> bandwidth plus royalties I think I've read that Netflix has an agreement with the studios where they pay per shipment rather than per DVD. So, having 1000 o

> bandwidth plus royalties I think I've read that Netflix has an agreement with the studios where they pay per shipment rather than per DVD. So, having 1000 of a new DVD on hand costs little more than having only a few. The studios like it because it aligns Netflix's cost structure with their own (basically fixed), so agency costs are minimized. I'm sure that Netflix pays less for bandwidth than Amazon sells theirs for. So, we can presume streaming a two gig movie (probably much less in reality) would cost much less than 30 cents -- postage one way for a DVD. Add in a few more cents for data center, etc. and they're still better off relative to postage.