You are correctly. I was imprecise. They were trusting another company to peer for them. They thought they were purchasing "CDN services". The problem is that one of those companies was Cogent. Cogent prides itself with settlement-free peering. But since Netflix put so much traffic onto Cogent's network, it caused traffic to push beyond the peering agreements. Cogent didn't want to pay for peering. Once Netflix took on peering themselves, things went much, much better and the customers have been pretty happy ever since.

If Netflix understood peering from the beginning, they wouldn't have ran into these issues and might have saved themselves some money.

Peering is what saved the Internet back in the late 90's through early 2000's and proved Metcalfe wrong. People using the Netflix problem to push for NN were wrong.