Netflix didn't kill my video store, but yours might be next!

by Anthony Kaufman
March 23, 2006 11:10 AM
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So it turns out Marty, my local video storeowner, didn't close up shop because of Neflix. He just wanted to retire. But a recent comment from Tod Herskovitz, the owner of an independent video store in St. Paul, Minnesota, raises three real concerns about how Netflix may be hurting independents while it continues to champion its democratic, indie-friendly model of video distribution.

1. There goes the neighborhood. "It robs our communities of revenue," he writes. "The money spent in a small business stays in the community; it isn't exported to shareholders. The money that stays in the community circulates and multiplies to further benefit those people who live in that community. Not only that, but Netflix pays no state or local taxes, so things like our schools and roads become undercapatilized as a community's money becomes virtual."
To back up his claims, he later supplied to me a recent study that indicates:
• For every $100 in consumer spending with a local firm, $68 remains
in the local economy.
• For every $100 in consumer spending with a chain firm, $43 remains
in the local economy.

2. Exclusivity. "They've made exclusive deals with PBS on docs (again tax money is used to produce docs that only Netflix can sell)," he writes. "Or they've done exclusives with directors such as Hal Hartley. Our store has done everything to carry Hartley's filmography, so imagine his new film comes out and we cannot have access to it. We've since been able to buy the film because evidently Netflix's window has expired, but the feeling of betrayal remains."

3. The human touch. "And lastly, there's the issue of human interaction," he writes. "The people at my store talk to the employees and depend on their knowledge and recommendations. . . Everyone talks to one another about other issues of the day and they see their neighbors and old friends. They also make it a point to support us because they don't want their city to become the homogeneous city space that other cities are becoming as they abandon their individual identities in the rush towards sameness that is enveloping us."

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