Reed Hastings, CEO of Netflix, sent me a nice apology letter this morning. Here’s some of it:

I messed up. I owe you an explanation. It is clear from the feedback over the past two months that many members felt we lacked respect and humility in the way we announced the separation of DVD and streaming and the price changes. That was certainly not our intent, and I offer my sincere apology. Let me explain what we are doing.

Hastings goes on to say that Netflix jumped into streaming because he didn’t want them to lose out on the next big thing (and he makes comparisons to AOL and Borders, two companies who did not “become great at new things people want” as Hastings put it.)

The benefits of our streaming service are really quite different from the benefits of DVD by mail. We need to focus on rapid improvement as streaming technology and the market evolves, without maintaining compatibility with our DVD by mail service.So we realized that streaming and DVD by mail are really becoming two different businesses, with very different cost structures, that need to be marketed differently, and we need to let each grow and operate independently.

Now get ready for the LOLs:

It’s hard to write this after over 10 years of mailing DVDs with pride, but we think it is necessary: In a few weeks, we will rename our DVD by mail service to “Qwikster”. We chose the name Qwikster because it refers to quick delivery. We will keep the name “Netflix” for streaming. Qwikster will be the same website and DVD service that everyone is used to. It is just a new name, and DVD members will go to qwikster.com to access their DVD queues and choose movies. A negative of the renaming and separation is that the Qwikster.com and Netflix.com websites will not be integrated.

So who are the “ad wizards” who came up with this one? As my friend O’dette commented, a whole team of marketers worked overtime for weeks to come up with the name “Qwikster”, which, quite frankly, does not make me think of “quick delivery.” No, Qwikster makes me think of doomed services like Friendster and Napster. I’m also having visions of brands like Edsel and New Coke.

And may I suggest that Hastings get a hold of one Jason Castillo, who already maintains a twitter account under the name Qwikster. Here is a sample of Jason’s tweets:

I recommend influencing Jason to give up his Twitter name by placating him with free video games from the new games rental division that “Qwikster” will be adding their lineup. Throw in a couple of blunts, too.

Reed concludes:

I want to acknowledge and thank you for sticking with us, and to apologize again to those members, both current and former, who felt we treated them thoughtlessly. Both the Qwikster and Netflix teams will work hard to regain your trust. We know it will not be overnight. Actions speak louder than words. But words help people to understand actions.

That’s right, Hastings, you better grovel. Netflix’s stock only declined over 25% last week. That’s over $2.8 billion that just went poof.

I must ask, though, why you think that making it more difficult for customers by first raising prices through the roof and then making them maintain two separate queues on two different websites will entice customers to stick around.

My guess is that Hastings sees the DVD rental business as a dead end. I wouldn’t make that assumption, myself, not with companies like Starz refusing to give up its content so easily. There may be less DVD subscribers now, but with more entertainment companies waking up to the fact that streaming can be hugely profitable for them, and the rumors that broadband providers may throttle bandwidth, the future costs of Netflix streaming may outweigh the benefits. Then – in a bitter irony – we’ll all find ourselves back at Blockbuster again.

- Bill

Update! October 10, 2011

Well it seems that the extremely negative reaction (and stock drop to about 117 on my last look) has caused Netflix to rethink its Qwikster idea. This morning I received this:

It is clear that for many of our members two websites would make things more difficult, so we are going to keep Netflix as one place to go for streaming and DVDs. This means no change: one website, one account, one password…in other words, no Qwikster. While the July price change was necessary, we are now done with price changes.

We’re constantly improving our streaming selection. We’ve recently added hundreds of movies from Paramount, Sony, Universal, Fox, Warner Bros., Lionsgate, MGM and Miramax. Plus, in the last couple of weeks alone, we’ve added over 3,500 TV episodes from ABC, NBC, FOX, CBS, USA, E!, Nickelodeon, Disney Channel, ABC Family, Discovery Channel, TLC, SyFy, A&E, History, and PBS.

It seems Qwikster is dead. Sorry, Jason Castillo! No payday for you, but hey, you don’t need any lifestyle changes. Back to the bluntz.

“95% off” is the new “going rogue.”

Borders, as part of its bankruptcy filing, announced it was closing numerous stores and began the liquidation process in mid-February. With most of those sales coming to a close and the prices thus reaching rock bottom, we thought you might like to know what products you can still get deals on. The answer is: apparently not much other than Sarah Palin’s “America By Heart,” available in bulk for $0.99 a copy.

(h/t to Amber, who powers CW Albany’s Deal Diary with aplomb)

Tiffany killed it last month, LVMH killed it this week and now BASF thinks the cosmetics market is poised for a recovery (you know we wonder if this is on the strength of Pam Anderson and Heidi Montag alone):

BASF SE, a possible bidder for moisturizer-ingredients maker Cognis GmbH, said there are signs that demand for luxury cosmetics is improving, adding strength to a rebound in the $3.7 billion personal-care chemicals market.

“During last year, some premium products have been lower in demand, but there are signs that it’s recovering, that we are seeing growth in both sectors,” said Thomas Greindl, BASF’s European marketing director for care chemicals, in an interview.

Fun, fun.

Trader A: “So, what do you think is gonna be the next market to turn around?”
Trader B: “Your face! Haha!”

Looking at the acquisition target, Cognis does make some interesting products. Some, like “Lamesoft”, would need a name change before being marketed in the US, we think. Others, well, probably do have more universal appeal:

With “Mystical Aura” a conditioning spray giving her protective sheath, priestesses could have invited men into the temple of their virginity.

a) Fairly certain priestesses could’ve gotten men to hit that even if their hair was a rat’s nest; b) if it’s really that alluring, maybe BASF can spray some of this stuff on their debt and prevent a downgrade?

For most of us, “blue laws” are those antiquated things that let us know what counties to avoid stopping over in on a weekend road trip, but if you live in Bergen County, New Jersey, you’re probably used to the malls not being open on Sunday. Yeah, in most of Bergen you can get some booze on a Sunday but you can’t get any pants, which sounds like a really dangerous combination. At its best, it’s kind of like Adbusters Buy Nothing Day, except it happens once a week instead of once a year. We assume that residents are usually like BFD and just go buy their pants on Saturday, but it was rather inconvenient for them last weekend when a storm tore through and flooded everyone’s basements and they apparently couldn’t hit up Home Depot or whatever for sump pumps until Monday rolled around. Soggy carpeting is soggy!

However, Bergen County’s blue law may be falling victim not to necessity but instead to a need to rake in the almighty tax dollar:

The Sunday shopping ban in New Jersey’s largest county — among the nation’s last remaining blue laws — may be lifted to satisfy the state’s hunger for more sales tax revenue. The budget proposed last week by new Republican Gov. Chris Christie assumes $65 million in new sales tax revenue by jettisoning the law starting July 1.

Some officials believe dropping Bergen County’s blue law would allow it to pick up Sunday customers from the nation’s largest metropolitan area; Manhattan is just a 20-minute cab ride away.

John Holub, president of the New Jersey Retail Merchants Association, said lifting the ban makes economic sense. He said adding a day of shopping in Bergen County would generate 3,200 jobs and more than $1.1 billion in net new retail sales a year. A portion of those sales would be from people who would have shopped online when retailers in their home county are closed.

NYC’ers — are you really dying to wake up on Sunday morning, stretch your legs, have a heaping pile of hazelnut waffles at Balthazar and head out to Paramus to hit the mall? New Jersey’s gov thinks you are, and that there are a ton of NY and NJ residents waiting for him to open the floodgates so they can come into Bergen to do their patriotic duty and consume. However, his opposition thinks the entirety of Bergen County – roads, police, fire – will come to a screeching halt if they allow for seven days of commerce. We suppose the other interesting bedfellows on the opposition side would include environmentalists and, per Holub’s quote, perhaps Amazon.com and other internet behemoths.

Abercrombie and Fitch, considered by some a bellwether of the ‘massclusive’ market because of its various refusals to discount during the recession and other flailing efforts to stay an aspirational brand for high-school and college kids getting a nascent grasp on class warfare, reported widespread fail in its US stores:

Sales at stores open at least a year dropped 13 percent in the quarter. This figure is a key indicator of retailer performance since it measures growth at existing stores rather than newly opened ones.

Abercrombie reported declines across all brands for sales at stores open at least a year. At Hollister, the key sales figure slipped 19 percent, while abercrombie kids posted an 11 percent decline. For its namesake stores, the key sales figure fell 8 percent.

Abercrombie’s full-year profit sagged to $254,000, or break-even, from $272.3 million, or $3.05 per share, in the prior year. Annual sales slid 16 percent to $2.93 billion.

Profits also suffered from the closure of stores that sold a spinoff line called Ruehl, which still has a website, and its meta description tag reads “Ruehl defines the aspirational Greenwich Village lifestyle.” Yeah, not the kind of thing that was likely to survive when the economy was less Greenwich and more Canarsie.

These numbers were still good enough to beat estimates and the chain also reported an 86% increase in international sales. And, from what I can tell, they will be saving on advertising costs by using the exact same signage with half-naked grainy photos that they use in the US. It also appears they are using the same half-naked Anglocentric models – reinforcing my suspicion that they actually have a cloning machine: