Editor's Note — By Antone Gonsalves: InternetWeek
Nowhere but the Internet can you find a company that penalizes customers who like it too much. That's the case with Netflix, the online company that pioneered DVD movie rentals by mail, causing major headaches for brick-and-mortar operations like Blockbuster.
While most businesses would kill to get more customers to buy products or use their services, Netflix punishes their heaviest users by making fewer movies available to them and delaying shipments.
Those who find this hard to believe, only have to read Netflix's Terms of Service, which reads, in part, "In determining priority for shipping and inventory allocation, we give priority to those members who receive the fewest DVDs through our service."
The reason for this less-than-customer-friendly policy is that Netflix makes more money off of the occasional user than from movie lovers who watch DVDs as soon as they get them, and then ship them back in Netflix's pre-paid envelope in order to get more movies. Since everyone pays the same amount each month, it's obvious why film buffs are Netflix's worst nightmare.