What is it about Netflix that causes critics to misread it so badly? Call it the innovator’s paradox: Netflix forged an identity by building a simple business—DVD delivery by mail—that had never been done before. The very fact that this DVD-by-mail idea connected so deeply with consumers led many observers to think that was all that Netflix could or would ever do. Instead, the DVD delivery service—while still vital to Netflix’s revenue—looks more like the Trojan horse of a much wider strategy designed to change how Americans watch filmed entertainment.

The company’s critics have also tended to focus on technological platforms, rather than what consumers actually want. Netflix, like Amazon, has built its relationship with customers extremely carefully and successfully—some 15 million people now send Netflix money every month. (How many nonutility companies can boast that?) As long as it continues to keep its customers happy, it should be able to transfer them to whatever platform—DVDs by mail, streaming over the Xbox or Wii or set-top boxes, the iPad, the iPhone—those customers want.

» via Slate

Netflix, the Web’s top movie-renting service, announced Friday that it has canceled plans to hold a second contest that awards a prize to whoever could come up with the most accurate system of predicting user film choices based on their viewing histories.

» via CNET news

“Network operators control the delivery pipes and generate significant revenue from content that travels over those pipes,” Netflix wrote to the FCC. These operators “provide both the means and motive for discriminating against new ventures that might threaten revenue sources of the network operators.”

Netflix’s comments to the FCC, first reported by The Washington Post on Monday, is a signal that the company sees a showdown coming with Comcast, Time Warner, and other broadband providers over the distribution of online video.

» via CNET news

Warner Bros. has signed a new agreement that will bring the studio’s new releases to Netflix in DVD, Blu-ray, and streaming form—a month after the original DVD release. The companies announced the continuation of their partnership today, but with the added twist of the 28-day delay, clearly meant to help Warner Bros. sell more physical media in a dying market.

The fact that Warner Bros. has agreed to distribute its media through Netflix is nothing new—the company has had this partnership with Netflix for close to 10 years—but the explicit addition of a 28-day release window is new. This means that when a popular Warner Bros. movie comes out on DVD for sale at your local Target or Best Buy, you must wait another month before you can get it delivered to your door or desktop via Netflix.

» via ars technica

It was really just a matter of time before Netflix was the target of a class-action lawsuit over its privacy policies; academics have pointed out for years how the company’s release of “anonymized” movie rental data could actually be used to expose a particular user’s viewing choices. And yesterday’s Netflix lawsuit by “a lesbian who does not want her sexuality nor interests in gay and lesbian themed films broadcast to the world” covers all the usual bases.

The suit, filed in a California federal court and first noted by Wired, blasts Netflix for perpetrating “the largest voluntary privacy breach to date” when it launched the first Netflix Prize contest to create a better movie recommendation engine. The contest offered a data file with a few million movie rentals in it. Names were not attached, but within weeks researchers had found a way to use an external data source to decode an individual’s viewing history with surprising accuracy.

Despite the finding, “Netflix did not withdraw the contest data,” and further security research also failed to compel the company to stop the contest.

The lawsuit also claims that Netflix should have known in advance that there were privacy issues with its data, and it points to the AOL data mining fiasco, which took place only months before Netflix launched its own contest.

Finally, after the successful conclusion of the contest, Netflix announced its intention to go further and hold a second Netflix Prize competition. The lawsuit wants to stop any such future data release.

» via ars technica

City libraries soon will offer a new borrowing system that borrows from Netflix, the mail-based, no-late-fee movie rental service.

For a monthly fee, library users will be able to check out a limited number of materials for an unlimited amount of time. The optional system will eliminate due dates and overdue fees, asking for money upfront in return for no worries later. Pricing would begin at $2.99 a month for up to three items out at a time.

“About 20 percent of our library users are blocked from further checkouts because of the fines they have accrued,” said acting library director Sean Reinhart, whose idea was approved by the City Council last week.

“These days, a lot of people want to do things on their own time frame. They’re busy. Returning materials can be kind of low on their priority list and they end up with fines, and stop coming.”

Seen at MercuryNews.com