Tuesday, February 1, 2011

Getting rid of the Middle Man (including Netflix?)

This article discusses how the internet has given companies the ability to reach their customers without the use of a middleman. Krippendroff’s example is that airlines used to need travel agencies to sell their flights, but now they can sell them directly from their websites. He seems to think that the trends (as led by the industries and not the consumers) are away from consolidation and for-profit meta sites like Travelocity, and towards direct sales from individual companies because it is more profitable for them: they dont need to pay the middleman, they can get ad revenue from their websites, and they can sell extra perks.
Then he applies this trend to Netflix, who is also a middleman. With the film and television companies able to stream their content directly to the customer online, they no longer need to give it to Netflix (who would also be their competitor), thus unraveling Netflix’s business model.
Though I agree this is a real possibility, it is only one possiblility. Unless something drastic happens, advertising alone will not sustain video streaming and the alternative that looks the best right now is subscriptions. However, the problem with individual companies selling subscriptions is that no one is going to want to pay multiple subscriptions. This would be the music industries' PressPlay and MucisNet (from the Patry reading) all over again. If all the content is consolidated on Netflix, then consumers will probably be more willing to pay the one subscription that goes to all the companies and everyone will benefit from cooperation.

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