Peerflix

» see peerflix.com as it lived, on the wayback machine

~ the obituary ~

Billy McNair and Danny Robinson met in 1998 at Spinway, a private-label internet service company that they later sold to Kmart, and the money from that sale paid for the next idea. The next idea came from McNair wanting the Baby Einstein discs that Robinson's child had grown out of. There was no way to buy them, because a watched DVD was a thing people kept on a shelf forever rather than something with a resale market. Peerflix went live in the summer of 2004 to make one.

Membership was free. You put up the discs you owned and no longer wanted, against a list of the ones you did want, and the site matched the two sides. Each trade cost 99 cents plus what it cost you to mail the envelope. Within six months of opening up properly it had 40,000 users, and by August 2005 there were 65,000 discs on the site and about 10,000 trades going through in a month. Investors put in 10 million dollars across two rounds, led by 3i Group and Battery Ventures.

None of this was reachable from where I was sitting. In 2005 the secondary market for a film in Turkey was a burned disc in a sleeve from a stall, or a download at the internet cafe, and neither one involved anybody's postal service. A trading network like this needs cheap domestic mail that arrives, and before that it needs a country full of people who paid full retail for a shelf of discs in the first place. I was a student with a hard drive.

~ the case file ~

~ the peerbux economy ~

The clever part was the currency. Discs are not interchangeable, so Peerflix priced them in units called peerbux. Sending out the special extended edition of The Lord of the Rings: The Return of the King earned you four of them, which was enough to claim two copies of Deuce Bigalow: Male Gigolo at two apiece. If a disc arrived and did not play, your peerbux went back to your account.

In 2006 the flat pricing was replaced with a demand-based model, so a title everybody wanted cost more than a title sitting in four hundred closets. That is a sensible thing to do to a market and it did not change the underlying arithmetic at all.

~ the postage problem ~

Peerflix collected 99 cents per completed trade. Out of that it paid for the matching engine and for every argument about a scratched disc that arrived at customer service. The asset being moved around was a used DVD worth two or three dollars at the very top of the range, and the fee had to stay under a dollar or the trade stopped making sense to the person doing it.

Meanwhile the thing being traded was losing value every single year. Netflix was mailing unlimited discs for a monthly fee and had started streaming in 2007. A collection of DVDs in 2004 felt like property. By 2008 it felt like weight. A resale market cannot outrun the collapse of the thing it resells.

~ the ad network ~

In November 2007 the company launched a media network selling advertising against movie audiences, a business with no relationship to swapping anything. Four months later the original product was switched off, with a notice that said exactly what it did: "Effective April 23, 2008 Peerflix is discontinuing the Marketplace and DVD buy/sell/trade portions of Peerflix.com." From that date nobody could send or receive a disc through it.

What remained was the ad network, and in September 2008 Brad Greenspan's LiveUniverse bought it for an undisclosed sum. Greenspan had co-founded MySpace and spent the years after it collecting cheap web properties, so Peerflix ended up as a line item in a portfolio of things that used to be something. The part with the envelopes and the peerbux had stopped existing in April, and nobody bid on that.

@}-->--

              )
             (_)
            .-'-.
            |   |
            |   |
            |   |
            |   |
          __|   |__   .-.
       .-'  |   |  `-:   :
      :     `---'     :-'
       `-._       _.-'
           '""""""

« previous  ·  random  ·  next »