"For those of us who care about hard-to-find movies and HD, physical media still has it nailed down—between Netflix discs and Movie Madness, Portland cinephiles shouldn't have any problem finding, like, anything—even it's only a matter of time until all we're left with is the terrifying, all-consuming movie/game/music/food streaming service that Qwikster/Amazon/Hulu/Sony/Microsoft/iTunes will have morphed into like some goddamn monster out of The Thing."

Dear god in heaven, someone save us from this terrifying, all-consuming monster sentence!

Regarding the "first sale doctrine" - I thought that video rental stores (for instance) had to purchase special copies of movies in order to rent them. I remember asking a video store clerk when I was in high school why the cost of replacing a lost VHS tape at their store was so high, and he replied that the production companies sell video stores more expensive, "resellable/rentable" copies of their movies.

But this isn't true at all?

"For DVDs, Netflix’s rights are unlimited and its costs are constrained. For digital, its rights are constrained and its costs are unlimited."

Nice post, Erik -- I followed your cite to abovethecrowd.com which gave a good analysis (which you succinctly paraphrase) of the Netflix pricing change.

Because of this info I'm not pissed at Netflix anymore -- other than their crappy PR people who should've been all over this and should have provided this explanation when they first announced their price hikes last month.

@ROM: Yeah, I'm fuzzy on that too. I remember having the same issue come up when I was a kid at Video Vern's in Salt Lake City, Utah—if you lost a tape, the replacement copy you'd have to buy was like a hundred bucks.

My guess is that it had less to do with build quality and more to do with scarcity—I don't think studios had yet figured out how how much money they could make by selling (affordable) copies of their movies to the public. So instead they focused on making copies for the rental market, in which case they (A) knew the rental shops would be making a good amount of money back on it, and thus could spend more to get it, and (B) probably had higher manufacturing costs?

None of that is backed up; I'm just guessing. But this ancient thread seems to give it at least a bit of weight:

http://forum.dvdtalk.com/other-talk/407404…

@guspasho: I added another word to it. And a comma! You're welcome.

I just wanted to be clear about something Mr. Erik: I typically don't keep anything in mind while whining.

Don't forget VideoRama which is also a very viable option, especially if you live in NE and within acouple of miles of Alberta.

The name Qwikster is disturbingly close to Quickstar, the Amway-style scam that spread like wildfire through the office I was working at in the early 00s, and had me ducking my coworkers and their horrid catalogs for months. So... just the instant play for me.

@DamosA: Yeah, good call, Videorama's solid too. Also Clinton Street Video and Video Verite. (R.I.P., Trilogy.)

This is an attempt by Netflix to segregate its risks. As a streaming company, they are forced into expensive licensing agreements with the big content groups, there is no first sale doctrine for streams.

As a disk rental service they are in the same boat as Redbox, not legally required to work with the big guys as they can always buy up their discs from resellers rather than directly from the source. However the more they undercut the big guys, the more those guys want to turn the screws in regards to the steam licenses.

Two separate entities means less liability. If Qwikster pisses off Sony by not paying the dane geld, it's less likely that Netflix will have to pay for them. Ditto, if Netflix pisses off Disney and doesn't agree to a price increase next time the license renewal hits, Qwikster is in a less compromised spot.

It's an unfortunate result of the fact that the past few years have seen big content being more and more aggressive with their bullying than they were. They are starting to realize that the modern world requires adaptation to survive and are desperately attempting to put the genie back in the bottle.