An Associated Press article by Michael Liedtke addresses the issue of Netflix’s throttling. The article is about two years too late, but at least the writer does not gloss over the issue of throttling like virtually all mainstream journalists do when reporting on Netflix.
The article, “'Throttling' Angers Netflix Heavy Renters,” simply details what the rest of us have known since 2004. The ironic thing is that people proclaiming theories of Netflix throttling a year or two ago were called paranoid conspiracy theorists. Now, those wild conspiracy theories about Netflix are the facts of an Associated Press article.
Netflix made fools of their loyal supporters. Netflix told them throttling was a myth, they believed it, and embarrassed themselves by defending the company in front of friends and family.
Throttling existed all along, and Netflix hid the practice from the customers as long as they could get away with it. Finally, their business practices just got to be too much to hide, and Netflix quietly began coming clean.
Unfortunately, for Netflix, it may be too late. Many people have learned the truth the hard way and have warned others about Netflix. Netflix and throttling are two words that are now inexorably linked. Netflix’s reputation for deceiving customers will haunt the company for years.
You can read the Associated Press article at the following links.
“'Throttling' Angers Netflix Heavy Renters”
and
“Netflix Sends Frequent Renters to the Back of DVD Line”
Make sure to forward this post to anyone who called you a paranoid conspiracy theorist when you told him or her about Netflix’s dark side.
1/23/2006
"How to Get Revenge on Netflix" Article Link
The article, "How to Get Revenge on Netflix," has been moved. Please click here for the permanent link.
1/21/2006
Netflix Hires Former Postmaster General As COO
Netflix’s favorite scapegoat for slow DVD turnaround is the United States Postal Service. If you have ever asked Netflix Customer Service why it is taking so long for your DVDs to be checked in, a Netflix employee has probably implied to you that USPS is slow and incompetent and should be blamed for any delays.
Oddly, Netflix has hired, former U.S. Postmaster General, William J. Henderson as its new chief operations officer (COO). This brings up an interesting question. If USPS is so incompetent that they cannot transport DVDs in a timely and reliable manner, why would Netflix give one of its highest and most critical positions to a former USPS leader? Perhaps Netflix has more faith in USPS than they are willing to admit.
The fact is that USPS does have some problems, but getting mail delivered is not one of them. USPS handles mind-boggling volumes of mail each day, and an amazingly high percentage gets delivered to the intended destinations on time.
The reality is that William Henderson is now probably the most competent and ethical person in the Netflix organization. Congratulations, Netflix on making a wise addition to your staff. Now that you have a major USPS insider on the management team, please stop blaming USPS for delays.
Oddly, Netflix has hired, former U.S. Postmaster General, William J. Henderson as its new chief operations officer (COO). This brings up an interesting question. If USPS is so incompetent that they cannot transport DVDs in a timely and reliable manner, why would Netflix give one of its highest and most critical positions to a former USPS leader? Perhaps Netflix has more faith in USPS than they are willing to admit.
The fact is that USPS does have some problems, but getting mail delivered is not one of them. USPS handles mind-boggling volumes of mail each day, and an amazingly high percentage gets delivered to the intended destinations on time.
The reality is that William Henderson is now probably the most competent and ethical person in the Netflix organization. Congratulations, Netflix on making a wise addition to your staff. Now that you have a major USPS insider on the management team, please stop blaming USPS for delays.
1/13/2006
FTC Concerned About Netflix Settlement
The Federal Trade Commission (www.ftc.gov) has concerns about the proposed Netflix settlement (Chavez vs. Netflix). The FTC’s concerns closely resemble the concerns voiced by the many former and present Netflix customers who are unhappy with the settlement.
Essentially, the FTC is concerned the proposed Netflix settlement is more of a promotional vehicle for Netflix that could end up having negative effects on the members of the class. The FTC also has concerns about Netflix not adequately informing class members about the fine points of the settlement.
Here is an excerpt from the FTC’s official statement.
You can read the entire FTC statement at http://ftc.gov/opa/2006/01/fyi0602.htm.
You can contact the FTC directly at the following numbers and addresses.
FTC Toll Free Help Line
1 (877) 382-4357 (FTC-HELP)
Online FTC Complaints
Complaint Form
FTC Bureau of Consumer Protection, Staff Contact
Carol J. Jennings (202) 326-3010
Mail
FTC Consumer Response Center
Room 130
600 Pennsylvania Avenue, N.W.
Washington, DC 20580
Essentially, the FTC is concerned the proposed Netflix settlement is more of a promotional vehicle for Netflix that could end up having negative effects on the members of the class. The FTC also has concerns about Netflix not adequately informing class members about the fine points of the settlement.
Here is an excerpt from the FTC’s official statement.
…the FTC has two basic concerns with the Netflix settlement. First, the settlement would serve more as a promotional vehicle for Netflix, than a means of providing redress to consumers, and could leave some consumers in a worse position than if they had decided not to participate. Second, the notice to class members does not adequately inform them about the existence of the negative option and the settlement agreement, does not require disclosure of the terms of the negative option plan, and fails to specify how consumers can cancel once they are enrolled. Class members need this information to understand the cost they will incur if they do not cancel the free service or upgrade before the deadline and the steps they will need to take to cancel the service or upgrade and avoid future charges.
The Commission believes the settlement should be either rejected or restructured to correct the above deficiencies. The Commission vote authorizing the staff to file the brief was 4-0. (FTC File No. P024210; the staff contact is Carol J. Jennings, Bureau of Consumer Protection, 202-326-3010.)
You can read the entire FTC statement at http://ftc.gov/opa/2006/01/fyi0602.htm.
You can contact the FTC directly at the following numbers and addresses.
FTC Toll Free Help Line
1 (877) 382-4357 (FTC-HELP)
Online FTC Complaints
Complaint Form
FTC Bureau of Consumer Protection, Staff Contact
Carol J. Jennings (202) 326-3010
FTC Consumer Response Center
Room 130
600 Pennsylvania Avenue, N.W.
Washington, DC 20580
11/30/2005
Netflix Gift Subscriptions: The Gift That Keeps On…
If your are considering purchasing a Netflix gift subscription as a present for your friend or family member, here are some questions to ask yourself first:
- Will my friend watch enough DVDs to get a good value for the Netflix subscription fee?
- How is my friend going to feel when Netflix requires credit/debit card information when he or she tries to redeem the gift certificate?
- If my friend has a billing dispute with Netflix resulting from a billing error, lost DVD, etc., will my friend unconsciously blame me for the frustration involved in resolving the conflict?
- Will my friend remember to cancel his or her Netflix subscription in time to avoid getting charged for an additional month? If not, will my friend blame me for the charge?
- Since my friend is probably already eligible for a free two-week trial, is a one-month subscription much of a gift?
- If my friend really wants a Netflix subscription, why hasn’t he or she already signed up for the free trial subscription?
- Does my friend know about Netflix’s reputation? If so, will my gift be considered a good gift?
- Do I like getting gift certificates as gifts, or do I normally think they're kind of lame?
The most important part of gift giving is showing others how you feel about them. If you have answered all of the questions above and still believe a Netflix gift subscription is the perfect gift for your friend, go to Netflix and buy one now. If you think the gift of a Netflix subscription may backfire, then start browsing. There are many nicer gifts available for $18.
11/19/2005
Reed Hastings' Total Movie Hounds
In a recent interview in FastCompany, Netflix CEO, Reed Hastings had something to say about heavy users.
In Hastings' view, if you want to watch fifteen DVDs a month, you are a “total movie hound.” He also suggests, in a narrow sense, it might be better to get rid of the movie hounds, because they cost Netflix money. He then seems to add as a positive that the movie hounds stay with Netflix a long time.
This view is contradictory. If a fifteen-DVD-per-month movie hound costs Netflix money, how could having a movie hound as a long-term customer be positive?
Is Netflix exaggerating their costs? Why does Netflix hang on to customers they dislike? If Netflix is really losing significant amounts of money on certain customers, why doesn’t Netflix rework their business model so they can have a less adversarial relationship with their customers?
Here is the original question and response for your reference.
FastCompany: Who's your ideal Netflix customer?
Reed Hastings: A customer who's traveling and forgets to rent a movie and watches no movies in a month [might be], because they haven’t cost us anything and they've paid us $9.99 or $17.99. On the other hand, a customer who's a very light user is not going to stay with us very long. It's not that there's something wrong, that they don't like you, it's just that they aren't watching any movies. That's the number one reason for customer churn. On the other extreme we've got users that are total movie hounds -- they're watching 15 movies a month -- and in some narrow sense, it would be better to get rid of them because you're losing money on them. But then, they stay with us a long time. So there is no best customer. We try to make the experience work for all of them and we try to balance that.
An interesting exercise is when we run short of titles. We try to always be in stock, but sometimes we're not. Say we've got 1,000 copies and there's 5,000 people who want a movie. So maybe somebody's already gotten a lot of value for their $20 or $18 or $9 because they've watched a lot of movies while other people have hardly watched that many movies this month, so they haven't gotten enough value yet. Our sense of fairness is that if we run short, it goes first to the people who haven't gotten the most value yet in order to create a fair and balanced experience for our customers.
Click here to read the entire article.
In Hastings' view, if you want to watch fifteen DVDs a month, you are a “total movie hound.” He also suggests, in a narrow sense, it might be better to get rid of the movie hounds, because they cost Netflix money. He then seems to add as a positive that the movie hounds stay with Netflix a long time.
This view is contradictory. If a fifteen-DVD-per-month movie hound costs Netflix money, how could having a movie hound as a long-term customer be positive?
Is Netflix exaggerating their costs? Why does Netflix hang on to customers they dislike? If Netflix is really losing significant amounts of money on certain customers, why doesn’t Netflix rework their business model so they can have a less adversarial relationship with their customers?
Here is the original question and response for your reference.
FastCompany: Who's your ideal Netflix customer?
Reed Hastings: A customer who's traveling and forgets to rent a movie and watches no movies in a month [might be], because they haven’t cost us anything and they've paid us $9.99 or $17.99. On the other hand, a customer who's a very light user is not going to stay with us very long. It's not that there's something wrong, that they don't like you, it's just that they aren't watching any movies. That's the number one reason for customer churn. On the other extreme we've got users that are total movie hounds -- they're watching 15 movies a month -- and in some narrow sense, it would be better to get rid of them because you're losing money on them. But then, they stay with us a long time. So there is no best customer. We try to make the experience work for all of them and we try to balance that.
An interesting exercise is when we run short of titles. We try to always be in stock, but sometimes we're not. Say we've got 1,000 copies and there's 5,000 people who want a movie. So maybe somebody's already gotten a lot of value for their $20 or $18 or $9 because they've watched a lot of movies while other people have hardly watched that many movies this month, so they haven't gotten enough value yet. Our sense of fairness is that if we run short, it goes first to the people who haven't gotten the most value yet in order to create a fair and balanced experience for our customers.
Click here to read the entire article.
11/02/2005
Class Action Settlement Registration Begins
The settlement registration process for Chavez v. Netflix, the class action lawsuit over claims of Netflix's false advertising, has begun.
If you were a paying Netflix customer before 1/15/05, you are part of the lawsuit class. You may visit www.NetflixSettlement.com to verify your eligibility and contact information. To receive a benefit from the settlement, you must complete the Claim Form Process at www.NetflixSettlement.com.
Unfortunately, the benefits of the Netflix settlement are ridiculously meager.
If you are a current Netflix subscriber, you will receive a free one-month plan upgrade. For example, three-out members will be upgraded to four-out plans for the month. Note that you must take the initiative to downgrade your plan at the end of the month. If you do not downgrade your plan promptly, you will be billed automatically for the upgraded plan at the beginning of the next billing period.
If you are not a current Netflix subscriber, you will receive a free month of Netflix service. (This will give Netflix one last time to take advantage of you.) As a former subscriber, you will have the option of a one-, two-, or three-out plan. Common sense suggests that most will choose three-out plans; however, take note that you must cancel your membership at the end of your free month. If you do not cancel promptly, you will be billed automatically for an additional month.
Click here to find more detailed information about the settlement and your various options.
Note: If you are currently suing Netflix or wish to sue Netflix in the future, you may not want to participate in this settlement. Consult with you attorney about your options.
Update: For opt-out information, go to http://www.netflixsettlementsucks.com/.
If you were a paying Netflix customer before 1/15/05, you are part of the lawsuit class. You may visit www.NetflixSettlement.com to verify your eligibility and contact information. To receive a benefit from the settlement, you must complete the Claim Form Process at www.NetflixSettlement.com.
Unfortunately, the benefits of the Netflix settlement are ridiculously meager.
If you are a current Netflix subscriber, you will receive a free one-month plan upgrade. For example, three-out members will be upgraded to four-out plans for the month. Note that you must take the initiative to downgrade your plan at the end of the month. If you do not downgrade your plan promptly, you will be billed automatically for the upgraded plan at the beginning of the next billing period.
If you are not a current Netflix subscriber, you will receive a free month of Netflix service. (This will give Netflix one last time to take advantage of you.) As a former subscriber, you will have the option of a one-, two-, or three-out plan. Common sense suggests that most will choose three-out plans; however, take note that you must cancel your membership at the end of your free month. If you do not cancel promptly, you will be billed automatically for an additional month.
Click here to find more detailed information about the settlement and your various options.
Note: If you are currently suing Netflix or wish to sue Netflix in the future, you may not want to participate in this settlement. Consult with you attorney about your options.
Update: For opt-out information, go to http://www.netflixsettlementsucks.com/.
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