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Postal Service Surcharge Could Slash Netflix Profit
mikesd81 writes "Boston.com reports that Netflix Inc., the largest US mail-order movie-rental service, may suffer a cut in profits if the US Postal Service starts charging extra to manually sort the envelopes that carry its DVDs. An audit prepared by the Postal Service's Inspector General last month recommended charging one unidentified company 17 cents per envelope for labor costs. Citigroup analyst Tony Wible, who said in a note to investors Tuesday that the company is Netflix, estimated the charge might reduce profit per subscriber to $0.35 from $1.05. Wible advises investors to buy Blockbusters shares because their DVD envelopes don't have the problem (floppy edges that jam the USPS's automated sorting machinery). Netflix says the whole thing is no big deal and they will change their envelopes if necessary."
Netflix says the whole thing is no big deal and they will change their envelopes if necessary. I don't see the problem. Netflix doesn't seem worried.
simply distribute them digitally :)
;)
I'm sure that people won't mind downloading them and it will save some $.
feel free to report any abuse on http://ntlgl.com/
MP3 Search Engine
Sounds kind of like Blockbuster FUD.
Virginia is for lovers. EVE is for griefers.
Netflix plans to change their envelopes if necessary... Nothing to see here.. move along.
So Netflix says they'll change the envelopes. So really it's a non-story as there's no fundamental problem shipping them if Blockbuster can do it without having a surcharge forthcoming for them too.
"Nature doesn't care how smart you are. You can still be wrong." - Richard Feynman
Are you tired of getting your floppy red end caught in the machinery?
If so, try our new improved blockbuster hard edge containers.
Buy now for best results.
liqbase
"NetFlix has no problem."
WTF?
Genesis 1:32 And God typed
That's not the only thing. One major factor attributed to eating away at Netflix a Blockbuster's profits are the Kiosks you can find at McDonalds. However, long term outlook is in streaming media. Blockbuster is trying to leap ahead and go mobile with their streaming. Netflix already has a service, which (from personal experience) is really good, if you don't mind watching movies on your Computer...
Note that this "analysis" is from a guy who's been recommending Blockbuster stock over Netflix stock for a while, and that's been looking like a really dumb recommendation lately. The scenario described in the article -- where Netflix takes no action to rectify a problem that would destroy all their profits -- is unreasonable on its face.
I have seen the future, and it is inconvenient.
It should be noted that this is an analyst who had already rated Netflix a "sell" and Blockbuster a "buy", and was trying to continue to justify his ratings when he wrote this. In reality, NetFlix is very postal service friendly (they pick up their deliveries themselves, for instance, saving the postal service $100M a year), and has already redesigned their packaging a dozen times and could easily do it again if need be.
In other words, this is FUD spread by an analyst who wants to see his predictions about Netflix's stock swings come true.
E pluribus unum
1. Get Blockbuster envelope
2. Make similar design but w. Netflix logo
3. Continue to profit
Non-story in my opinion.
Sweet informative mod.
Unless this story is lacking on important detail (which I suspect it is) I can't help but feel that there was a major communications breakdown.
According to the article, USPS blew $40 million manually processing Netflix mailers, but apparently didn't bother talking to Netflix and saying "hey...uhh...can you help us out here.?"
Netflix has changed the envelope repeatedly so I doubt they'll hesitate to do it again if not changing would cut per-subscriber profit by 2/3...
Unless Blockbuster has patented "envelopes that don't gum up Postal Service machines".
Sorry about the writing. Robot fingers, you know? Cliff Steele in DOOM PATROL #23
This has cost the USPS an extra 42 million dollars over the last two years and they're just complaining about the floppy edges now? It seems odd that this wasn't brought up a long time ago considering Netflix relies on the USPS for distribution and not keeping them happy means not keeping their customers happy. Seems like USPS could have just said, "See this no floppy edges on the Blockbuster envelopes? Do it like that. Now." 42 million dollars is a rather large wake up call.
Reviewing just the first hour of video games.
net neutrality for snail mail. Will the /. mob lynch the USPS?
In my short tenure in the post office in the area where freshly received mail would be brought in for processing, we would have to manually remove the netflix envelopes (all being envelopes sent back to netflix after the customers watched). Since the DVD portion of the letter is not balanced, leaving the large flap of paper to cause problems in the canceling and sorting machines. However, Blockbuster's envelopes do not have this problem as the DVD is left in the center leaving very small flaps that do not cause problems.
so, basically it's a slow, lame, pump&dump?
Self proclaimed typo king, and inventor of the bear destroying coffee table (patent not pending).
I agree that they can just change the envelopes, seems like the simplest answer, but even if they paid a "surcharge" how does 17c extra per envelope translate into a 70c reduction in profit?
Postal Service Surcharge Could Force Netflix To Change Their Packaging *Again* or Postal Service Surcharge Could Force Netflix To Copy Bockbuster Packaging
They don't fit into the outbound mailbox at my apartment complex.
I have to fold the edges and hope it doesn't get jammed inside.
I quit the service in part because of that. Hope they change them...
This is begging a reference to the 'cut corner' on punch cards.
Man, I'm showing my age.
USPS: Hey Netflix can you change your envelopes so they won't jam our machines?
Netflix: Why should we?
USPS: We'll charge your $0.17 per envelope to process them manually?
Netflix: We'll change our envelope.
Is there really more to this? I would think Netflix would want the post office to be able to more efficiently process the mail. The faster it's processed, the faster it can be loaded on a truck and heads out. If the mail is delayed due to manual processing, Netflix customers are going to be less satisfied.
Netflix is going to dip this afternoon, rebounding in afterhours and early tomorrow when people realize floppy envelopes can be stiffened with minimum capital outlay.
...but perhaps some of his friends/family do.
Ah ha! And that is when Blockbuster is going to reveal that they have a patent on the "Postal Sorting Machine Non-DVD-Jamming Envelope". I predict a $500 Billion patent infringement lawsuit to follow.
Our NPO does bulk mail pre-sorts for the military and others.
The return address may say Kansas or Kentucky. But the postmark will be upstate New York.
The disabled workers go home with a decent supplement to their monthly SSI or disability check and access to a free dental clinic and other services. The client saves a bundle on mail handling and postage.
Maybe it is time to seriously consider revoking the monopoly provision that the USPS has in terms of being the only legal first class mail deliverer. The last time this was seriously proposed and enacted was over 150 years ago. That one competitive business put the USPS to shame and lowered prices and increased quality (as competition does).
I still can't figure out why we're accepting the postal service when there are many more companies that provide better service for other forms of mail (priority, ground, freight, etc). Even the USPS uses FedEx for their International Express service.
The USPS has one big problem: it can not compete well. It's run by bureaucrats who know they'll get paid regardless of service levels or prices. UPS and FedEx woo my businesses regularly (we mail a ton of stuff), and the prices haven't changed much even with fuel surcharges and the rest. I get an amazing rate for local deliveries of packages under 8 pounds, and it all ends up landing next day just via ground delivery.
I really haven't heard one good reason why we can't let competition into the first class mail market. Yes, the Constitution provides for the Federal Government to maintain mail delivery, but it doesn't actually say they should be the only providers. I'd think the USPS would do fine for remote areas of the country, and the big boys would bring prices down, and service up, by entering the market that desperately needs help.
$1.05 - $0.17 - $0.17 ?= $0.35
This gives a good contrast with net non-neutrality. In this case, the envelopes (apparently) cost more to process than the postal service planned on. That's understandable since it's a fairly new thing to be shipping such mass quantities, so the postal service hasn't yet made a new category to cover it. So this isn't the postal service attempting to charge a customer more simply because the customer is making more money than another customer shipping the exact same envelope. Contrast this with net non-neutrality where the carrier wants to charge more to the more popular company per bit simply because that company has deeper pockets or is more profitable than some other company also transporting bits through the carrier.
The real story here is that the US Postal service is trying to pressure Netflix into changing their envelope design. This means Netflix is shipping so many movies that a flimsy envelope has gotten the attention of the US Postal service and is annoying the heck out of them. A sturdier envelope would no doubt be more expensive, but the odds are that Netflix will just do whichever is cheaper: Pay the extra fee or cough up the extra cash for new envelopes.
The fact that a Blockbuster shill is trying to spin this as some devastating catastrophe for Netflix is just proof of how desperate Blockbuster is, and how badly they're getting nailed by Netflix.
"Live Free or Die." Don't like it? Then keep out of the USA
But it creates a nice buying opportunity for Netflix stockholders ... or selling opportunity for people who had already shorted Netflix.
Don't piss off The Angry Economist
Agreed, They have been evolving their design for some time now
Um, don't you mean they were intelligently designing it?
***
Hey, if it costs the USPS more, maybe they could pay for it from the ill-gotten profits they derive from selling spamming services!
Apology to Ubuntu forum.
It's always bothered me that my tax dollars were going to subsidize the business model of a publicly held company. Even if they fix their envelopes, they're still benefiting from using the low cost delivery provided by the federally subsidized postal service.
http://money.cnn.com/2006/04/20/technology/business2_netflixgallery/index.htm
It never reaches the postal service. They just *say* it does.
This guy must have an agenda if he recommends BB over Netflix.
I'd think the USPS would do fine for remote areas of the country
Therein lies the rub. Delivering mail to Alaska costs way more than 41 cents or whatever it is now. Rural routes are just not very profitable.
Any private competitor would focus on urban delivery as it's far cheaper, and they certainly would charge less than the USPS. That would force the USPS to greatly increase delivery rates as the remote delivery would no longer be subsidized by urban delivery. Or we'd be spending a bunch of tax money to subsidize the USPS, which wouldn't exactly be free market competition.
So it's not going to happen -- remember, Alaska has *two* senators. As does Montana, North Dakota, and every other rural state.
I have seen the future, and it is inconvenient.
Netflix should go ahead and change it's envelope anway. They'd save a lot of paper.
I already watch a few movies online.
"You'll get nothing, and you'll like it!"
Netflix also said they pay for pickup service even tho they deliver their shipments to the post office, at an estimated $100M savings to the post office. They could either demand the post office pick up as they are paid to do, or charge less for what they don't do.
Either way, this is nothing but a conflict of interest from that so-called analyst. I wonder if the SEC will investigate him for this.
Infuriate left and right
Oh, I don't doubt that rural deliveries would be more expensive -- but that's the responsibility you accept when you decide to move further away from urban areas. More gas to go places, more costs for communications (digital and physical), less choice in what you can buy locally, etc. The upside is more privacy, possibly more personal security, etc, etc.
I serve some churches in Alaska, and my shipping charges via FedEx are more expensive, but not that much more. I recently shipped an 8 pound package to Alaska and I believe the charge for FedEx ground was around $20. Shipping the same package to California is around $8. Considering the distance, that's not a huge price difference. Since the market sets prices based on supply and demand, it would make letters to Chicago cheap, and letters to Alaska expensive for me. That's normal, but how many people are mailing things to Alaska to begin with, compared to Chicago?
Fortunately for Netflix, they have no intention of infringing on Blockbuster's patents on an envelope that doesn't jam DVDs. Unless of course Blockbuster also has a patent for "A Non-Postal Sorting Machine-Jamming DVD Envelope."
I personally think the NetFlix envelopes are horrid. I've had them come in various stages of destruction to my home. Ripped edges, torn open, etc. Nearly every envelope we get looks like it was jammed in some sort of machinery... that is until about three weeks ago. It looks like the postal service changed tactics and is manually sorting NetFlix envelopes to keep their equipment running smoothly. I've had no problems with torn envelopes since then. Perhaps the postal service is simply wanting to be paid for the problems NetFlix envelopes cause.
Other than that, I'm a huge NetFlix fan and hope they can work this out. The last thing they should want to do is make their delivery channel angry. Their business depends on it. I had naively imagined the problem was solved because NetFlix was working with the USPS. Let's hope the NetFlix managers figure out they need to be nice to the postal works. You DO NOT want to make your mail man angry! TRUST ME!
I think the infrastructure is a little bigger than FedEx/UPS really want, plus suddenly they would be faced with hiring a lot more "drivers" for a lower per-item profit. Drivers are already paid substantially (like everything else, much higher w/more years of svc), and now you would need even more to deliver the much larger amount of mail (a bulk of which would potentially be low profit to them). Have a larger force of newer drivers would drive down wages for the drivers, and the unions would try to force wages to go up, thus lowering the profit even more for the carrier. So I would think, why would they bother?
So tax the private first class deliverers to pay for the USPS to deliver stuff to Alaska for 41 cents. You'll at least be introducing competition in the urban market and making that more efficient, even if the rural deliveries still have to be done by the government.
Remember the days when Republicans were the party of fiscal responsibility?
But I don't see streaming video becoming the end-all-be-all answer in the immediate future.
There are still problems with it. Lower resolution, wait times for downloading, DRM restrictions, having to watch on a PC based system, etc...
Some of these can be corrected through technology. Like a 'NetFlix enabled Tivo' where the whole system is integrated into the existing DVR hardware solutions. The wait time isn't horrendous, but if I have a DVD in hand, I can watch it immediately, I don't have to wait 30 minutes from when I pick what movie I want to watch. Even then, with some smart ordering options (remote selection so you can start the download from work, time shifting, and other options to minimize the impact of the download) Resolution is a bad hit though, the better the res, the longer the wait, and who wants to watch a 320i version of a movie on your 54" 1080p HD plasma screen?
Anyways, the whole thing runs into the bandwidth limitation issues currently plaguing North America. As broad band improves, I can see the streaming option becoming better, but I've been hearing promises of consumer fiber since the 80's yet I'm still paying for a POS cable modem connection.
-Rick
"Most people in the U.S. wouldn't know they live in a tyrannical state if it walked up and grabbed their junk." - MyFirs
Why would someone that shorted the stock want to buy more at a lower price ? Perhaps you do not understand the concept of "shorting" a stock.
You sell short when you feel the stock will drop to a LOWER price then the current price. In essence you sell stock you don't have , then buy the stock to deliver at the price you sold it as.
What we need is Postal Network Neutrality, and we need it now!
"It's the height of ridiculousness to say for those 9 lines you get hundreds of millions."
That IS an intriguing response, and one I've heard before but never spent time answering. I'll give it some thought.
I actually do hang out with one of my UPS drivers regularly at a local saloon, and he's told me that he would have no problem at all delivering first class mail to customers he alreadys serves (duh). We receive a daily UPS and FedEx pickup, as do hundreds of my customers. For those customers, the cost to UPS is negligible in terms of warehouse-to-end costs. Sorting would introduce a cost, but UPS and FedEx have significantly better sorting equipment than the postal service does (and I know this from someone who quit USPS and moved to UPS).
I'm not saying that EVERYONE would use it, but the added advantage of the competition would bring prices down for urban areas almost immediately, and allow the companies to look into competing in suburban and exurban areas. The priority would be the competitive pressures on the USPS to do better, faster, cheaper than currently.
All our shipments are done faster through FedEx or UPS than USPS. Both companies have provided me with thermal printers, and our software allows us to look up an address, weigh a package, and print the tag in seconds. I can do a batch of 20 shipments in just a few minutes. USPS has done better by allowing third party stamp sellers (which we now use when we have to use USPS), so they have made some positive changes.
Would UPS deliver at 41 cents per letter? I'm doubtful, but we also don't really know. Our house gets, on average, about 15 pieces of mail a day. Based on weight (I just weighed my mail from today), we're talking about a overall cost of about $11.15 to the companies sending the mail. Because UPS and FedEx would work on the total grossdelivery cost (not the individual net sending cost), I would believe that $11.15 is more than enough for them to sort and deliver letters to me daily. On my slowest days we receive one ground shipment that costs the shipper $6.00 or so. $11.15 is more gross income, but more work, so I'm sure they make more on the $6 delivery than on 15 deliveries totaling $11.15, but again, it depends on if their market forecasts can see a profit.
I'd think they could. The current system of USPS is huge, but I see new UPS Stores and FedEx Kinkos stores opening up regularly all around me. That means that they've built a decent infrastructure, and can likely cover many suburban areas already (my town is small, and I believe we have 20 FedEx depots of various sorts within a 20 minute drive of me).
kdawson's wetware pump-and-dump detector must've be on the fritz today.
Maybe today's the day to sell him some SCOX before it enters chapter 7.
Knowledge is how to play a game, intelligence is how to win, wisdom is knowing what game to play.
You need to look at what's probably going to happen. This FUD, if public enough, may cause Netflix stock to drop. This represents an opportunity for traders with a short position to cover by buying at a lower price. This also represents an opportunity for people who want to buy stock to do so at a lower price. The next expectation is that when the world realizes this is no big deal for Netflix, the stock will rise again and all those who bought low will have earned something on their investment.
Maybe you think that the suggestion was for the short-sellers to short some more at the lower price? That, indeed, would be an unwise move.
GreyPoopon
--
Why is it I can write insightful comments but can't come up with a clever signature?
Keep in mind that Netflix has already successfully sued Blockbuster over patent issues. Blockbuster suing back would only be fair.
Well, fair might not be the right term, but there would be some irony in it.
Looks like Blockbuster FUD to me.
HCG 50a = 2MASX J11170638+5455016
11h17m06.4s +54d55m02s
The post office is a business. If I had a customer that was paying me the amount of money Netflix pays the post office, I would be changing my equipment to suit that customer.
There's a simple answer to that though; instead of giving the USPS a monopoly, require all mail carriers to provide fixed-fee service to the entire country. Don't limit how the carrier does this; a carrier concentrating on urban service could (for example) pay the USPS to handle remote areas, and eat the loss whenever it leaves its own delivery area; if it's got a process advantage over the USPS (such as better sorting systems), it may not make a loss whenever it does have to pay the USPS to fill in coverage gaps. To protect the USPS from abuse, once you're a mail carrier, you may not make use of another carrier's fixed-fee services (so you'd need to negotiate a suitable commercial contract with the USPS to fill in your coverage gaps).
If postal services are a natural monopoly, the USPS ends up as the only carrier. If there's room for someone to undercut the USPS, they will do so, and make a profit in the process. So long as the USPS isn't stupid enough to set its rates below the level where they can continue to make a profit on every delivery, it survives to provide fill-in coverage.
Put another way; the USPS is a monopoly because we want reliable postal services at a fixed rate, anywhere in the country. If we regulate for the outcome we want, and let private enterprise do as it wishes within those regulations (with business-destroying penalties for flouting them), we should get the results we want for the minimum price possible. If that means a USPS monopoly, it's clear that the monopoly is a consequence of our desire; if it means competing carriers, then the monopoly was an inefficient way to get what we wanted.
I appear to have a blog. Odd.
Oh, is THAT how shorting works?!?! No wonder I've always lost money on my short trades! Gosh! The sarcasm is just dripping today! I'm gonna wear out my exclamation mark key!
See the "or" connecting the two concepts? That means that you would do one but probably not the other. Reading lessons on slashdot. What ARE they teaching the victims of government schooling these days?
Don't piss off The Angry Economist
Not only that, but the post office will probably prefer that solution to actually charging them the extra 17 cents to hand-sort.
Compare:
Cover the cost of extra work
vs.
Eliminate extra work
A bit sideways of the topic, but I REALLY wish we had Netflix in Canada. It sounds like a great concept.
Yes, sturdier envelopes would be good, less damage to the DVDs in the long run...
I don't understand how that can be; in an interview I heard on NPR, one of the Netflix people details how important the mailer is, and that because of their traffic volume, even a fraction of a penny savings on the mailer equals millions of dollars in revenue. A fraction of a penny in the other direction couldn't possibly be benign, and the additional costs will surely be made up for.
Great. Now Blockbuster's patent lawyers will be at the USPTO within the hour to file the paperwork. Thanks a lot for the tipping them off.
SiO2
They've changed their envelopes before, and they'll have no problem changing them again. What I find interesting is that the US Post Office has suffered in silence for 2 years, charging up costs in something that could easily be remedied. If post office stock was available, that's the one I would drop.
You forgot to start your post off with "As an anarcho capitalist..."
Those is especially true if you meant that the price is *going* to drop. If that's true then it's most certainly a selling opportunity for anyone, including (and especially) those who currently own the stock.
So in short, if the price is artificially low then it's a buying opportunity. Period. For owners, short sellers, and bystanders.
Not just do I agree with timster and the person he was responding to, but, from what I have seen, enough investors will read idiotic things like what the "analyst" wrote, and actually cause (to some extent) the stock inflation/deflation he is trying to "predict". Some (many?) investors seem to jump on this sort of "news" without actually checking for basis in solid fact - much akin to when a company announces a piece of vaporware or cost savings discovery and their stocks jump ridiculously - followed by the vaporware never being released or that discovery never being able to be implemented.
It all equals out eventually... but (and I could be wrong) in the meantime, it seems a "great" way of driving stocks to perform how one wants them to in order to make a few bucks on the peaks or drops...
I think if that weren't the case, such "news" wouldn't be picked up all over the place (like this piece has). "Gee, we'll change our envelopes... done deal" should have been the end of this, and not make it a noteworthy news item by anyone... I know I would have laughed at the "analyst" and never repeated his story anywhere... after all, what would happen first? The USPS sets up the guidelines, and gets approval for a rate increase/surcharge addition - before NetFlix uses a different type of envelope? The USPS can't just tack on a new charge or change a rate without having to go through a whole bunch of steps that take quite a bit of time - including (assuming the measure was approved) setting an implementation date sometime in the future - all of which would give any company plenty of time to tell their printer "We need _____ type of envelope".
I'm sure someone has posted that this is "news" that shouldn't be on /. but in my opinion, it should be. It's (things like this) are a great tool to help judge the intelligence of "experts" in a given field, as well as public perceptions of such (combined with our slightly more technically oriented perceptions).
StarTrekPhase2 - The Five Year Mission Continues!
1.Stupidly invest in company A
2.Publicly sullen the good name of competitor B
3.SELL SELL SELL!!
4.??? 5.Profit!
Balderdash!
It's interesting to note that Netflix' former COO, Bill Henderson, was the United States Postmaster General from 1998 to 2001, so I have to think their relationship with the USPS is nothing but close.
Note: Henderson's role changed to strategic advisor in February 2007.
Oh, is THAT how boolean logic works?!?! No wonder I've always lost bits on my binary relations! Gosh! The sarcasm is just dripping today! I'm gonna wear out my NOT key!
:)
See the "XOR" connecting the two operands? That means that one is true, but not the other. Reading lessons on slashdot. What ARE they teaching the victims of computer science these days?
No malice intended, just trying to be cute
Having previously worked for the US Postal Service DELIVERING ACTUAL MAIL, I can tell everyone here that the flimsy (though protective) tyvek Netflix-style DVD-sleeves are not a favorite with USPS workers.
They can be rather slippery and are often difficult to keep a good grip on within a large stack of sorted mail.
I have no doubt that similar US Postal Workers have had identical frustrations not to mention that the thicknesses of the disks really add up and complicate the holding the 2 to 3 piles of hand-held mail when preforming dismount-delivery (on foot).
As a postal worker, you come realize this 5" square (and thick for its area) Netflix-style DVD envelope is being delivered by you many dozens of times per day (or more) and the disks *are* slipping out of the letter stack more easily than other types of mail when delivering mail 'in the field'.
You also realize that this Netflix-style mailer is NOT bringing the First-Class postage rate (but you spend MORE of your time handling it than the premium First-Class letters).. They do not even pay second-class or media-mail rates but a pre-sorted postage rate. Also, in all likelihood, the Netflix-style DVD mailer is causing just as much trouble for the automated sorting machines in the postal distribution centers. It also is not difficult to imagine that these odd-shaped and slippery (for mail) DVD mailers therefore must be handled by 3 to 4 more sets of human hands to get accurately delivered compared to the handling and delivery for standard premium first-class postage envelopes. Netflix, et al are probably paying at least half-as much to have them delivered as they would cost if delivered first-class (if even that). Even my credit card-statement comes First-Class!
If the profitable business models for these DVD rental/mailing companies is dependent on US Government (USPS) mailing subsidies, I suggest shareholders beware.
Individuals in the US, mailing their personal letters are *required* (most of the time) to use First-Class postage stamps (or equivalent). These same individuals are experiencing increasingly HIGHER POSTAGE RATES because, in large part, they too are subsidizing the added expenses of delivering Netflix-style mailers and other bulk non First-Class mail.)
Ask your postal worker what they deliver more of, First-Class mail, or "bulk mail"... you will see in their expressions the real answer to why we see the frequent postage rate hikes.
Shape and size of mail DOES have much to do with the *costs* and efficiencies in the delivering of the US Mail. I only wish the prices for mailing were adjusted accordingly (as we would all have MUCH LESS junk mail). -Z
Well, in all fairness, the way you phrased your original comment was confusing. When you said it creates a "selling opportunity for people who had already shorted Netflix", what you really meant was that it creates an opportunity for short sellers to close out their positions. And, of course, one closes out a short position by buying the underlying asset.
I find it unlikely that they are "suffering". In fact, it's probably in the best interests of the Post Office to work with Netflix to find a solution to this and keep them around. After all, how many new businesses are there that rely on the good ole post office as a cornerstone of their business model? Not many I'd suspect....
I want peace on earth and goodwill toward man.
We are the United States Government! We don't do that sort of thing.
You don't understand bureaucracies: new employees and revenue is growth of the bureaucratic organism. It means promotions for everyone, increases in salary, benefits and retirement income.
Any bureaucracy will react this way. Private companies, that exist for profits and return for shareholders, would evaluate it differently.
Or, Postal Service Surcharge Could Force Netflix To Improve on Bockbuster Packaging.
"It's the height of ridiculousness to say for those 9 lines you get hundreds of millions."
And why are they using an envelope format they know to jam automated sorting machines? That's pretty rude if nothing else...
http://spamdecoy.net - free throwaway anonymous email - avoid spam!
It would be a valid decision for the post office to prefer covering the cost of extra work. This employs more people. It also generates more cash flow. The worst thing is that they're *already* doing this extra work, so if Netflix fixes their envelopes, the post office will likely lay off employees.
NO!!! I'm benefiting by getting Netflix service cheaper than I wold be getting it otherwise.
Also, if you not, even medium cities have a local Netflix depot, meaning most Netflix movies are only a local delivery both ways, although they pay the same price if the UPSP had to deliver and return them across across the country. That's a savings for the fixed price USPS.
"It's the height of ridiculousness to say for those 9 lines you get hundreds of millions."
The rub would be receiving upwards of 3 separate mail deliveries each day. That means an increase of street congestion caused by extra stop-and-go deliveries. Plus, there's extra road maintenance in suburban & rural areas, etc.
To wit: airlines ("On-time arrivals are HARD. Can we have another bailout? Say, 100 billion dollars this time?"), the *AA ("We could make a lot more money if copyright never expired. Let's buy us a couple new congresscritters."), California utility companies ("Stop us from price-gouging, will they? Let's see how they deal with ... ROLLING BROWNOUTS! Bwahahahaha!")
This is rich.
Spam is a burden on everyone. It's a waste of time and resources
and is a nuissance. In some cases, it might even be a threat to
your financial reputation.
Yet they would rather shakedown a company that is actually
doing something constructive with the postal service. If the
postmaster general doesn't like Netflix envelopes, he could
make some constructive suggestions.
Forget charging Netflix extra. Take this charge and apply it
spam and especially bulk mail.
I rather doubt that bulk mail was originally what Franklin
had in mind...
A Pirate and a Puritan look the same on a balance sheet.
I first got Netflix when it was brand new (back before that damn subscription model and throttling came in). In the early days, they used a heavier cardstock-type mailer (not cardboard, but a lot thicker paper than the new ones). It was only later that then went to the flimsy mailer that they use today. Personally, I think they never should have changed it in the first place. The earlier mailers were a lot tougher and I never once got a cracked or missing disc back then.
SJW: Someone who has run out of real oppression, and has to fake it.
"The scenario described in the article -- where Netflix takes no action to rectify a problem that would destroy all their profits -- is unreasonable on its face."
Yeah, that would be like a brick and mortar movie rental company only trying alternatives to their antiquated business model after years of hemorrhaging money. If this guy is analyzing Blockbuster stock, he's used to a company taking no action to rectify a problem that would destroy all their profits.
Perhaps a change in envelopes will speed up Netflix's turn around times, as there will no longer be a delay due to the personal handling of each envelope. If this guy is a Blockbuster supporter, then I'm sure this is what he wanted to accomplish :)
What monopoly? What prevents any private business from delivering sealed envelopes to residences and businesses for a fee? Nothing -- in fact, UPS, DHL, etc. already do this. They choose not to compete against the 41 cent first class letter. I wonder why?
I've worked in post office processing plants. I'm 100% sure they'll pick the more work option.
May contain traces of nut.
Made from the freshest electrons.
Where is that key? I can't find it. I asked a co-worker where it was, and he said it was next to the "any" key, but I can't find that one either.
psmylie's dictionary: Godzillion (noun) Any number large enough to destroy Tokyo
And a pretty convenient one at that. They probably prefer printed, pre-sorted, barcoded identical envelopes to the kind of crap that regular people put in the mail--even if one does jam occasionally. (We get letters at my company that not only required hand-sorting, but probably handwriting experts to decode.)
I switched to Netflix because I was tired of the kiosks.
Kiosks have two problems:
#1 - Only one person can browse through the selection at a time, which creates tremendous lines
#2 - They have an extremely limited number of movies
I just flat out got tired of standing in line only to find out that the movie i did want was all out.
Streaming movies isn't a threat until every house has a T3 with full bandwidth to the source. I watch TV shows from NBC streaming, and that's fine... but for a movie, I want the DVD experience at a minimum.
You assume a great deal. One of the basic problems with postal delivery is the "customer" isn't necessarily the one that is on the receiving end of poor service. Assuming that you receive bills in the mail, does the sender care when you receive them? Or in what condition? Not really. They care a lot about how much it costs them to send them out.
Similarly, most businesses care about shipping costs and not so much about shipping performance. If Netflix was charged $0.10 less for each envelope but it took two days longer, would they care? I'd say they would jump at the lower cost.
Different groups have different criteria for judging performance, and with delivery services in general the problem is the people that want excellent performance are not paying the bills and the people wanting low cost are. If you control for low cost you are going to get really cheap, poor service. Right now the overnight delivery companies are doing fairly well keeping everyone happy in their niche and the USPS is doing a fair job on both costs and performance. Upsetting the balance would take a lot of care and I don't think the all the aspects of the situation are clear.
About one out of every 4 discs I get through netflix are damaged to the point of being unplayable. Half the time they're cracked, the other half they're scratched or chipped. I probably have a higher incidence of damage, as I tend to request older movies instead of new releases, but still...
The worst case was one which was cracked almost in half. I didn't realize it when I took it out of the wrapper and inserted it into my DVD player. The clanking sound as it tried to play was the first indication. The fact that the DVD player was damaged is what made me angry.
The most amazing one, and this was clearly netflix's fault, was a disk that had apparently been cleaned with sandpaper. You could see the circular scratches in the dvd showing quite clearly that it had been cleaned with a machine. I wonder how many discs they destroyed before they realized the cleaning pad was dirty?
Define "efficient". What is "efficient" for the shipper is not necessarily the same as "efficient" for the person receiving the shipment. The shipper is going to want to control costs and make sure the package eventually gets there. 2 days or 10 days probably doesn't make a difference to the shipper.
The real shipping cost probably isn't reflected to the customer anyway - they aren't going to be charged less because the courier is charging a little less because they are paying for the packaging and the person putting the stuff in the box. So "efficient" to the recipient is both cost and delivery time, as well as a bunch of other stuff.
I'll give you a good reason: because it's a dying business[1] and no company in their right mind would want to compete there. Low-cost, high-volume mail is sinking fast due to email and other replacements. Maybe it made sense 150 years ago to compete with the USPS for first-class mail, but here in the 21st century it's quite different.
[1] http://www.gao.gov/new.items/d04565t.pdf
Unless Blockbuster filed for a patent like, "A method for placing media into solid-cornered transport containers." If this is the case, we're all screwed.
Reid
The Right Reverend K. Reid Wightman,
The summary should read: "Speculative parasite attempts to exploit frivolous issue to drive up Blockbuster's stock at the expense of greedy morons slightly stupider than he, and, if there were any justice in this world, his slimy carapace would be stomped by the hobnailed boot of the SEC into a mealy paste roughly the consistency of his fetid, thrice-damned soul."
how many pairs of boxer shorts should you own?
Sorry, Netfix envelopes are ordinary paper, not Tyvek. They're also not square. (And I'm more annoyed that first-class mail subsidizes junk mail.)
Unlimited growth == Cancer.
Isn't charging certain users more just because they're making money what we're all up in arms about with Network Neutrality?
"They want to use my posts fer free, but I ain't gonna let 'em."
-- USPS director Ed Whitacre
"It's not a tube you can just dump something on. It's a series of BIG TRUCKS!"
-- US Senator Ted Stevens
4, 13, 21, 26 and 30
Now give me my $19,503!
Well if he says it's plastic and square maybe his stint as postal worker was in 2000 and he hasn't seen a netflix envelope since?
http://money.cnn.com/popups/2006/biz2/netflix/frameset.exclude.html
...doesn't 41 cents cover this? It does if I sent a DVD in a nice tough envelope.
but probably handwriting experts to decode.)
sorry 'bout that. i'll use a typewriter next time
Snowden and Manning are heroes.
But their volume is so high that it's cheaper to replace the occasional disc than it is to pay the extra materials and mailing costs for cardstock envelopes.
Benford's Corollary to Clarke's Law: "Any technology distinguishable from magic is insufficiently advanced."
I first read that as the "portal sorting machine." But then, if you had portals, you wouldn't need the USPS...
Libertarians somehow believe that private businesses should be stronger than governments but weaker than individuals.
Until the next group of Robber barons start to choke us through corporate Mergers and Synergies.
Build a man a fire, he's warm for one night. Set him on fire, and he's warm for the rest of his life.
A: All the successful ones.
Before we talk about radical reforms we need to identify the specific defects with the existing system. I do not see much evidence that the USPS is a drag of any significance on the national economy.
Build a man a fire, he's warm for one night. Set him on fire, and he's warm for the rest of his life.
"Ask your postal worker what they deliver more of, First-Class mail, or "bulk mail"... "
How often do you get first class mail? How often do you send it? Without standard mail, would said letter carrier have a reason to even be out there on a daily basis? What about weekly?
People sending standard mail have financial incentives to automate the heck out of their mail (presortation, address verification, barcoding, etc.). Single-piece first class mail doesn't even require a ZIP code while carrying a greater legal obligation to deliver. Which is more expensive to implement, barcode scanners or OCR? Is OCR as accurate as barcode scanners, especially with handwriting?
So what's subsidizing what now? If you were to specify presorted first class, then yes, I'd agree the USPS is making a killing delivering your bills to you. But without standard mail, I doubt anybody would have curbside service at all, at least not without paying Express Mail rates.
"you will see in their expressions the real answer to why we see the frequent postage rate hikes. "
A letter from Miami to Anchorage (or San Juan to Pago Pago, for that matter) costs $0.41 to send. The same letter from Halifax to Vancouver is $0.52. $0.69 for Aberdeen to Plymouth. $0.72 in Japan, $0.73 in France, $0.80 in Germany, $0.88 in Italy.
I can't really complain.
"Shape and size of mail DOES have much to do with the *costs* and efficiencies in the delivering of the US Mail. I only wish the prices for mailing were adjusted accordingly"
For first class, they have been since May, which is where the non-machinable surcharge in TFA came from.
To take your points in order; senders do care about when their bills arrive, as the sooner the bill arrives, the sooner it can get paid. Further, they don't want to have to extend their payment terms to allow for a slow carrier (if I receive a bill tomorrow for payment on the 1st December, I can't pay on time, and it's the sender's fault, so they can't legally charge me for it).
They also care about condition; if the bill is damaged beyond readability in the post, they're issuing a new one, and dealing with customers on the phone to get it sorted.
Finally, my point is that if you apply regulations that indicate the outcome you want, and give the regulator teeth to ensure that companies don't see the cost of breaking regulations as part of the cost of doing business, you end up with the service you want (although not necessarily at the price you want). You could also fix the problems you're raising by making mail carriers liable to the recipient for consequential damages caused by mail delays or damage.
I appear to have a blog. Odd.
I think that the other posters in here are ENTIRELY correct. This is just a way to manipulate stock prices on the short them to make some big players a lot of money. Netflix is NOT going to accept a 70c approximate loss in profit per DVD. My big fat $#($% they are.
They will just work with post office to create a new type of delivery package (or rip of blockbuster, which I use) to solve the problem.
Will probably short them maybe a cent or two per DVD in the short term to make the change. That's it.
The fact that this even reaching Slashdot or any other prominent distribution point for geek news is an incredibly transparent attempt to lower the stock price of Netflix.
Shenanigans I say!!! Shenanigans!
The Royal Mail in the UK is facing the same problem. Basically the government mandate that they must provide service to everywhere in the country and serving all the outlying villages / sheds in remote places is killing their chances of competing with other companies who are free to only serve areas that are profitable.
I imagine this would be even more of a problem in the US where the distances involved are so much bigger.
I have discovered a truly remarkable sig which this post is too small to contain.
You DO know that the USPS is actually a private company with a congressional charter, right? Btw only the minority of private companies have shareholders, the majority or sole proprietorships. I think you were thinking of PUBLIC companies.
There are 4 boxes to use in the defense of liberty: soap, ballot, jury, ammo. Use in that order. Starting now.
I'd say it's more like a short and distort.
I guess you haven't been around the inside of the Postal Service recently. If it takes extra hand labor, we don't want it. Machines are cheap and salaries are expensive. I strongly suspect that we have a team working with NetFlix right now to produce economical, machinable packaging. We've also recently been given the ability to negotiate rates for large customers. Don't look for NetFlix to be out of business anytime soon due to postage rates.
Profanity - The sign of a small mind trying to express itself.
Umm... that was pretty much my point. Are you sure you didn't mean to respond to one of the other comments?
And apparently his clients are idiots if they think Netflix is going to absorb a 17 cent charge rather than put an extra 2.3 cents into their envelopes.
Does Citibank treat all of the clients this way? And no, I'm not sort in Citibank, but maybe I should be buying against this analyst's ratings!
My God, it's Full of Source!
OUTSIDE_IP=$(dig +short my.ip @outsideip.net)
True. You explained it better than I.
Don't piss off The Angry Economist
I find this to be ironic since former Postmaster General, Bill Henderson is now a paid consultant to Netflix. Also, I work for the USPS as an electronic technician servicing their delivery barcode sorters and it is the Blockbuster envelopes, NOT the Netflix ones that are always jamming in our sorters!