P2P DVD Exchange

For the past couple of years, I've been mulling over an idea for a different kind of DVD "rental" company, similar in ways to the popular NetFlix. Now I have encountered a new company called Peerflix which is doing something similar. Is it annoying or vindicating to see somebody else run with something? :-)

So instead I will comment on Peerflix, which I am going to try out, and what I planned to do differently.

The rough idea is a movie network that doesn't own the movies. The members do. The members declare what disks they have that are available to go out (key in or scan UPC codes or just put disks in drives) and, just like netflix, they also browse the list of DVDs and pick what they would like to rent. For each disk you have out, you are entitled to one in (approximately), and somebody close to you, who has the disk you want, is told to mail it to you.

Once scaled up, it's faster than netflix (the disk is mailed to you directly from the last person to have it, rather than going through the warehouse) but mainly it's vastly cheaper. In theory it could even run for free, with postage and mailers being the only cost -- plus of course the initial disks you introduce into the system. Netflix 3-at-a-time is $216/year, the one at a time is $120 per year.

There are, however, a number of interesting problems to solve in doing this, and some special factors you may not know about Netflix.The system as I envisioned it truly had you renting your DVDs. What that meant was that after the DVD's rental life was over (or whenver you demanded it) your disk (or an identical copy) came back to you, to put back in the box you kept and sit in your collection. Part of the fees (in a non-free system) would go to insurance to make sure you got your disk back if you wanted it. This means that the DVDs you introduce into the system are ones you particularly wanted.

Peerflix isn't a rental system at all. Instead, it's more like a specialized eBay. You sell your existing DVDs for their Peerbux (2 to 3 peerbux for a typical movie) and you buy DVDs from other members with those peerbux. You can buy the peerbux for cash but they are vastly overpriced at about $9 each; you are much better off picking up used DVDs and selling them into the system. You own the disks you get, you can quit their system and keep those disks. You don't get your originals back ever though you can rent (really buy) some copy back if you want and others have them on the outgoing list.

Both approaches have merit. There are some legal benefits to the Peerflix approach because it can also do music CDs which can't legally be rented. (Thanks, RIAA.) Because it's to inefficient to mail around the DVD case and accompanying booklets, the Peerflix approach leaves the old owner with an empty box and the new owner without one. But I suspect this is fine most of the time.

Both systems need a reputation system to deal with people who don't perform well. Those who don't mail disks on time, or don't mail them at all. Those who damage disks. Those who pretend not to receive disks or are slow to report that they received them. Unfortunately when a disk is reported missing, you can't tell whether to blame the sender, recipient or the postal service, so both parties reputations must be dinged, which is unfair to one.

To improve the situtaiton, it might make sense to provide a small cheap label printer to customers to make the process of sending off disks as automatic as possible. Pick disk from menu to declare it available for sending, then when told to send it, it prints a mailing label (possibly with e-stamp style postage to get really automatic) and away it goes. For people who get mail pickup at their house it's very easy, or for people who have a very close mailbox or a mail slot where they work. For people who must make a special trip to send mail, reliability will be lower.

(It's reported that some forms of e-stamps include confirmation from the post office that the package was mailed. That could improve things a lot, making sure people put stuff in the mail, and knowing not to blame them for not mailing it -- unless it arrives empty or broken. Of course thieves on the receiving end could declare it arrived empty but not too often.)

If a service like this got very popular, it would be not uncommon to end up sending a disk to somebody very near -- perhaps somebody who works or lives on the same block. People could elect manual delivery to make this even cheaper. They could even meet neighbours, if they wanted. A good feature would be to declare multiple places you could receive the disk if you wanted this to happen -- ie. home or work.

Peerflix system of fixed peerbucks may be too simple. The value of disks varies a bit more than that. One could actually implement peerflix on top of ebay pretty easily, though I agree people would not want to sit around bidding on items -- it's too time consuming -- and would want to go entirely with a buy-it-now based on good market information. And of course, on eBay, you have the annoying trick many sellers pull of charging less for the item and charging ridiculous shipping. Or just charging ridiculous shipping.

Right now you can go to eBay and pick up just about any DVD used at a decent price, then sell it back when done for pretty much the same price. The shipping charges will ding you. And it would be a lot more work, at least today, than peerflix. eBay could build a streamlined DVD trading system using dollars instead of peerbux and take advantage of eBay's existing reputation system.

Eventually a DVD's demand-life fades, and far more people will be offering a disk than wanting it. When this happens with peerflix, you are stuck with the dead DVD. As demand drops, more and more people rent it to find nobody else wants to take it next, and thus they have fewer DVDs "out" to allow them to have the same number in. To fix this the user needs to buy a higher-demand DVD and put it into circulation. So there will be an annual cost to operate this above the postage and company fees. But almost surely less than netflix.

My own approach deals with this problem in a different way. When a DVD falls out of demand, it is the original owner who introduced the DVD who loses a slot. They can elect to take the DVD back for their collection (for free) or also leave it with the current holder until such time as somebody wants it again. By default, after a few months of non-demand, it would probably come back. Again, to be able to rent DVDs, you would need to buy new in-demand DVDs to put into the system.

In any case, you don't actually have to buy new DVDs. You can pick up used DVDs on eBay or other places, watch them and put them into the system.

Netflix has a special advantage here which is harder to adapt to. They have a special deal with the studios to buy just the disks (no boxes and booklets) for a much lower price, and destroy them when demand goes down. Thus their cost of inventory is much lower than a physical rental store. My approach relies on the fact that the original introducers of a DVD want it back to deal with their higher cost of acquisition -- they get something for it.

It's not impossible that a P2P system might cut the same deal, so that a person wanting a high-demand new release could elect to pay a reduced price to get just the disk. Then the company would bill them and mail them the disk, and they woudl watch it and put it in circulation. In fact, to stop this from being a cheap way to get DVDs during their hot demand period, the system could insist this DVD be reintroduced within a set period, breaking the "keep as long as you want" rule on just these disks.

I will report back on my Peerflix experience. What I have read reports some problems expected with startup (limitations on selection) and some longer term problems (trouble with people not mailing disks soon enough.)

Another alternative

Hi Brad,

I just came across your post and thought you should know about BarterBee.com. It's very similar to your concepts and PeerFlix but also allows for trading of CDs and Video games in addition to DVDs. People get to set the value of the products ultimately getting around the system forced approach.

take a look and provide some commentary if you wish.


So how does it deal with the problems

That people are seeing in Peerflix? Requests for trades are too infrequent except on the hottest releases, so if you try to get a good but not recent movie, plan to be holding it for a while. Is that different in barterbee?

New Trading Technology Developed

Hi Brad,

There is a completely new technology that has recently been developed. Basically, this technology will match people according to their wants and needs. You simply list items you have (such as DVDs) and items you want. The technology takes care of the rest. It proactively searches for matches with individuals closest to your location. It is also much cheaper than Netflix, Peerflix, and other "trading" based sites available. Individuals pay a subscription fee to list items they have. For example, for $4.95/month you can list 10 revolving items you have (only $60/year). This technology will search for any item or even services (plumbing, electrician, etc.)

My website, www.binswap.com, incorporates this technology. Please check it out and provide any commentary.


Why is that cheaper?

In spite of the problems with peerflix, one thing that’s clear is that it’s much cheaper than the price you suggest for the low-volume user. Higher volume users might be more interested in a $4.95 fee or the higher fees of netflix etc.

The site is a bit hard to use to get details on how it works, but from what I can see it arranges trades, so that somebody has to have a DVD (or other thing) I want, and I also have to have what she wants to make it happen, and I have to enter a negotiation to complete the deal. (Ie. what if my DVD is much more expensive than hers?) That doesn’t sound like it would work, but perhaps if your web site answered these questions I would know more.


I have never encountered a company with such a flagrant disregard of customer service. I have sent a half dozen unanswered emails to Peerflix. They don't have a phone number to call, and I guess I lost the few DVDs I sent to them. I don't know if the whole thing is a scam or not, because my last email asked for a response if they were still in business. And, once again, NO RESPONSE. I may have to contact the Attorney General's office to check on the validity of this whole scheme.


Oh, boy do I agree with you! I found the selection and speed of delivery impossible to tolerate. I tried writing to them three or four times w/ questions and never got a reply. Finally, I sent them four emails trying to close my account. They agreed to close it but kept the money remaining in my account. This is illegal. I told them this and they said the money in the account was a "fee" and they were entitled to keep it. Uh, no. The money in the account is kept there in anticipation of their performing a service. Which they didn't do. It was a small sum but I imagine they're doing this to everyone that quits and they're making a tidy profit. I'm filing a complaint right now w/ the California Consumer Rights Commisson.

Problems printing, no answers yet.

I'm new to Peerflix. It was recommended by someone who used and liked the service.

I'm having problems. Two of the mailers printed incorrectly. One would not print at all, but an error message showed up on the paper. The second printed fine -- except the address area is blank.

(Two other labels printed without a hitch.)

Am I responsible for these errors? In the meantime, my PeerBux are being spent automatically with automatic fulfillment. Which means my balance will soon be at zero. Which means if I have to cancel these two shipments, I'll be in the negative, already hurting my reputation.

Has this happened to anyone else? What should I do?



I run a book trading website in the UK (www.readitswapit.co.uk). Rather than operating a credit system like PeerFlix we offer direct swaps (you choose something you want from somebody else's books, and they choose something they want from yours).

I think this is a simpler model, and seems to work well for our users. What do you think? Visit here for a brief discussion of credit vs direct swapping and give us some feedback if you want.

A US-based site that (I believe) operates on a similar model is Zunafish.


I really like this site

I really like this site SwapSimple.com - They responded to both my customer service emails immediately and you can trade across platforms (books for dvds vice versa)

I think it's worth looking at and commenting on.

Devon Mills



We're working on a new startup iLetYou that is aiming to change the way that you rent, which in turn fixes this problem of a true currency of exchange - something eBay has, but PeerFlix is constrained to arbitrary Peerbux values. You can sign up for a Private Beta invite:


Feel free to let me know any additional thoughts.



BookMooch is another one

BookMooch does the same thing with books. However, the sender is responsible for the shipping costs for whatever they send, and a point system is used to balance trades.


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