But rather than chronicle all the wrong moves Netflix has been making as of late, such as separating their streaming and DVD rental business into two Web sites and now backtracking on that decision (interestingly, in a letter not from CEO Reed Hastings as the other infamous letters were, but just from “Netflix”), let me offer the letter I think Netflix should have written to their customers in light of their recent price hikes.

One could argue the price increases were the wrong decision as well, but I’m not convinced of that.  In fact, I think there’s an argument to be made that Netflix did NOT, in fact, raise their prices.  This point will soon become clear.  Here is the letter:

Dear Netflix Customer,

As you know, Netflix’s streaming service has grown by leaps and bounds over the past two years, and we now currently offer thousands of movies and TV shows that you can stream instantly to almost every device in your household.  From the iPhone to the big screen TV, Netflix built in to hundreds of devices that make using our streaming service so convenient.

As a company we continue to invest in our streaming service, and we strongly believe streaming is the way most customers prefer to consume their entertainment.  However, in order to continue to invest in expanding the number of titles and overall quality of our streaming services, we have decided to adjust our pricing model.  In most cases, the new prices will not change how much you pay on a monthly basis for Netflix.

You may have noticed that our streaming service has grown tremendously in the past few years.  In fact, on a plan-by-plan basis, the average customer now consumes [INSERT % HERE] more total titles today than three years ago.  The number of titles available, the convenience and the high quality our streaming offers are a testament to that.  As you can imagine, while the number of customers streaming content has grown considerably, those who receive DVDs by mail are holding on to them longer.  Given the choice, our customers have demonstrated to us that they prefer to stream rather than wait for a DVD.

So, in order to continue to invest in and expand on our streaming services, we are going to adjust our pricing model.  In essence, we are leaving our prices the same, but reducing the number of DVDs out at a time on your account by one.  In other words, if you had a streaming plus 3 DVDs out at a time subscription, you will be switched to a streaming plus 2 DVDs out at a time.  Your monthly rate will not change.

Of course, if you prefer to only receive DVDs by mail and not stream any content, there will be no changes to your account and you will continue to pay the same rate.  We also have streaming-only options for those who prefer that option as well.

We believe these changes reflect the value we’ve added to the Netflix streaming service over the past few years, and will allow us to continue to invest in and add further value.

We sincerely appreciate your business and I invite you to write back with any comments, feedback or questions you might have about these changes.  I look forward to hearing from you.

Sincerely,

Reed Hastings
CEO and co-founder, Netflix

* Note: The pricing changes suggested in this letter reflect the pricing changes Netflix actually made; they’re simply presented in a different light.

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In a business sense, obviously the reduced price did not significantly increase sales volume to justify keeping the rental vs. the purchase model. But I don’t think it’s correct to say customers prefer to buy vs. rent as such. The truth is, Apple’s iTunes user interface (UI) was terrible for renting TV shows, and customers and the rental model were never really given a chance.

The iTunes interface suffered from a number of functional problems. For example, when you rented content, you could only play it on the device you rented it on. But worst of all, iTunes had no bookmarking feature that kept track of which shows you’ve rented, so it was nearly impossible to keep track of where you were in any particular show. Nor did the customer, as renter, know when a new episode of a TV show became available for download. One can buy a “Season Pass” on iTunes, and get the content of that TV show pushed to you automatically. Not so with a rental.

Netflix, on the other hand, has a bookmarking feature. And whether you switch between the home TV set, your computer, your iPad or iPhone, or any other device you might have, the last show you watched is marked as such. All you have to do is tell Netflix you want to watch the “next” episode in the series of the show you’re watching and it knows what to play next. It’s easy to keep track of which shows you’re watching (via a ‘recently watched’ list) and which episode you’re on in any particular show.

Without bookmarking or season passes for rentals, Apple customers likely lost track of their place and just gave up, frustrated—or forgot about it altogether. The real problem wasn’t that customers prefer to buy vs. rent, nor was it about price; it was that the cost of using their UI was too high.

But darn it, I was pretty sure I had clicked the ‘Add to Wish List’ button. On the other hand, I found it difficult to contemplate how Amazon could make an error like that. I figured it was user error, and I went back and retraced my steps to figure it out.  Here’s what I discovered:

Upon first loading the page, the ordering box looked like image you see at the right. Now, I’m pretty fast with my mouse and am very familiar with the Amazon site, so I quickly went over to click the ‘Add to Wish List’ button, and then moved my eyes to another open window and thought that was the end of it.

So how did it the ‘Buy now with 1-Click’ button get clicked? It turns out that the image above is only part of the story; shortly after the page is fully downloaded into the browser (I’m using Chrome on Windows 7), some more options appear in the right-hand ordering box, notably a ‘Get it:’ option (shown at right) with the ability to select between Saturday delivery or Tuesday delivery.

I love this ability to choose shipping options just before clicking the 1-Click ordering.  It’s pretty convenient.  However, because this portion of the page doesn’t load until the rest of the page loads, it actually pushes the content below it down a few pixels.  Enough pixels, in fact, that the time between when I saw and meant to click ‘Add to Wish List’ and when I actually clicked and moved on to other things, the ‘Buy now with 1-Click’ button had moved under its place and that was the button that was actually clicked.

The image shown to the right of this paragraph illustrates what that order box part of the page looks like before and after the page is fully rendered.  Comparing the two side-by-side, you can clearly see that the ‘1-Click’ button has moved down to exactly the part of the page where the ‘Add to Wish List’ button is in the image above it. Viola! I figured out what happened.

So let that be a UI design lesson for all you developers out there. Or perhaps it’s a lesson for me to stop surfing the ‘net like a maniac.

Either way, designers should  be on the lookout for how a page loads in real time, behaves over time, and how that impacts the user experience. You don’t want to accidentally be buying stuff on behalf of your customers.

The obvious reasoning behind the move is that Conan would bring in a huge influx of new viewers to the network, and while Lopez would be on later, the carryover from the Conan boost would more than make up for it.

Unfortunately, that bet didn’t pay out.  This week TBS announced they’ve canceled Lopez’s show, due to low ratings.  And a recent article in Variety posed the question: Did Conan Undercut Lopez?  It’s an interesting analysis of the ratings and speculation as to the reasoning behind the move, and anyone interested in the matter should read it.

The dirty little secret in this story is that a large portion of Conan’s audience is watching him online or with their DVRs, i.e., when time slots are irrelevant. So while TBS is happy with the overall take-in of Conan-based revenue, it doesn’t help much with the rest of TBS’s programming.

Perhaps, if anyone is taking notes here, it should be Conan. People are showing up for him and his brand, not for any particular network.  So what if he were to cut the cord, so-to-speak, and produce his show exclusively online?  Sure, at the beginning, the overall ad revenue pie might be smaller for his show, but he’d get the full piece of it and not have to share it with a network.

Internet based video content is exploding and maturing.  And many shows produced for internet consumption are increasingly grouping themselves together under “channels” or “networks” of their own.  Look at Leo Laporte’s TWiT.tv network, Jason Calacanis’ This Week In network, Streamin’ Garage, etc.

If Conan is happy producing his show and that’s all he wants to do, then yes, he should definitely be with a network that can manage his online presence and let him do what he loves to do.  But if he wants to join the pioneers of online content production, the data clearly shows that the opportunity is his to seize—if and when he wants to seize it.

RELATED POSTS
• Jan. 2010 – Conan Takes Principled Stand
• Oct. 2009 – Eight Reasons to Quit Cable TV

It throws a lot of conventional wisdom about business out the window, and embraces that scrappy, “get things done” attitude that I admire.

One important idea in the book is to “sell your by-products.”  I loved this chapter and, if you have a new or growing business, is a critical principle to leveraging the most out of your business.

The basic idea is this: every business has a by-product, and one can leverage these into sellable items.  In fact, Rework itself is a by-product from the authors’ experience in running their company, 37 Signals.

During my tenure at Box Office Mojo, we took a similar approach.  We looked at things we did on a routine basis in our existing workflow to find new and innovative ways to get the most out of them.

One small example was our process of updating rating movie information.  We would enter the MPAA every week for movies they recently gave ratings to.  But rather input the information so it would be viewable on the movie pages themselves, we automated our database to record the date the rating was issued.  From that, we were able to create a page that showed the latest ratings issued by the MPAA.

With just a few hours of one-time upfront development work, we were leveraging our process of entering ratings into a news item we could promote to our readers on a weekly basis.  It required no additional time in our regular workflow, and was an additional item we could “sell” to our readers (more pages views via a regular news item).  We applied this same idea to release date changes, movie title changes and slew of other areas in our business.

Granted these are fairly minor examples, but if you’re looking at ways to improve the bottom line, take a look at your existing processes and see if there’s anything that you’re currently doing that you can leverage into a sellable product with little or no extra overhead.  Even small by-products can add up to significantly increase your profits without impacting your existing operating costs.

Atlas Shrugged

The LA Times pieces reads like his motivations for making the picture were mainly to get good reviews by the press.  But why should that matter?  Sure, the picture isn’t great, but given its low budget and rushed production schedule, I highly doubt a cinematic masterpiece was thought possible.

Could the picture have been better, even given these constraints?  Yes.  But it’s also very easy to Monday-morning quarterback the whole endeavor, and the “I could have done it better,” attitude amongst critics and even Objectivists is easier said than done.

That’s not to say that that we the audience—movie reviewer or not—aren’t entitled to our opinions.  Even if the reviews are bad, Aglialoro should be cashing in on this fact, embrace Rand’s individualist philosophy and say: “Judge for yourself: see the movie.”

Still, to blame the Atlas’s modest success at the box office on poor reviews is a cop-out.  The fact that the movie was reviewed as widely as it was only helped gain exposure for the movie, regardless of what those reviews said. Algialoro implicitly knows this, as he cites The New York Times’ decision not to review the movie as the biggest blow by the media at large.  Further, given that the movie received almost no marketing beyond press reviews and grass-roots efforts, that Atlas posted box office results in the millions of dollars is pretty good.

And, anyway, reviews in and of themselves do not make or break a picture, and there are countless examples at the box office to demonstrate this.  Even if one believes reviews do have an impact, their biggest impact would be on the movie’s first weekend at the box office.  Yet Atlas Shrugged earned a modest taking in its opening weekend.  After that, it’s mostly up to word of mouth and marketing.

I believe Atlas Shrugged’s box office earnings is directly correlated to the quality of the movie: not terrible, but not great.

If Aglialoro didn’t want to venture on to Part 2 and 3 because he was not able to make the kind of movie he wanted to, then fine.  Or if his investment will not earn the kind of returns he wants to get with his money, that is certainly understandable.  But to blame it on reviewers is not only a red herring: it also implies a second-handed motivation to making the movie to begin with.

Making a martyr of oneself to the mainstream media certainly isn’t going to garner any sympathy with audiences—and will only hurt his chances in selling his movie to those ancillary markets he so desperately needs.

The King’s Speech

My admiration for The King’s Speech and the climactic speech at the end got me thinking: What if “King Oscar” addressed his fellow academy members about the state of the awards show? Here is my answer:

But I’ve learned a lot so far about what works, and I’m sure there’s plenty more to do. Most importantly, I’m realizing the need to create mobile-friendly versions of my shows.

I’ve set up my shows on a Wordpress Blog using Blubrry’s PowerPress plug-in, which is terrific. It’s saved me an enormous amount of development time and allowed me to focus on creating content. One of the services Blubrry provides is a measurement tool that shows how many downloads my shows have received, including what form people are downloading them.

I’ve produced twenty episodes of The Movie Film Show, and I finally have enough data to draw some conclusions. But first, the facts:

Few people listen on the Web. Only 7% listen through the Web site’s flash player tool. The rest are people downloading the shows through iTunes and on their mobile devices.  In fact, 53% of downloads come from applications like iTunes, and the remaining 40% are from mobile devices.

I was amazed at the number from mobile devices, especially considering I don’t currently have a mobile-friendly version of my shows.  It makes sense, though.  Audio podcasts are best listened to on the go, whether in the car or at the gym, and Smart Phones are a great way to grab such content while out and about.

I’ve concluded that enhancing the mobile experience is my top priority. Here are three action points I will begin to execute and want to share with my fellow audio-podcasters:

1. Create a mobile-friendly site. If the current version of your site is mobile friendly, that’s great. But if you have things like a Flash player and what not, they will not work on devices like the iPhone.
2. Create a ‘download MP3’ link for each show. Most mobile devices can download and play these files just fine. That means all listeners have to do is visit your URL and click on the latest show download link to listen. Get rid of any links or features that don’t work on a mobile device (like Flash players).
3. Make sure the file size of your MP3s doesn’t exceed mobile download limits. Some ISPs, like AT&T, limit downloads on mobile to devices to files sizes less than 20 megabytes each. Make sure your shows are under that limit. If they are longer, split them into multiple files on the mobile version of your site, if possible.

Related Article: Why I Prefer Audio Podcasts

Why are we so scared about that?

Americans, I think, are rightly concerned about “big brother” watching what we do, and many equate corporations watching our behavior and tracking our interests as impeding on our privacy.  But there is a fundamental difference between the real “big brother,” i.e., government, impeding on our privacy and a company supposedly doing so.

When we interact with a company or another person, it is on a voluntary basis.  We chose to go to Whole Foods or Ralphs or visit Google or Facebook.  We do not have such a choice when it comes to the government.  Any corporation, no matter what the size, cannot force us to do anything.  It can’t force us to buy their products, use their services, or visit their Web sites.  Only the government can do this; it can, and does.  For starters, it forces us to pay taxes, get our car smogged, and buy health insurance.

Since government’s proper function is to protect individual rights, when it comes knocking on our door and asking for information that could only be used to violate our rights, clearly fears of “big brother” are justified.

How much money do you make?  What is your ethnicity?  What are your religious beliefs?  Such questions are none of the government’s business, yet when and if required by law, we have to provide such information to the government.  That is not the case with a company.

The purpose of a company is to make money.  It is to offer us value in exchange for money.  It is not to destroy value.  So when an advertising company wants to know our income, our age, our interests, our buying habits, etc., this information is used by the company to potentially provide us with better value in the future.  It uses this information for the purpose of better their product and marketing efforts to reach the right buyers, i.e., the people who want to buy their product the most.  Maybe it’s you.  Maybe it’s not.

The smarter advertising technology, the happier I am.  If I never see an ad for ESPN again in my life, that’s a good thing, because ESPN should know that the only game I like is Badminton.  Yet when Badminton is being played on the Olympics, perhaps NBC could send me an e-mail alert telling me where to go watch it and when.

That’s a good thing for ESPN and for me: They won’t waste their time trying to reach me and I don’t’ have to sort through ESPN spam.  It’s also a good thing for NBC and me: They can target me specifically—someone who actually may be interested in their product—and I probably would have forgotten to even look for it in the first place, but once reminded gone and watched it.

Am I giving up my privacy?  In a small sense, yes, but there is no harm to me and, in fact, only value to be gained.  “Giving up” your privacy is not necessarily a bad thing.  You do it every time you introduce yourself to someone: “Hello, my name is Sean.”  Now you know my name.  You didn’t before.  This allows you to engage with me in some way—or even avoid me in the future if you don’t want to deal with me.

Of course, companies and other people can and do violate rights.  But this is the exception, not the norm.  And such violations should (and generally are) illegal and individuals should be protected against those who do violate their rights by force—which is the proper function of government.

So the next time you’re worried that Best Buy may be watching your behavior as you walk through their store, or a Facebook is tracking how you use their social network, or the supermarket asks you to sign up for a loyalty program, know that in all likelihood, they are doing so for the purpose of improving their product or to better reach or communicate with you about things you actually may want to buy in the future.

Often times we get “junk mail,” whether electronic or via snail mail, and we cry for privacy laws because they are a hassle to sort through and throw away.  But when we get or see content we actually want, we don’t think of it that way.  It just feels like our friends at Bed Bath & Beyond were kind enough to send us another twenty percent off coupon, and we don’t cry about our privacy.

This isn’t a problem if I stick to a single device (I use Twitterriffic), since it keeps the screen on the last tweets I’ve read whenever I load the program. I find myself avoiding looking at Twitter on anything other than my iPhone, because then I have to figure out what the last thing I read was, or scan through a bunch of posts I’ve already read when jumping between devices.

With a “last read” or “bookmark” feature implemented into their API, software developers such as Twitterrific, TweetDeck, etc., could use this to sync the last message read, and thus only display the messages one hasn’t read yet (or mark that point with some visual indicator). Twitter could implement the same feature on their site by visually displaying this mark at the appropriate place and jumping to that point on the screen.

(As a side note, it would be nice to read tweets from oldest to newest on the site as well. I tend to read from the bottom to the top, and that’s a little clunky.)

How would this work? Every time a user downloaded a batch of tweets successfully, Twitter would update the “last read” indicator for that user, so the next time a request for tweets is received (even if from a different device), this information would be passed along to the application and dealt with properly.

This would save everyone valuable time when consuming their tweets across multiple devices.

If Twitter doesn’t implement this in their API, I would switch to any software that did internally. There are versions of Twitterrific and Tweetdeck for iPhone and iPad, so if I had to stay in one ecosystem to achieve this, I would.