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How the Netflix model impacts the environment, economy and society


Netflix. Photograph: Graham Whitby Boot/Allstar/Sportsphoto Ltd.


Powered by article titled “How the Netflix model impacts the environment, economy and society” was written by Ucilia Wang, for on Thursday 6th February 2014 19.37 UTC

Success often breeds copycats, and the rapid ascent of Netflix is no exception. Its initial model of sharing products by mail has attracted a wave of start-ups and big retailers hoping to be the Netflix of toys (Spark Box Toys), books (Booksfree), fashion (CoutureSqd, Le Tote, Rent the Runway), designer jewelry (RocksBox) and more.

Some of these companies charge a membership fee, just like Netflix, while others offer pay-per-use online rentals. All are part of the sharing economy: they make money by sharing the same products instead of by selling more products. The sharing economy also includes Airbnb, which rents private rooms, apartments and homes; and Zipcar, which charges a monthly fee to members who share cars instead of owning them.

But as the Netflix model gains popularity, how sustainable is it – and has anyone besides Netflix actually been able to make a profit?

Without doing credible lifecycle analyses, many of these companies that embrace the model are banking on the intuitive belief that it’s more environmentally friendly to reuse the same stuff over and over, by different people, rather than to sell new products that will most likely sit unused in a closet corner. The idea, simplified, is “less stuff is better.”

That is certainly a philosophy to which Max Gover, owner of Spark Box Toys in Newark, New Jersey, subscribes. The company, founded in 2012, charges members a fee for a box of toys designed for children under the age of four. A box arrives every four, six or eight weeks, and parents can opt to buy the toys.

“Educational toys have a short life because children develop so quickly, so what happens is you have this incredible amount of waste by accumulating them,“ Gover said. “A child could get attached to a teddy bear. But a toy that teaches scales will serve very little purpose after that [skill] has been acquired.“

But good data crunching often shows results that upend what may seem obvious. A study by the University of Massachusetts found that streaming a movie requires 78% of the energy needed to ship a DVD, but accumulates a carbon footprint that’s roughly 100% higher. The higher carbon impact comes from the intensive energy use – caused by inefficient equipment – of data centers that store movies and pipe them into homes.

The study focused only on Netflix, however, which ships thin, lightweight DVDs or sends content electronically. But some entrepreneurs attracted to the Netflix model are often offering larger products, some of which come in odd, harder-to-ship shapes and sizes.

The surprising environmental impact of shipping

Shipping goods over longer distances would certainly seem to require more energy, and a bigger carbon footprint, than driving to a local video store. But again, that’s not always true. According to a study in the Journal of Industrial Ecology, a two-mile drive to a video store uses a few hundred times more energy than shipping DVDs 200 miles away.

One reason is that Netflix uses a mail service that would operate regardless of whether its DVDs are among the deliveries. The same argument could be true for larger or heavier products, said Lindsay Clinton, senior manager at SustainAbility, a London-based consulting firm.

Other types of e-commerce use more energy than one would expect, however. The previously cited study in the Journal of Industrial Ecology found that the energy consumed while browsing Netflix’s website in a comfortable environment for 30 minutes would exceed the energy spent delivering the DVDs, and is roughly equivalent to driving a hybrid car to a store half a mile away.

Most young, sharing-economy companies probably haven’t done the math to suss out the energy intensity of their operations. But they sometimes have economic incentives to weed out inefficiencies.

Online retailers may want to find more efficient way to pack and ship their products given that those costs make up a big chunk of their total operational costs. To control its expenses, Spark Box Toys doesn’t offer outsized items such as easels, and it standardizes the number and types of toys it ships, Gover noted.


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