The Daily Overdose of Logic for Tuesday, 25 October 2011: Netflix's Tragic Hemorrhage

Netflix is, in my opinion, one of the most innovative companies in a long time. It has made it both easy and cheap to access an incomprehensibly vast universe of diversions. For people young enough that electronic amusement has always been a staple of their daily lives, it's a true godsend (just ask my sister). Netflix has literally changed the way we think about entertainment; it is no longer necessary, or even desirable, to maintain a library of physical copies of TV shows and movies at home when one can watch something new, every day, anywhere one wants. The more one thinks about it, the more incredible Netflix is.

Netflix has been so good at what it does, in fact--on any given day, it accounts for just about a quarter of all North American Internet traffic--that it may well have sown the seeds of its own destruction. We spoiled assholes became so accustomed to getting unlimited DVD rentals and unlimited web streaming of movies for a single bill of ten dollars a month--TEN whole fucking dollars! for nothing but a way to fill literally all of one's free time!--that when, over the summer, Netflix told us that we would now have to take out two subscriptions totaling sixteen dollars a month for the same service, we, as a people, went absolutely apeshit.

Zounds! The horror! Those extortionist scoundrels! How dare they raise their price for one of the greatest conveniences of modern middle-class American life! If you think I am going to pay an extra six dollars a month to help pay the expenses of a company that has made my life substantially more enjoyable, you have got another thing coming, sir!

Netflix has lost $12 billion in market value in 104 days since announcing the change. After announcing that it lost 800,000 subscribers in the third quarter--more than 3% of its total subscription base--the company shed 37% of its share price in the first ten minutes of trading today; a share of Netflix stock was, as of 0739 MDT this morning, worth $75.28, about one quarter of the $298.73 that same share could have fetched on 13 July.

If ever there were a case of consumers acting against their own self-interest out of pure spite, this would be it. Netflix is dominant in its market. None of its competitors have anywhere near enough infrastructure or capital to fill the void in the market Netflix might leave if it failed. Admittedly, such a failure is unlikely (though not impossible). To me, though, it seems arrogant and preposterous in the extreme to punish so harshly a company that literally created a market everyone loves because it will suddenly no longer allow us to access that same market unless we pay an increased price (that nearly every thinking person agrees is still a great bargain).

In a market economy, consumers can vote with their wallets however they so choose. That much is axiomatic. But if Netflix instructs us in one thing, it is that the useful fiction of the perfectly rational Homo economicus is just that. Apparently, sending an implicit message of "don't you think about innovating, or we'll turn on you the first time you ever do anything to sour the deal for us even slightly" is worth twenty cents a day to us.

In other insufficiently logical news:

America: It's official--Herman Cain is the front runner. I like this guy less and less by the day; his popularity is inexplicable to me, given his pedigree as a board member of the hated Fed, his failure to have ever been elected to anything of consequence, his expensive and uber-regressive tax plan, and his production of campaign ads that succeed at nothing but making me go "OMGWTF?" (Oh, and check the caption on that CBS News article--he's also a fucking Iowa fan.) If the GOP is trying to become totally irrelevant, then favoring somebody other than two incredibly smart and experienced, though admittedly flawed, former Governors (Mitt Romney and Jon Huntsman) or a long-time legislator of great philosophical purity and with a concrete plan to address the raging debt crisis (Ron Paul) is a fine way to go about it. Otherwise, what the fuck are they thinking?

Science: Remember when everybody was all gaga over the fact that some neutrinos appeared to travel faster than light and that Einstein might thus have been wrong about something? In the intervening weeks, physicists from all over the world have been rushing to poke holes in the paper expounding the alleged discovery and defend the greatest physicist of all time (shocking, that), but so far to little avail. Except for the fact that it now comes out that the paper "[had] some errors" and "an improved version of the manuscript is now under peer review." (Way to bury the lede, by the way, NYT.) I was very skeptical of FTL neutrinos from the beginning, and remain so, but am reserving judgment until the new paper arrives (or gets rejected, and what a clusterfuck that would be).

Medicine: A bad day for human papillomavirus is a good day for humanity: the CDC will now recommend that teenage boys be vaccinated against HPV, an announcement that comes right on the heels of a finding that HPV may be linked to heart disease by means of inactivation of the p53 gene. A CDC recommendation carries a lot of weight, and though I'm inherently distrustful of public health laws that mandate private action, this will hopefully spur citizens to take preventive measures against HPV of their own accord. (It will also help to further shut up the most obnoxious segments of the Religious Right, whose objections to Gardasil look more and more shameful and ridiculous by the day. Good.)

Colorado: Boulder is the happiest city in America. Do I even need to post things like this anymore, or have I made my point? (Don't answer that. I'm going to keep posting them regardless.) Also to be filed under "This the Finest of All States" and "things that make me smile": Kum and Go may be about to expand to Colorado Springs. I am all in favor of this; I mean, yeah, supposedly Kum and Go is a quality chain, but I'm mostly interested in the fantastic irony of having a bunch of businesses named after ejaculation in the same city as James Dobson.

The national pastime: Think there's no such thing as home-field advantage in baseball? Well, then, your team's fans have never made so much noise that the opponent's bullpen warms up the wrong pitcher. If I believed in karma, I would point at the night Tony La Russa had last night as evidence. (As it is, I'm pointing at Tony La Russa anyway--and laughing. A lot.)

Anti-depressant: McRib!