Slow & Low: How Netflix Raises Prices

Quartz: “When Netflix raised rates this month, it increased the price of its most popular plan in the US by $1 and its premium package by $2. The hike hit new signups first and is still rolling out to existing users—a strategy Netflix uses to give people time to adjust. The company, shrewdly, did not touch the basic plan—its cheapest offering at $7.99 a month—so that folks on tighter budgets could still afford the service … The key, for Netflix’s management, was learning to raise prices without spooking subscribers—by doing so in small and infrequent doses.”

“Netflix has been careful not to raise rates too quickly in markets where it’s still building out its library and launching originals geared toward local audiences. It needs to become a service its customers can’t live without, before they rethink its value … Some analysts expect and welcome another modest price lift in the US next year to cover the rising cost of Netflix’s content. An extra dollar here and there, if Netflix continues to add new ‘must-watch’ series and movies all the time, shouldn’t dent its base too badly.”

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Whip It Good: The Last Train to Weirdsville

    Dangerous Minds: “Last week Dave Taylor, who runs Weirdsville Records in Mt. Clemens, Michigan, on the northern edge of Detroit, pulled a funny kind of prank when he decided to switch up the visual look of his store for an hour or two … a full wall of Whipped Cream & Other Delights and Whipped Cream & Other Delights fronting every bin! (Yes, in case you were wondering, the unseen albums in the bins are not all Alpert’s masterpiece, they’re just regular albums.)”

    Taylor explains: “Every day we get records in. There will be at least two of these in every stack! Nine out of 10 households had this record! It’s a great record and who can’t love this cover?”

    “One of the most interesting aspects of the display is that Taylor went out of his way to make sure customers understood that the copies are not for sale. Taylor says that he has about 75 copies of the album, and sheepishly admitted that he is ‘stockpiling the Herb’.”

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Surge Pricing: The Customer is ‘The Boss’

The New York Times: “When Bruce Springsteen decided to do a run of shows at a Broadway theater with fewer than a thousand seats, he appeared to reject the laws of economics — or at least what would seem to be in his financial best interest. He limited ticket prices to between $75 and $850 and has been allocating them through a lottery that includes identity verification. His goal was to prevent scalping. Yet not everyone who sought tickets got them at those prices. The tickets that have leaked onto the open market on StubHub ranged in one recent search from $1,200 to $9,999.”

“Fans don’t want to think their favorite artist is gouging. And the entire concert experience may be better if raucous superfans are in the front rows, rather than whoever is able to pay four figures for a ticket. The goal is to create an experience that makes everyone leave with a warm glow, their fandom of that artist that much deeper. If artists did raise prices sharply, there’s a risk they would need to discount prices later to fill up the arena. Research shows that when people find out they overpaid for something, they buy less in the future.”

“That might be a lesson for the other industries where variable pricing could make a lot of sense … What the successful examples of variable pricing have in common is that they treat customers’ desire for fairness not as some irrational rejection of economic logic to be scoffed at, but something fundamental, hard-wired into their view of the world. It is a reality that has to be respected and understood, whether you’re setting the price for a highway toll, a kilowatt of power on a hot day, or a generator after a hurricane … one view of the Springsteen approach is that it is economically irrational. But another is that it is part of a long-term relationship between a performer and his fans.”

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Broadway Bargains: There’s An App For That

The Wall Street Journal: “A veteran Broadway producer is instituting what he believes is an industry first: A best-price guarantee on show tickets. Ken Davenport, lead producer of the revival of ‘Once on This Island,’ … says the guarantee will ensure that ticket-buyers won’t have to scour the web for deals through theater sites advertising discounts. Instead, they can go to the show’s website.”

“While Mr. Davenport says the idea is to make pricing fairer and more transparent, he also allows that he stands to benefit from the guarantee. If theatergoers come to see the show as the best source for a discount, he says he doesn’t have to spend as much time and money marketing various other deals. Moreover, when theatergoers go to discount sites in search of cheaper seats, they often learn about deals for other Broadway productions, Mr. Davenport says. In turn, that could lead them to buy tickets for a different show.”

“But while Mr. Davenport’s strategy may resonate with theatergoers tired of the bargain hunting, not everyone thinks it will pay off. Larry Compeau, a Clarkson University professor who specializes in consumer psychology, says Americans have become accustomed to the hunt. He notes failed experiments by prominent retailers and manufacturers to simplify pricing and do away with discounts. “The general American consumer values the deal,” he said. Others say Mr. Davenport could be sacrificing revenue from ticket-buyers who don’t necessarily worry about deals.”

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Slowball: Is ‘Big Data’ Wrecking Baseball?

The Wall Street Journal: “Baseball has never been more beset by inaction. Games this season saw an average gap of 3 minutes, 48 seconds between balls in play, an all-time high … A confluence of hitting, pitching and defensive strategies spawned by the league’s ‘Moneyball’ revolution have all played a role. That makes baseball, whose early use of big-data strategies was embraced by the business world in general, a case study in its unintended consequences.”

For example: “Statistics showing precisely when starting pitchers become less effective have prompted teams to remove them from games earlier than before. That has increased one of the biggest drags on pace of play: pitching changes. Regular-season games this year saw an average of 8.4 pitchers used between both teams, an all-time high. That’s up from 5.8 pitchers a game 30 years ago.”

“Radar and camera measurements of the angle at which balls leave the bat have shown that the optimal swing angle looks more like an uppercut than many hitters preferred. Hitters, in turn, have started swinging for the fences in droves. Home runs this season reached a record level. That all-or-nothing approach means that between each home run there is a lot of standing around and waiting. Some classic displays of athleticism—a daring attempt by a runner to advance more than one base on a teammate’s hit, for instance—have become rarer.”

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Chance v. Swift: Sincerity v. Authenticity

David Brooks: “It’s interesting to compare Chance the Rapper’s new song with Taylor Swift’s new song … The former stands out from the current cultural moment; the latter embodies it … The first thing you notice in comparing the Chance the Rapper and Taylor Swift songs is the difference between a person and a brand. A lot of young people I know talk about ‘working on their brand,’ and sometimes I wish that word had never been invented.”

“A person has a soul, which is what Chance is worrying about. A brand has a reputation, which is the title of Swift’s next album. A person has private dignity. A brand is a creation for an audience. ‘I’ll be the actress starring in your bad dreams,’ is how Swift puts it.”

“The second thing you notice is the difference between sincerity and authenticity. In Lionel Trilling’s old distinction, sincerity is what you shoot for in a trusting society. You try to live honestly and straightforwardly into your social roles and relationships. Authenticity is what you shoot for in a distrustful society. You try to liberate your own personality by rebelling against the world around you, by aggressively fighting against the society you find so vicious and corrupt … rebellious authenticity is the familiar corporate success formula, and sincerity, like Chance the Rapper’s, is practically revolutionary.”

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Disney Brings Its ‘World’ To Retail

The New York Times: “Quietly, like a mouse on tiptoe, Disney overhauled its retail store at the Northridge Fashion Center mall in late July. Out went the twisty Pixie Path aisles, the ornate displays, the green walls and the color-changing fiberglass trees. In came a movie-theater-size screen, a simplified floor plan, white walls and more items for fashion-conscious adults … the Disney Store here was a prototype, and the company has been monitoring sales and consumer feedback as it prepares to revamp its 340-store chain.”

“The redesign makes Disney’s stores a bit more like Disney’s theme parks. For instance, daily parades at Disneyland in California and Walt Disney World in Florida will be streamed live to those colossal video screens. During the parades, store personnel will put out mats for shoppers to sit on and roll out souvenir carts stocked with cotton candy and light-up Mickey Mouse ears. The screens could easily be used to stream other events, such as red carpet arrivals for Disney movie premieres. That kind of programming could bolster foot traffic, and thus sales — while also turning the stores into a more potent promotional platform for Disney’s films, television shows and theme parks.”

“As it attempts a new mall strategy, Disney is also remaking its e-commerce operation. ShopDisney.com is replacing DisneyStore.com. The new site will have a less cluttered look and a vastly expanded assortment of designer merchandise aimed at adults (Mickey-themed Ethan Allen furniture and a $350 Siwy denim jacket with Minnie embellishments will be on offer). The site will also stock more items that previously were available only in stores inside Disney theme parks.”

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Porky Pig: The Anti-Mickey

The Wall Street Journal: “There were essentially two modes of expression in the Hollywood studio cartoon: the Disney style and that of Warner Bros. Disney strove for believable narrative and overwhelming naturalism—even in a fantasy like his 1937 milestone, ‘Snow White and the Seven Dwarfs.’ Conversely, the Warners style, which is often conflated with that of Avery, its most innovative director, came to mean uproarious, fast-paced and often transgressively violent humor in which characters frequently violate the fourth wall and confront you with their artificiality.”

In 1935, “Warners released a cartoon called ‘I Haven’t Got a Hat’ introducing a group of animal schoolchildren, and the one who began to attract notice was a certain pig with a speech impediment. Within a year, he was starring in his own series of shorts, and before 1936 was over, Porky Pig was rapidly becoming the embodiment of a whole new kind of animated film. … By 1938-39, Bob Clampett had become the dominant directorial influence in Porky’s career. On his watch, Porky became considerably cuter, thanks equally to Mel Blanc, who now provided the pig’s voice and made the stutter more adorable than grotesque.”

“Clampett’s characters are like cuddly, bouncy balloons being manipulated by a maniacal genius … Clampett seems determined to contrast exaggerated cuteness with even more extreme violence, as if throwing a hand grenade in the middle of a Disney Silly Symphony.” By 1943, “two characters had already succeeded Porky as the studio’s biggest breadwinners, Daffy Duck and Bugs Bunny. As popular as Porky had been a few years earlier, he was essentially a passive character—like Laurel & Hardy, things happened to him. He couldn’t compete with the brash, aggressive stars of the World War II era, like Bugs and Daffy, who belonged to the age of Abbott & Costello.”

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Perennial Seller: Make Connections, Not News

The Wall Street Journal: In Perennial Seller, Ryan Holiday “emphasizes the value of low prices and word of mouth over press coverage. Raymond Chandler, he writes, became the ‘quintessential detective author’ because he encouraged his publishers to sell his books as pulp paperbacks, for 25 cents a copy. Suddenly his books went from selling a few thousand copies in bookstores to hundreds of thousands in gas stations, train stations and cigar stores. Humphrey Bogart as Philip Marlowe followed.”

“Likewise, the comedian Drew Carey’s long run on network television began with an invitation from Johnny Carson to appear on “The Tonight Show.” Validation by one person whose opinion is valued, Mr. Holiday argues, is worth all the press coverage in the world.”

“Iron Maiden has never relied on hit singles or frequent radio play, since its songs often run to 10 minutes, with solos from each of its three guitarists. Instead, the band has toured almost nonstop, building close connections with thousands of fans who now buy almost anything it puts out, from albums to beer to belt buckles. Its core of hard-core fans, Mr. Holiday writes, has allowed Iron Maiden to ‘endure through fads, technological shifts, and the fact that their music was never mainstream’.”

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