Depends on the Meaning of the Word “Unlimited”

It wasn’t exactly a slow news weekend.

A British newspaper released a video apparently showing British troops beating Iraqi teenagers, ex-FEMA chief Michael “Brownie” Brown testified that he told a senior White House aide that Hurricane Katrina was going to be “a catastrophe within a catastrophe,” there was a record-breaking snowstorm in the midatlantic sates and the northeast coast of the USA and the Vice President of the United States accidentally shot a hunting companion.

So what is the blogosphere and the MSM abuzz about?

The months-old Netflix “throttling controversy,” of course.

About two hundred different items on this very topic have crossed our desk the past few days, most of them the original AP story we told you about here, often with a changed title or a sentence or two added to make the story more relevant for local readers.

We thought the story was pretty interesting and worth noting, even if, as Hacking Netflix points out, the customers interviewed in the article include a man “with an admitted bias against the company and CEO” and the web study cited hadn’t been updated until very recently – and doesn’t take into account the great improvement in Netflix distribution centers… there are now 37.

(The Hacking Netflix blog, by the way contains a rather, um, spirited discussion with lots of people offering their passionate opinions on throttling, pro and con. It’s well worth a look.)

Most media folk seem to be discovering this topic anew after the AP story, but very few are looking at with fresh eyes or actually analyzing or providing commentary or insight.

Except Rick Aristotle Munarriz of the financial web site The Motley Fool.

In a piece this morning [available via MSNBC], he acknowledges that this isn’t a new story at all and pinpoints the real problem: the use of the word “unlimited” in Netflix marketing materials.

In reality, it was never really “unlimited,” since there are only so many days in the week. It would take three days to see a movie, mail it out the next day, have another one ship out the day after that and then start the process again.

So even a frenetic Netflix patron — whether a timely movie buff viewer or a hobbyist pirate burning a copy of the discs and flinging them back — could only go through roughly 30 monthly rentals, and that’s in extreme cases.

The current model and pricing strategy is built around less frequent renters subsidizing the losses on the speed demons.

…The problem, though, lies in the necessity for Netflix to clarify its marketing message and the ramifications of the service’s value proposition.

Exactly.

I’ve stated before that I don’t believe I’ve ever been throttled by Netflix. Then again, maybe I’m not the speediest of movie watchers and so not really a logical candidate for throttling.

(In fact, I once had a Netflix disc sitting on the top of the TV for about three months. You know how sometimes you have a title in your queue that you think you want to see, but when it actually arrives, you can never actually getting around to watching it? Netflix loves customers like me!)

But I certainly don’t want to think Netflix is taking advantage of me or my online DVD rental brethren, either.

If you promise me “unlimited” rentals, then don’t hide from me the fact that some renters are more equal than others. Because when I find out you’re “throttling” customers – and if I think that’s somehow unfair, even if it makes good business sense for a company I genuinely like – I am far less inclined to think favorably of your service and recommend it to friends.

And that’s a big problem since Netflix customers tend to be Apple-like in their evangelical zeal towards the company and most of the online DVD rental giant’s customers actually come from referrals from existing customers.

So… after the bungled settlement of the class action suit and this latest internet buzz surrounding throttling, will the water cooler talk now turn from how great Netflix is to how unfair they are?