5 ms·

> Famous examples being how Netflix pivoted from DVD rentals Not to nitpick your overall post, but let me explain the context better. Netflix is named "Net fl

> Famous examples being how Netflix pivoted from DVD rentals Not to nitpick your overall post, but let me explain the context better. Netflix is named "Net flix" because the original plan was to offer a streaming product ASAP, but investors and end-users weren't ready at the time. So mailing DVDs was done initially, and because of a loophole in USPS pricing rules, was a genius move when looking at cost. (Netflix historically has employed a former Postmaster General to stay on top of that.) Source: worked there, read a bunch of stuff on this.

eru 6y ago
Do you have a link to a write-up on the loophole in the USPS pricing rules somewhere? Edit: I found a few articles. Seems mostly a lesson on how you shouldn't have a government monopoly on the postal service in your country..
- smnrchrds 6y ago
  I can't find the article. Would you mind linking to it?
  - redis_mlc 6y ago
    Adding to my previous comment. The Netflix business model hacks were: 1) First class mail (cheaper than media mail packages for bare DVDs) with likely letter-carrier presorting, volume and whatever other postal discounts (hence hiring former Postmaster Generals) were available, plus an agreement with the Post Ofice to manually sort DVDs to avoid machine damage using their light-weight mailer: "Bulk Discounts. First-Class Mail commercial pricing is available for presorted letters, flats, and packages with a minimum quantity of 500 mailpieces. Automation discounts may also apply." https://www.usps.com/ship/first-class-mail.htm https://www.usps.com/ship/first-class-mail.htm See the 2000/2001 mailers for the prepaid first-class stamp: http://blog.dvd.netflix.com/new-dvd-releases/the-evolution-of-the-mailer http://blog.dvd.netflix.com/new-dvd-releases/the-evolution-o... Also, if you get a tour of a main post office or sorting facility, you will see bins labelled "Netflix", so DVDs get special handling and slightly faster return delivery. 2) Because Netflix was the first adopter of #1 for DVD's, they won a ruling that they could continue to use First Class pricing. (The Post Office tried to move them to media mail which allows better packaging (at much higher cost) for automated handling, but that was viewed as anti-competitive by the court.) https://www.courthousenews.com/post-office-cant-raise-rates-on-netflix-mailers/ https://www.courthousenews.com/post-office-cant-raise-rates-... (I used to be an expert in postal bulk rates around that time.) 3) First-sale doctrine allowing multiple rentals of the same DVD without further payments to the studios. (Streaming requires payment per stream.) https://freakonomics.com/2013/03/22/a-brave-new-world-for-copyright-and-the-first-sale-doctrine/ https://freakonomics.com/2013/03/22/a-brave-new-world-for-co... For HN readers, I believe this is the first detailed analysis of both their postage pricing strategy and first-sale doctrine in one article, likely because few people know about both bulk mail and IP.

eru 6y ago

Do you have a link to a write-up on the loophole in the USPS pricing rules somewhere? Edit: I found a few articles. Seems mostly a lesson on how you shouldn't have a government monopoly on the postal service in your country..

smnrchrds 6y ago
I can't find the article. Would you mind linking to it?
- redis_mlc 6y ago
  Adding to my previous comment. The Netflix business model hacks were: 1) First class mail (cheaper than media mail packages for bare DVDs) with likely letter-carrier presorting, volume and whatever other postal discounts (hence hiring former Postmaster Generals) were available, plus an agreement with the Post Ofice to manually sort DVDs to avoid machine damage using their light-weight mailer: "Bulk Discounts. First-Class Mail commercial pricing is available for presorted letters, flats, and packages with a minimum quantity of 500 mailpieces. Automation discounts may also apply." https://www.usps.com/ship/first-class-mail.htm https://www.usps.com/ship/first-class-mail.htm See the 2000/2001 mailers for the prepaid first-class stamp: http://blog.dvd.netflix.com/new-dvd-releases/the-evolution-of-the-mailer http://blog.dvd.netflix.com/new-dvd-releases/the-evolution-o... Also, if you get a tour of a main post office or sorting facility, you will see bins labelled "Netflix", so DVDs get special handling and slightly faster return delivery. 2) Because Netflix was the first adopter of #1 for DVD's, they won a ruling that they could continue to use First Class pricing. (The Post Office tried to move them to media mail which allows better packaging (at much higher cost) for automated handling, but that was viewed as anti-competitive by the court.) https://www.courthousenews.com/post-office-cant-raise-rates-on-netflix-mailers/ https://www.courthousenews.com/post-office-cant-raise-rates-... (I used to be an expert in postal bulk rates around that time.) 3) First-sale doctrine allowing multiple rentals of the same DVD without further payments to the studios. (Streaming requires payment per stream.) https://freakonomics.com/2013/03/22/a-brave-new-world-for-copyright-and-the-first-sale-doctrine/ https://freakonomics.com/2013/03/22/a-brave-new-world-for-co... For HN readers, I believe this is the first detailed analysis of both their postage pricing strategy and first-sale doctrine in one article, likely because few people know about both bulk mail and IP.