3 November 2005

Attention Netflix members

I’m a happy NetFlix customer. I have been since either 1999 or early 2000, I forget exactly. It’s a good service—you queue up a list of DVDs, you keep a number of discs at home, and each time you mail one back they mail you the next one from the list.

A while ago some guy named Frank Chavez took exception to Netflix’s advertising. Their ads were offering “unlimited” rentals, and Chavez discovered that they actually deliver DVDs to you more slowly once you hit more than 12 rentals in a month. Chavez reasoned that this put a definite upper limit on the number you could rent, over and above the limit resulting from postal delays. Hence Netflix weren’t really letting you rent an unlimited number of discs; you’d probably only be able to rent a movie every other day. Cue the very small violin.

So, Chavez filed a lawsuit for a few hundred bucks. Lawyers Adam Gutride and Seth Safire took on the case on his behalf. And now, there’s a proposed class action settlement.

Under the terms of the settlement, the customers of Netflix will get a free upgrade to a higher tier of service, with an extra rental allowed—for one month. After that they’ll either have to pay more to keep the improved service, or request their original deal again.

If that doesn’t sound like a very good deal, well, as you might expect Mr Chavez did a little better. He’ll apparently get $2000 in damages.

But what of that crack team of two lawyers? What do they get as meager compensation for the hours they spent on this deeply worthwhile lawsuit? It turns out that under the proposed settlement, they’ll rake in a cool $2,528,000 to split between them. That’s about half of Netflix’s quarterly profits.

Let’s just run those numbers again: You get one month of improved service, worth a couple of bucks—and if you’re careful, it doesn’t cost you anything. Netflix most likely make more money from people forgetting to cancel the upgraded service; if they don’t, they probably jack up the membership fees to cover the cost of the settlement. Chavez gets two grand. And the lawyers get a million bucks each plus change.

If you think there’s something a little skewed about the terms of that settlement, you might like to head over to netflixsettlementsucks.com. It turns out that if 5% of the people eligible to take part in the settlement write in and say they want no part of it, the whole thing is invalidated and the lawyers get nothing. Personally, I’d love to see that.

The opt-out instructions are on the site, and geektronica has Microsoft Word and PDF templates for the lazy.

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