a DVD option. I would have probably continued to do this, but I'm not going to pay $8 a month for that option. If I subscribed to a separate DVD plan, I would have to really get some use out of it and I'm obviously not that big on renting DVDs from Netflix. If Netflix has a significant number of customers like me, then this seems like a really stupid decision because they're basically collecting $2 from me because I want the option of DVD rental, but I'm too lazy to actually rent them.

Of course, I'm probably not a typical Netflix customer and the people complaining the loudest about this change and threatening to quit also might not represent the majority of customers. It's entirely possible that a lot of customers don't use streaming and are annoyed that there's a cheap streaming only alternative, but no DVD only plan.

I seldom rent DVDs, so I'll probably try Redbox or Blockbuster (are they going to be around?) or even outright buy the DVD. The only difference is that I'll be paying less per month. That said, it would have been nice if Netflix offered a bundled plan ($13.98, for instance) or grandfathered older subscribers in. Of course, if they plan to use the money they're making to get a better selection of streaming titles, I'll be a happy camper, price hike or no.

A few days ago, I came across a short story called Nanolaw with My Daughter. The premise was interesting: In a world where people were literally being nickeled and dimed with lawsuits, a father sat down and taught his daughter how to answer her own lawsuits. In a day, the daughter received over fifty suits, only a few over a dollar, and several dealing with copyright. It should have been ridiculous (you hum a song walking down the street, the copyright hold catches it on video and demands a few cents because of your infringement), but a couple of stories this week made it seem less so. First, there was a proposed bill that would make it a crime to embed a copyrighted Youtube video without permission. Second, Tennessee passed a bill that makes it a crime to share your entertainment subscription login information. Tennessee's governor supported this by "citing the large record industry presence in Nashville." The article mentioned that the bill was aimed at hackers and thieves who resell passwords, but made sure to mention a couples cases where college students share Netflix login info with everyone they know. Techdirt posted an interesting commentary (RIAA Wants To Put People In Jail For Sharing Their Music Subscription Login With Friends).

This bothers me for a couple of reasons. First, based on my understanding of how Netflix and other providers license content, the recording or movie industry isn't losing money if subscriptions are shared. Netflix pays a yearly fee for licenses (for instance, $30 million for Starz content). Period. Starz doesn't get paid more if Netflix has more accounts or less if they have fewer. In other words, Starz gets $30 million a year, even if everyone with a Netflix account shares their password with everyone they know. I assume that other companies license content in a similar way. So I'm a little unclear as to how the RIAA is claiming that sharing subscription info is resulting in lost revenue. At most, Netflix and Rhapsody are losing subscription revenue.

Second, why is this being criminalized? Looking over Rhapsody's terms of use, only the user can access the service. Netflix limits usage to members of the immediate household. Obviously, sharing login information violates the terms of use and could result in an account being terminated, in addition to possible civil liability. Furthermore, entertainment services already have protections in place to prevent massive password sharing. Rhapsody will only stream to one device at a time and Rhapsody to Go limits the user to three devices. Netflix only allows the user to have six authorized devices as well as the number of devices that can stream simultaneously (between one and four devices, depending on the plan). That alone would probably dissuade most users from sharing login information. It's all well and good to let ten of your best buddies watch their favorite shows and listen to their favorite songs for free with your subscriptions when it doesn't affect you, but when it means that you might not be able to use the service you're paying for, it's a lot less tempting.

Personally, I'm getting tired of hearing about how the recording industry's profits are down and how movie piracy hurts corn farmers. Like most people, I consume a lot of media and I'm a huge fan of streaming media. I subscribe to Netflix, Hulu Plus, and Rhapsody To Go and I come out ahead for doing it. In fact, since I subscribed to Rhapsody to Go at the beginning of this year, I haven't bought any music. I'm still buying DVDs, but I'm definitely spending less as Netflix increases their catalog. I still buy games and books, although I'm using the library more for books and I would happily pay a reasonable monthly subscription if I found a good streaming game service or if I could download all the ebook I wanted.

In short, I understand and accept that the entertainment industry has to make money to continue producing works. I also understand that consumers have to pay for content. However, just because the entertainment industry likes the model where the only way hear a song is to either listen to the radio for hours or pay $15 or more to buy the entire CD for one song doesn't mean that they can turn back time and recreate that model. Like it or not, today's consumers are accustomed to being able to either buy songs a la carte or pay a flat fee for all you can eat. If the RIAA's profits are decreasing because of this (and I'm skeptical as to whether they are), then maybe they should be grateful that they managed to get away with overcharging consumers for so many years and try to figure out how to make a fair amount with the current model. Personally, if I had to go back to the days of buying an entire album to get one song (assuming, of course, I could even find the album in a store), I would probably just stop buying music completely.