Netflix has become the unquestioned champion of the digital streaming universe. The company has over 40 million paid members in the United States and another 19.3 million in the rest of the world.
With its combination of original programming and movie library and television shows, the service has changed how people consume video. The streaming giant has also done something that should make it the envy of all the companies trying to put the word “business” back into the music business: It gets people to pay.
Aside from a 30-day free trial period that requires customers to turn over their credit card information and opt out if they don’t want to be billed, Netflix operates on a purely paid model. Whereas the major music players Pandora and Spotify offer free, ad-supported versions of their services, the digital video streaming leader gets a subscription fee of between $7.99 and $9.99 from every user.
That has been a financial boon for the company (and it explains at least partially why video content is in a healthier business place than music). But it does leave Netflix vulnerable, at least in theory, to rivals which use an ad-supported model to give video away for free.
Read the entire story here.