The decision to split Netflix into two companies, with the poorly-named Qwikster getting the DVD by post business and Netflix keeping the streaming business has caused a lot of fuss. Bill Gurley suggests that this is due to the very different licensing regimes the two businesses work under, and Clayton Christensen has praised this an a rare example of a company pre-emptively disrupting itself.
However, Reed Hastings gave rather non-plussed responses to those who complained about not having the two queues (DVD and streaming) integrated. As danah said,
It may seem logical to split the world based on business models from the inside of a business, but if you want your business to succeed, you should be focusing on understanding your users' mental models. And those aren't organized along business lines. They're organized around movies that they like, obtained by the means that is appropriate to the particular context of that user. People understand Netflix through its database of movies and the ratings that they've spent time providing, not its distinct queues.
Hastings clearly isn't thinking about this from our point of view - we want to watch something, and are much less focused on the particular medium. Instead of separating the two modes, Netflix should be uniting them further - help us book cinema tickets too, or buy Blu-ray discs. Encourage us to bring in information on favourite films and TV shows from Facebook, Amazon, GetGlue. They still could do this in an exemplary way by having Netflix and Qwikster share users' information through public APIs that others could use too. Activity Streams was made for this.
Being on the users' side in this way is another disruption, and indeed several startups at TechCrunch Disrupt had this mindset - what Doc Searls's VRM project calls '4th party tools' - ones that mediate between the customer and the vendor on the customers behalf. Cake Health mediate between you and insurers, TalkTo between you and local shops, FlickMunk between you and cinemas, and u4them as a way to donate to others medical bills.
The deeper currents of disruption of the film and TV industry are showing up in music. At SF Music Tech last week, turntable.fm was on everyone's lips, as the site that has got us all sitting round playing music for each other again, like the older label execs fondly remember from the 1970s. What it has done is apply the semi-overlapping publics and sharing models of twitter to listening to music together.
The other critique of Netflix that I saw was Megan McCardle saying that they were freeloading on the studios by only paying the marginal cost. Someone has to fund the creation, she pleads with us. Again, the answer was assumed at SF Music Tech, in the form of Kickstarter, which explicitly encourages people to fund production, and not just at marginal cost either. A key part of a successful Kickstarter project is widely spaced payment options, the special deals that are really about showing support with largesse. That these are power-law distributed seems odd at first sight - why would people pay more? But in fact it makes perfect sense. Income and wealth are power-law distributed in the US too, so people can pick the level of patronage that fits their income.
Independent artists like Pomplamoose and Zoë Keating are not served by the commodity pricing of Spotify - many are removing their songs from the catalog; they'd rather host them for download themselves. Zoë reports that her Bandcamp site, which lets you pay as much as you like for an album, has received payments of $8 to $500. Because they want to support her.
Cory Doctorow once said that "If big-budget movies might turn into opera, then long-form narrative books might turn into poetry." Opera has long understood the power-law distribution of wealth, and seeks donations in the same kind of structure.
In some ways, this power-law distribution of price is visible throughout commerce in the US. You can pay anything from $1 to $5000 for a burger, with price points inbetween, similarly for housing, transport, drinks, clothing, shoes, you name it.
The old economic choice between a commodity business that's all about margins, or a fashion business that is about competing for the most popular spot is finding a new accommodation. The discovery mechanisms like Turntable, Spotify, Pandora, and yes even Netflix, need to connect to these artist empowering patronage sites, as well as the commodity playback from the industrial aggregators. They need to lead people to Kickstarter and Bandcamp too. They need to be convenient, comprehensive and supportive of those creating art.
Update:Zoë Keating on Spotify, Apple and Independents (and lettuce)