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Comment by Animats | Hacker News Reader

Netflix is now behaving like a channel, rather than a library. Originally, they had a huge library from which you could choose. Now, they announce "Here are some of the great and varied selection of films coming to our U.S. service in the next few months". Some of those films are decades old. Gradually, their back catalog has shrunk.

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Ultimately, I'm afraid this is due to the difference in laws between owning a physical copy of a disk and having the rights to redistribute digital media. Once Netflix had a DVD of some old movie, it was effectively free for them to hold onto it forever, and older DVDs could be siphoned up from a zillion sources for pennies. Netflix would have to pay for new movies, but the maximum they could be charged would be retail price, and once they had the copies, they'd have them forever. Their catalog would only grow.

Digital redistribution, however, severely hampers them. They can't "buy" copies of movies anymore. Instead, they must pay for the right to stream a movie for a certain amount of time to a certain number of users.

It's an unfortunate outcome, and it's all but guaranteed by the way copyright law works. If there were a law change to allow the digital equivalent of "owning one copy" or, say, allowing the owner of a DVD to stream its contents to exactly 1 recipient over the Internet per DVD owned, I think Netflix's catalog would be an order of magnitude larger.

> It's an unfortunate outcome, and it's all but guaranteed by the way copyright law works.

This can be easily solved. We solved it with music.

https://en.wikipedia.org/wiki/Compulsory_license#United_Stat...

Confusingly, compulsory licensing (which is specific to the US) actually only refers to a new recording of a song, i.e., a cover version. If you want to use an original version, you still have to negotiate a license with the owner of the sound recording (usually the record company), because sound recordings have their own separate copyright. There wouldn't be an equivalent concept of a "cover" for a film, of course.

> There wouldn't be an equivalent concept of a "cover" for a film, of course.

Well... https://en.wikipedia.org/wiki/List_of_film_remakes

You've narrowed compulsory licensing too much. Pandora has a compulsory license to play original recordings for a preset price: http://www.billboard.com/biz/articles/news/digital-and-mobil...

I'm not sure I'm reading that right, it's late and I'm not a lawyer so it's kind of flying over my head... is it saying I can burn some CDs and release the entire back catalog of Britney Spears songs on my own, for a profit, as long as I pay a royalty fee?

If that's the case, how can Taylor Swift or Garth Brooks etc keep Spotify from streaming their music? Why aren't all streaming music services catalogs exactly the same? And how can labels demand YouTube take down my video slideshow of vacation pictures that features popular songs?

As I understand it, what you propose would not be a "new recording" but rather a copy of a previous recording. This provision allows covers to be made without permission, provided you pay.

I don't see it as an 'unfortunate outcome' - it is a great outcome because it maximises the total value of the economic pie created by the movie and TV studios. The fact that movie studios can add restrictions when distributing digital content means that they can charge a fee closer to the value that consumers receive. This means (1) the studio shareholders get larger dividends, (2) the industry makes more movies; (3) consumers who are willing to pay get a wider choice; and (4) more people are employed in the industry.

In general it seems to me inefficient to have laws which prevent suppliers from charging fees close to the value they create. For example, if the government says "farmers cannot sell tomatoes for more than $2 per kilo" that would clearly restrict the total size of the 'economic pie' produced by growing tomatoes (shared between farmer and consumer). Similarly if we place restrictions on the kind of agreements that movie producers can negotiate with distributors it also limits the size of the movie industry.

It's not a free market industry. To follow your exemple , a tomato owner cannot license you tomatoes and come back and take away your tomato after three days, nor make a deal with you to force your user to eat your tomato only in some settings and not other, otherwise they violate the DMCA.

TV and Movie owners already have copyright laws and DMCA laws giving them legal control on who gets their content and how it is used. The situation with Netflix is that now they can remove their past supply from the market to limit competition from their older titles. New content won't be better or more sought after than the older, it will just be the only one conveniently available. And as we move to more and more digital releases, there might not be any alternative way left to get the older content anymore.

You are right that this will pay salaries for industry people, but I agree with the parent that it's unfortunate.

Not a Netflix owner so I'm actually confused. Why do they worry about competition of their own titles? If you choose one thing from your selection they are still paying for your selection, isn't it?

> TV and Movie owners already have copyright laws and DMCA laws giving them legal control on who gets their content and how it is used.

And you have property laws giving you legal control over who gets your physical property and how it gets used. You could, for instance, loan your car to your family all you want, or agencies can rent their cars out as they wish. But the moment some stranger makes off with it, the government law enforcement agencies are obliged to help.

The legal distribution of content is a free market -- there is no government price setting agency and no monopoly more than other forms of ownership -- the public only needs to be better educated about what they are paying for.

I've been thinking about it, and perhaps the conclusion could be that the moment you start loaning, you are by definition in a special situation. I guess in the wider sense of the term it is still a market, but it doesn't behave like how we use to think about markets.

With your exemple about cars for instance, if every car maker decided to refuse to sell their cars, and only accepted loaning them, they'd have a lot more control than they have now, as long as they collude to all go loaning only.

They could block reselling, forbid you by contrat from using your car for specific uses (or you'd need an extra fee for professional use for instance), they could get rid of all the second hand market and force old cars to retire prematurely. You are right that we'd fall exactly in the situation we discussed with Netflix.

The main issue is not digital property or not, it's basically that we have a model where there is no tranfer of property, and the producer only lends to the consumer instead of outright selling. As it was said in another comment, Netflix could own the physical DVD while now they only rent the digital copies.

So in summary: it's great because it makes more money.

The implication that this leads to a better movie offering is dubious. Would you say better movies are coming out now than 10/20 years ago? Even if more movies are coming (which I would find very easy to believe), I doubt (as in: I'd need to see some evidence) it's a consequence of digital distribution rights.

The tomato example is also bogus. Yes it's inefficient if this restriction does not have a raison d'être. But (completely) free markets do not magically create a societal optimal.

That works well for music. Music services don't have to ask permission, they just have to declare what they broadcast and pay the rights. As a results services like Spotify have almost all albums from all artists (at least the major one).

Why can't we fix the law so movies can work the same?

Music services (I believe you mean streaming) is quite different than radio (broadcast). Labels and artists can restrict where and when their music can be streamed.

That is largely driven by the content creators and they don't have nearly as much control over it. They signed the Starz deal before streaming was big and when it came up for renewal Starz wanted more for catalog access than netflix was willing (maybe able) to pay. I would pay more for a bigger back catalog, but i guess I am in the minority.

Not to mention the content creators desperately want to avoid another Amazon/iTunes situation, with one distributor being able to dictate what the market does. They go out of their way to strategically deny licensing things completely to ensure Netflix doesn't have everything at once.

Hulu used to be their great big hope, since it's owned by several media companies, but they seem to have given up on that (even as Hulu has finally been worth using as they finally gave an option to pay and not still see ads).

Hulu is a great example of an company working super hard to un-innovate innovation. They had the distribution, rights, timing, capital and credibility to at least compete with, if not overtak netflix, but they couldn't Clayton Chrisitiansen it.

Let's examine the Hulu usecase & customer storyboard. Who the fuck would want to pay, to watch selective programming...with commercials? What customer wants a worse, more tempermental version of their DVR box, that forcibly eliminates the features making a dvr/tivo box useful?

Not only that but HBO? are they kidding. I am an HBO customer and I pirate HBO shows because they load faster and are in at least as good quality.I used to do this to Adobe. I commend them for lowering their product price and really getting competitve/offerig a ton of value. I pay $20 for creative cloud which is totally worth it for me vs. the time/aggrevation of pirating.

I would've paid for hulu if I could watch shows as they aired, and anytime after, without commercials. Obviously, I can never pay for/trust them and never will, now. Netflix really needs a competitor...

edit, to people saying HBO Now is good. HBO Go started in 06'. If it takes your company (one with the highest leverage in the industry) one decade to achieve mediocrity, you're already dead.

Let's explore HBO further. HBO is a compan that primarily buys an resells content through a dying (but currently critical) distribution mechanism. Sure they develop their own content too, and it is really good tbh. It's just that when they end up like blockbuster, they will have to sell it through netflix. I mean, how the fuck didn't they see this coming...

> Who they fuck would want to pay, to watch selective programming...with commercials?

People like me.

Agreed, it's a good way to get network shows on demand without subscribing to a cable package.

>Who they fuck would want to pay, to watch selective programming...with commercials?

Most homes do that. The people that hate commericals are a small but growing minority. And Hulu just recently released a no-commerical plan for like 13 bucks a month.

>I am an HBO customer and I pirate HBO shows because they load faster and are in at least as good quality.

I have really good experience with HBO NOW (and before it GO). It'll stream in 1080p the second the show airs on tv. They had some fuck ups a could years ago during some premiers, but since they moved to being hosted on mlb.tv, it's been great.

> The people that hate commericals are a small but growing minority.

I'm going to have to stop you there. With the exception of the 4 hours surrounding the superbowl, you go out into whereever you live and find someone who wants more commercials. Maybe you are correct, that people who hate them is a minority[0] as it is a strong sentiment, but they certainly aren't going to pay hulu? Why the fuck would they, they would just simply be purchasing a worse expereince than the DVR box they currently own? I mean maybe, if they demanded portability, and had an unliited data plan, but this is a strawman, as netflix exists.

> I have really good experience with HBO NOW

That's cool, and I respect that. One of my buddies worked on HBO Go when they started to think through the idea in 06. So I can't really trust a company that has arrived at mediocrity after a full decade of tackling a problem.

[0] This is a thought experiment. You are super obviously wrong. The majority of people, of course, fucking hate commercials.

It's not about the technology or the ads or so much the price. It's all about the catalog. Hulu, Netflix, HBO and Amazon are just fancy completely interchangeable video players; the only thing that matters is what you can watch on them. I pay for Hulu because the price is low enough, and the extra catalog is worth it. A few extra ads don't bother me enough to outweigh the good points. I pay for Netflix for the House of Cards and a few other things they have available for streaming here and there (like a bunch of children's shows), though their catalog has been getting terrible over time and I will probably cancel it. I pay for HBO for Game of Thrones. I'll probably cancel when I catch up.

The bottom line is, the content creators have everyone by the balls and no matter how few ads the streaming sites show or how fancy their video player is there is very little they can do about it.

you know, this was a pretty good rebuttal. The interesting thing here is that this is the total opposite of the internet. Content creators (and content) is virtually worthless and interchangeable, while the "catalog" is virtually everything. The internet version of the catalog can be a portal like hn/google/reddit ect, but the actual content doesn't matter.

Where as you correctly observed, the content is the only thing that matters for video.

> I can't really trust a company that has arrived at mediocrity after a full decade of tackling a problem

I disagree that it's mediocre. It's just different from Netflix, and has worked well when I use it.

Also, this is a well entrenched company in the cable industry that is working hard to maintain their current revenue stream while opening up a new revenue stream from a completely different distribution channel.

I can think of a number of companies that have failed to do this. Oracle and SAP in the cloud are at the top of mind. This is challenging for any company to do.

You can see my response above, and I haven't used it in a year so I am not sure. My experience is based on using it for about a 1 week period once a year before getting frustrated. I started in ~2012-2013ish.

However, hbo go started getting developed in 06'.I am not saying it isn't difficult to do, but if you can't do video at scale in 2016 when your core product is video and you have 8-10 years of developer hours spent on it, I mean, what are you doing? The reason, if I understand correctly, it is pretty decent now is because hey bought/licensed mlb.coms tech.

I think you're making the wrong comparison; it's not people who hate commercials and people who love them, it's people who accept them because status quo and people who don't.

Also, your Netflix answer for mobile is a non-answer. Jaccard similarity between Netflix and Hulu is pretty low.

If I understand you correctly, and I am not sure that I do, I think we are in agreement. My point above was that no one wants to watch commercials. The parent pointed out people don't hate them, and I flippantly and sarcastically tried to point out that people do. However, regardless, people watch televisiont to see the program, so certainly they would want to watch a 60min program vs a 45min one with 25% advertising propaganda. Some people aren't aware there is an alternative, or aren't comfortable enough with technology to learn a new paradigm (typically >65 years old). So I agree with you here.

> Also, your Netflix answer for mobile is a non-answer.

Again, not super sure what you meant. However, I was arguing that hulu is pointless vs a dvr. It is all around worse (price, performance, convenience, reliability in programming & behavior) than a dvr box, except portability. So I viewed it like this:

1. Hulu has only 1 single advantage over dvr 2. The advantage is portability of media & devices. 3. Netflix too has all the advantages of a dvr AS WELL AS portability. 4. Hulu has virtually 0 value as 2 substitutes exist in the market that are leagues better than it.

So again, i believe we are agreeing ;).

I think HBO is that competitor. Also, the funny thing about Hulu is: nobody wants to acquire them b/c they know big 3 networks will jack up the pricing for the content as soon as they sell it. Hulu is less competition to traditional TV because they still have commercials which fundamentally hobbles them. I imagine Hulu's owners hobble them in other ways (admittedly, just a hunch).

Broadcast TV DVRs like HD Homerun and Channel Master DVR+ are currently under-utilized (even TIVO, the leader, is), but eventually may become well-known and used.

> If it takes your company (one with the highest leverage in the industry) one decade to achieve mediocrity, you're already dead.

Just because they were bad 10 years ago and are good now does not mean it took 10 years to get good. It means sometime in the last 10 years, they got good. That may have been yesterday, it may have been last year, or the year before, or the year before, etc.

I had no hair on my head when I was born. I have hair on my head now. Did it take me decades to grow hair, or did I grow it years ago and merely continue to have hair on my head to this day?

This does make a lot of sense and I thought about it and is verifiably a series of true statements and rhetorical questions that drive home a point that is correct. However, it is totally unrelated to the development of a product that took 10 years to create. They brought in a team and made a halfway decent attempt at HBO Go before killing hte project(shelving it), they then revitalized it and ultimately launched a total piece of shit project.

To be clear, software design is hard and sometimes you need to iterate. However, you are HBO so we can assume that you are either incompetent or just DGAF. Either way, GO floundered for the next halfish decade as an utter piece of shit totally eclipsed by for profit pirating sites doing a 10x better job delivering the content someone ripped from a box and then put online into native media players they wrote themselves that bury 2-3 layers if iframes into the page so they can still try and serve ads...this was a 10x better experience than HBO go. You had to find your cable password and go through an insane experience of finding passwords and cookie failures to get the privelege of a horrible search, viewing and quality experience.

After a decade, HBO licensed technology from a completely independent party and now has halfway decent UX/UI. So I do not feel perfectly qualified to speculate on how your hair progressed because I don't know you. However, I would say that if you spend 1 decade avidly working on an application which would prove to be core to your business had it been successful, and then you ultimately just end up leasing one...well yeah you're fucking dead. I mean what does HBO do?

It buys content and sells it. So they just lost the decade head start to build a distribution platform for that.

> But they develop their own original programming!

Everyone was thinking that. Correct, they mostly buy scripts and fund projects that have been pitched to them. Sure they do some stuff, but it would be a lot easier for netflix to buy the people (or the process) of developing the few shows HBO actually has a hand in creating (rather than simply buying and funding a pilot) than HBO has of recreating Netflix.

So HBO is dead. Hulu is somewhat dead, I suspect due to the ties with legacy rent-collectors it will not "die" but just rebrand and be a slightly less horrible version of itself.

tl;dr

> Did it take me decades to grow hair, or did I grow it years ago and merely continue to have hair on my head to this day?

Humans grow hair at a semi average rate of 0.5 inches a year. So if you were a typical human, unless you hair is over 60inches long then the hair is from new growth < 1 decade old.

You seem to be missing my point, which is that just because 10 years has passed, does not mean it took 10 years to make. Did you try it last year? Was it good then (yes)? Then now we know it only took nine years to make. Did you try it the year before? Was it good? If so, then we know it only took eight years to make. And so on.

Your attitude seems rather callow. I'm rather disappointed this is what HN is becoming.

My biggest problem with Hulu, even more annoying than the ads was that they didn't have all the episodes of the shows that they presumably have rights to. For a show like Modern Family for instance, they would have the latest episodes but not the previous seasons. And I saw the same for other shows as well. Ads were annoying, but they fixed that by charging more. But not having the content I cared made me cancel my premium subscription.

To some extent this is inevitable and I think ultimately it will be to their detriment. One of the things that struck me during my recent "cut the cable" exercise was that while the offerings on Amazon Prime video were significantly less to my liking than those on NetFlix, if it wasn't on prime I could "buy" it or "rent" it from the same interface almost regardless of what it was. On NetFlix things vanish and then you no longer have access, period. So its fine "in the now" but want to watch an old episode of some show that used to be there and now its off the list.

I suspect that one of the things that Netflix cannot afford using AWS is to have content available that not enough people watch. They end up paying the storage charges with no revenue.

it's way more likely to be a problem with licensing terms than anything else

I think your first paragraph is spot on.

> I suspect that one of the things that Netflix cannot afford using AWS is to have content available that not enough people watch. They end up paying the storage charges with no revenue.

Licensing is a vastly higher cost than the AWS bill. It's all about what they can afford to license.

That's a very silly assertion to make, their content delivery costs are likely several orders of magnitude higher than their storage costs.

However, as others have pointed out, these moves are about licensing deals with the content providers.

Edit: My point is that storage cost of their content is basically a non-factor in their decision making process.

Doesn't Netflix run it's own CDN outside AWS? I thought the AWS gear was only for browsing the catalog and actual content delivery is done with custom hardware, preferably at your local ISP.

I suspect that their licensing fees are orders of magnitude more than the distribution costs. The size of the catalog seems to me like it would be limited by the content owners terms more than storage prices.

Yeah, they have appliances for ISPs from which the films are streamed, it's called Open Connect: https://openconnect.netflix.com/en/

14 TB of solid state drive, nice

Its too bad that netflix wouldnt just do a rev share deal w/ amazon and other media providers so that when I search "$SomethingInPrime" I would get a "not available for streaming" click here to pay $5.99 to rent. Then I can just keep going with my happy life.

> I suspect that one of the things that Netflix cannot afford using AWS is to have content available that not enough people watch. They end up paying the storage charges with no revenue.

That is incredibly wrong.

Conservatively speaking, the average film can be stored with 1gb. The Library of Congress has 1.7 million videos (the largest film collection in the world).[0]

1.7PB could be stored on S3 for $54k a month which is, while not insignificant, is almost certainly insignificant compared to Netflix's streaming costs.

[0] https://www.loc.gov/about/fascinating-facts/

Well wrong certainly. I agree with most folks that licensing is a much bigger cost than storage.

The average film, at 1080p, is in my personal experience closer to 10GB+. 1GB maybe be enough, say, for a single TV episode.

The average film is not in 1080p though. Many of those 1.7 million films are old independent films.

Also, I've never gotten close to 10GB for even 1080p films.

> That is incredibly wrong.

> Conservatively speaking, the average film can be stored with 1gb

Well actually[0].....Netflix transcode their material to hundreds to different formats. I think you'll find that a single film will probably take up several gigs, possibly hundreds once it's been transcoded:

http://techblog.netflix.com/2012/12/complexity-in-digital-su...

https://gigaom.com/2012/12/18/netflix-encoding/

https://vimeo.com/52637219

http://techblog.netflix.com/2016/03/imf-prescription-for-ver...

http://techblog.netflix.com/2016/04/the-netflix-imf-workflow...

[0]: http://tirania.org/blog/archive/2011/Feb-17.html

They've been pretty open about that for at least 3 years. This profile in GQ quotes Reed Hastings as saying:

  "The goal," he says, "is to become HBO faster than HBO can become us."

http://www.gq.com/story/netflix-founder-reed-hastings-house-...

I love HBO but they are in a different weight class. At the end of the day most customers will see Netflix's catalog vs HBO's and will go with Netflix. I don't think that this is the best way for them to frame this battle.

Hbo has a very good catalog.

I was speaking about quantity, not quality.

Remember that the original huge library was comprised of CDs they bought. Streaming was always smaller. Streaming also got more expensive because studios cut much more aggressive content deals. They were forced to create content to stay alive. (This is true across tech - what's flowing through the pipes generally extracts more value than the pipes themselves. The telecom providers went bankrupt while the world thrived on the broadband they provided)

Cancelled it the other day. Rubbish choice if you do t want to watch fairly boring series vaguely aimed at kids. Waste of money!

I'm pretty sure at least half of their original programming would not be appropriate for kids, let alone the rest of the catalog.

I mean in part teenagers when I say "kids".

I've found their selection to be really poor. As someone else said their back-catalogue for movies is wafer thin.

Certainly they have to have some decent content if people are willing to pay for it. I can find a fair share of entertainment and documentaries on there, especially the ESPN 30 for 30 films

Their movie catalog has always been thin. A few years ago, I was chatting with one of their tech guys I knew and he told me that people come for the movies and stay for the TV. In any case, this trend toward increasingly fragmented content subscriptions has pretty much been on the wall for a while.

I cancelled too and one of the reasons was their goddam awful UI. As they lost their back catalog they decided that they couldn't let you see what they actually have available, they had to hide their thin selection behind a crap UI. Whatever, fuck holywood, until I can get "spotify for movies" there's always torrents.

Agreed, the UI is very poor. However after using their dreadful UI to trawl their entire "catalogue" (more like pamphlet) and still finding nothing one is even more disappointed.

Agreed on the Hollywood part. They are asking too much.

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