July 2013

It turns out 2013 has been lucky for Netflix. The stock has surged 178% so far, the best performance in the Standard & Poor's 500-stock index. But to keep the odds in its favor, the video-streaming and DVD-rental company will need to be more like an Amazon than an HBO.

Netflix's paid domestic streaming subscriber base has increased to nearly 28 million from 25.5 million at the start of 2013 and 22 million a year before. This puts it just below Time Warner's HBO. Meanwhile, Netflix's domestic streaming margin on the basis of contribution profit, revenue less cost of sales and marketing, was 20.6% in the first quarter, up strongly from 14.3% a year earlier. But expanding margins may represent a risk for Netflix. That sounds counterintuitive. But when Netflix reports second-quarter earnings on July 22, investors will be more focused on how many subscribers it added, something that may require extra spending. For Netflix, building a formidable subscriber base should be a more immediate concern than raising margins. Having more users enables Netflix to spread the costs of buying and creating new content. And rising market share should help it raise subscriber fees.

A plan to dramatically expand the number of possible Web addresses — by adding more than 1,000 new domains such as “.buy,” “.casino” and “.gay” — could cause widespread disruption to Internet operations, say some industry officials.

Efforts to augment existing domains such as “.com” and “.gov” have been underway for several years and are entering a critical new phase as industry officials meet at an international conference that began Sunday in Durban, South Africa. By summer’s end, the new domains could be going live at a pace of 20 or more each week. The plan has touched off a scramble among investors eager to gain control of the virgin Internet real estate, potentially worth billions of dollars in annual licensing fees. But a vocal group of critics is calling the speed and scale of the expansion reckless, given its possible impact on the Internet’s global infrastructure, which relies on interactions among computer networks owned by companies, universities and individual users.

[Commentary] The global book industry is changing beyond all recognition. Writers are having to quickly adapt to the new economics of publishing.

There are more opportunities for authors than ever before but fewer commercial reasons to indulge them. Across the world, more people are reading: print sales may be slightly down but those of e-books are growing strongly. This is the fundamental context in the books business. In any discussion about publishing, the names Amazon, Google, Apple and increasingly Samsung occur just as regularly as Penguin, HarperCollins and Hachette. The technology companies are the new entrants with the muscle, money and easy distribution.

[Michel is chief executive officer of Peters Fraser & Dunlop, a literary and talent agency]

[Commentary] The Obama Administration stumbled badly in recent months as it repeatedly overstepped its authority in seeking information from news organizations. Prosecutors swept up phone records tracking calls by reporters and editors of the Associated Press, suggested that a Fox News reporter might be criminally prosecuted and continued their vigorous pursuit of information held by reporters in ferreting out alleged leaks. For that, the administration has been properly excoriated. On July 12, however, Atty. Gen Eric H. Holder Jr. unveiled new guidelines to govern the department's behavior in cases involving news organizations. Those guidelines represent a historic step toward restraining the reach of government and affirming the rights of a free press. The Administration got to this place only because of the outrage it brought on itself, but it got to the right place anyway.