On the news of Netflix acquiring Warner Bros, I’m reminded of how good Netflix has been at innovating their business model.
Over the past 27 years, their business model has changed multiple times and each evolution appears to be in direct response to the bottleneck of growth, from maintaining inventory of DVD to acquiring global streaming rights.
Year /
Business Model /
Bottleneck to Growth
1998 /
Sell DVDs over the internet /
Need to continually replenish DVD inventory,
1999-2006 /
Rent DVDs over the internet /
USPS delivery & return times
2007 /
Stream movies over the internet /
Acquiring US streaming rights to a massive library of movies
2009 /
Start producing movies (Netflix Originals) /
Number of subscribers watching Netflix Originals
2010-2012 /
Global expansion; Canada, South America, Europe /
Maintaining rights globally
My rant on token-based pricing is primarily based on the difficulty in consistently forecasting spend.....and also that the ongoing value of a token is controlled by the vendor...."the house always wins"
There are enough vendors that it's difficult for any one vendor to charge too much per token. There are also a lot of really good open-weight models that your business could self-host if the hosted vendors all conspire to charge too much per token. (I believe it's only economical to self-host big models if you're using a lot of tokens, so there is a breakeven point.)
I'm all for it, just curious as the law has existed for 8 years and been in effect for 3. Seemingly little interest from anyone in the tech world to put lobbying behind reversing it until this point.
Lobbying has been ongoing since the law was enacted. Congress came close to repealing it several times, with the House actually passing a bill to repeal it (Tax Relief for American Families and Workers Act of 2024).
Just because Hacker News doesn't care doesn't mean it hasn't been a big focus of small business lobbying since before it came into effect.
The actual reason it hasn't been repealed is politics: It makes the CBO budget deficit look much worse. It seems as though neither party wants the optics.
In 2017, in order to pay for the tax legislation in Trump's first term, a provision was added that would prevent companies from deducting Research and Development costs immediately (includes but not limited to payroll costs). It required domestic R&D costs to be expensed over 5 years (really 6 years since you only get to deduct one half of your first year expenses in the first year) and foreign expenses over 15 years (really 16 years). This provision was put in place to start January 1, 2022 because they were looking for additional revenue to pay for 2017 individual and corporate tax cuts. At the time, the thinking was it would be eventually fixed (allow for R&D deductions) as they had almost 5 years to fix the provision. Due to the politics at the time, it was not fixed. Bottom line, the political stars haven't aligned until now to actually get this fixed.
At the beginnning, to most people it seemed like a non-issue (oh no, amortize the costs over 5 years, cry me a river big tech etc. etc.). But now that the entire tech sector is crumbling, and nobody is getting hired, people are giving it another (well-deserved) look.
Over the past 27 years, their business model has changed multiple times and each evolution appears to be in direct response to the bottleneck of growth, from maintaining inventory of DVD to acquiring global streaming rights.
Year / Business Model / Bottleneck to Growth
1998 / Sell DVDs over the internet / Need to continually replenish DVD inventory,
1999-2006 / Rent DVDs over the internet / USPS delivery & return times
2007 / Stream movies over the internet / Acquiring US streaming rights to a massive library of movies
2009 / Start producing movies (Netflix Originals) / Number of subscribers watching Netflix Originals
2010-2012 / Global expansion; Canada, South America, Europe / Maintaining rights globally
2025 / Acquire Warner Bros Discovery