On Netflix and Elastic Demand

If you're a Netflix subscriber, you've no doubt head about the pricing changes taking effect on September 1. DVD and streaming services will now be separated, and consumers will be paying at least 30% more to keep the same service. Personally, since I don't have many movies in my Instant queue, I will be churning through those in the next month and discontinuing streaming starting in September. This will actually reduce my monthly cost. But back to the company. The main issue for Netflix is not how current subscribers will react to the price increases, it's how non-subscribers react. Already we see that subscribers in the most recent month are down. Hulu Plus is a more than viable alternative for TV shows. While Netflix remains the king for recently released movies (who has premium cable anymore?) it is taking body shots from all sides and the initial results from its price increase are not positive. It appears that demand for Netflix's services was more elastic than they thought (as opposed to the New York Times, who is seeing enormous growth and revenue from its subscriptions). Time will tell, and a price reduction will be a serious admission of market research failure, but could be a necessity. Bold Prediction: On September 1, 2012, Netflix will be cheaper than on September 1, 2011.

Let's fix America

David Harsnyi attempts to evaluate the Obama administration's efforts to alleviate the economic crisis. I'll concede that he writes one-sided, only using numbers that help his case. But still, we see the ineptitude of government (Yes, I'm lumping all politicians together, not just the Obama administration). The promise to keep unemployment under 8% was simply an effort to garner votes and support, not something they actually thought they could bring about. Spending large amounts of money to create infrastructure jobs helps some people, but at a large cost to taxpayers. The real way to create large amounts of jobs at no cost to the taxpayers is to release taxes and regulations on businesses, especially small businesses. Only the most stubborn and archaic politicians and economists would cling to the notion that our national economy and the global economy are zero sum games. The power of job creation and market expansion resides in the private sector, with the imaginative, brilliant, and daring, adjectives that hardly describe anyone in the public sector. What if we loosened restrictions on Exxon Mobil, Chevron, Conoco Phillips, Valero, Marathon Oil, and Sunoco, who together employ 250,000 people? You don't think that they could create 50,000+ jobs in R&D and research? Pfizer, J & J, Abbott Labs, Merck, Bristol Myers Squibb, Eli Lilly, Amgen, Baxter, Genetech, and P & G employ over 260,000. If they can devote more resources to R & D, away from compliance, taxes, and other capital draining activities, thousands of jobs will be created, and maybe, just maybe we'll get cures for cancer, aids, alzheimers, and more. You don't think that would bring wealth to America? Companies like Facebook, Digg, Twitter, MySpace, YouTube, LinkedIn, Hulu, and other spring up all the time, creating 100 jobs quickly. Loosen the red-tape, bureaucratic hoops, and boilerplate that new companies need to wade through, and you have yourselves a modern industrial revolution. Get real crazy and relax trade restrictions and the floodgates of creative invention, job creation, wealth creation, and economic prosperity would be pushed open. The inevitable flood of wealth to the US would be unbelievable. All we have to do, all Obama has to do, is lessen the corporate tax rate, and initial costs to small businesses. If he wants to ignore these massive, potential, positive effects in the vacuous and inefficient throwing of taxpayers money at projects that fatten the bureaucratic wallet, he might as well be stealing from every American.