Print 63 comment(s) - last by The Raven.. on Jul 18 at 3:00 PM

The price hike and change in service plans are not sitting well with many Netflix customers, but Netflix already knew this would happen

Two days ago, Netflix announced that it would change its pricing and plans associated with its DVD rental and video streaming services. These changes include separating DVD rental from video streaming entirely, charging $7.99 for one or the other. For both, the cost is $15.98 (the current price for one DVD out at a time and unlimited video streaming is $9.99).

The price hike and change in service plans are not sitting well with many Netflix customers, but Netflix already knew this would happen. In fact, one day before announcing these plans, Netflix told customer service representatives to be prepared for angry callers.

Today, the company even increased the number of personnel in the department to handle the amount of phone calls they've received. "Hundreds" of Netflix employees have been answering phones, and this still caused some callers to have to wait to speak to an employee. The sales representatives have said that many of the calls have been "emotional."

"We tested, we researched, we analyzed," said Netflix spokesman Steve Swasey. "We knew what the reaction would be. We are not surprised. We knew that there would be some people upset by the service and with the price being adjusted."

According to Rich Greenfield, a Wall Street analyst with BTIG Research, Netflix employees have not been giving callers satisfactory responses through the day. Greenfield tested how Netflix's service department was handling the flood of calls by making over 35 calls over a two-hour time period, and said that Netflix employees simply tell customers (who threaten to cancel their subscription) to wait to cancel until September when the new plans/pricing takes place.

"There was simply no promo or 'save' technique to offer us a discount to retain our business," said Greenfield. "This would appear to illustrate that Netflix is simply not concerned with the prospect of losing customers."

In addition, Greenfield said he waited on hold for about 9 to 15 minutes while making these calls.

While customers are up-in-arms, investors are salivating at the Netflix price rise. According to Ingrid Chung, a Goldman Sachs analyst, the higher prices will make up for the cancellations by "driving customers toward more profitable Netflix plans."

"Gross margins should benefit as we believe that the majority of lower-priced (subscribers) were less profitable for Netflix," said Chung.

Chung also mentioned that "lower-priced subscribers" may be drawn to the streaming-only service as well, which could prove to be a successful shift.

Netflix shares increased three percent yesterday after the announcement of the new plans.

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They guessed wrong
By borismkv on 7/14/2011 12:40:20 PM , Rating: 2
Well, my Netflix subscription price has already gone up once this year, so I'll be ditching the DVD plan altogether and switching to Streaming only. Guess the investors didn't account for the number of people like me who were at the top tier and will be downgrading because of this.

RE: They guessed wrong
By icemansims on 7/14/2011 12:45:46 PM , Rating: 5
Actually, now you're guessing wrong.
Streaming only is more profitable for Netflix than the DVD's, since there is no physical shipping.

RE: They guessed wrong
By kingmotley on 7/14/2011 1:31:27 PM , Rating: 1
It's good to see that unlimited internet bandwidth is now free, and that you've gone through all of Netflix's content contracts and see that streaming and DVDs are exactly the same price. Oh wait, neither is true.

RE: They guessed wrong
By Milliamp on 7/14/2011 9:09:29 PM , Rating: 2
>It's good to see that unlimited internet bandwidth is now free

Actually, for Netflix it is very cheap since most of the expense is pushed off to ISP's that have to carry the data most of the distance.

Netflix is 30% of the data on ISP's networks.

RE: They guessed wrong
By steller2k on 7/15/2011 9:46:57 AM , Rating: 3
Is it really so hard to see that they want to push the majority of their customers to streaming only? They get they market numbers up and their pull with Hollywood actually increases. "If you want our subscribers to watch, you need to let us stream your movies." For me, it is an easy switch; I was on the 1 movie at a time + blu-ray for $12 a month. But in reality we almost exclusively stream content, the dvd sits around for a few weeks. So streaming only it is.

Now, who should be really happy? Redbox investors. That is where I'll be going to get all of my recent release, hi-def movie fixes.

RE: They guessed wrong
By mcnabney on 7/15/2011 9:55:38 AM , Rating: 2
It is very rare for me to find the movies I want to watch on Streaming.

Sure, I can stream all of the Phineas and Ferb as I want, but the disk I have right now - Battle: Los Angeles, is streaming only.

Their DVD options are like a buffet - everything is there. Streaming only offers what was cheap to license. So don't expect any new releases.

RE: They guessed wrong
By Souka on 7/15/2011 2:22:34 PM , Rating: 2
It would be super cool they had a streaming + 1 or 2 rental per month plan.... they could put the word "hybrid" into the title which is an excellent marketing term these days.

My $.02

RE: They guessed wrong
By aharris02 on 7/14/2011 1:37:32 PM , Rating: 2
Wrong. Streaming is currently more profitable than DVD because the licensing costs are lower for Netflix because movie studios didn't take streaming seriously when Netflix proposed the original contracts.

Now that the studios have seen the demand for electronic distribution (they must have some serious effing blinders on to just now be noticing consumers want this feature...), expect Netflix's licensing costs to skyrocket. One article estimate (probably pulled out of the author's ass) a 10-fold increase in Netflix's pricing on those contracts... but either way the license pricing is going up.

RE: They guessed wrong
By tng on 7/14/2011 2:03:42 PM , Rating: 2
Combine that with data caps that will come from ISPs like Comcast and Time Warner who want to sell their own product and I can see Netflix getting really spendy.

RE: They guessed wrong
By rocketbuddha on 7/14/2011 2:18:50 PM , Rating: 2
Agree. With the studios having smelt blood, they are trying to extract maximum costs from Netflix which in turn makes Netflix increase the price to its customers.

I remember that HBO senior official was saying something like "NFlix streaming prices are a joke! They are too cheap. Our customers perfer exclusivity even if expensive".

So going forward I am guessing with the new contracts, the licensing costs have sky rocketed. Add to it the hosting to serve to millions of connected devices including Media Players, Smartphones, Blu-ray players and with ISPs wanting to have a share of the revenues generated thru heavy traffic, I can understand that the so called "cost benefit" over the mail DVDs has been significantly reduced.

I am ambivalent about the price hike. Currently I am on a Account hold(2DVD + UL streaming variety) till mid september and have not decided what I will do. Comparing against other on-line streaming services, I find Netflix to be far cheaper inspite of the lack of latest movies. If Amazon is able to get equivalent titles (in the future) then may be the PRIME + streaming is something I can think about. Add to it NFlix has absolutely no commercials while Hulu+ has I cannot see the value the latter offers.

Well if Netflix does the following
a) Expand the movie titles.
b) Add sub-titling as a option and make it available even to non-PC devices.
c) Improve the sound quality vis-a-vis blockbuster instant videos

I would not mind continuing with them. I have a Samsung BDP1690 (while it is a poor QC device, I have to un-plug the device after few days so that it behaves properly). It can access 4 internet streaming services

I have only used BB feature to view the various trailers. I have it connected to my Pio VSX-520 5.1 HT system with. I find that for the same amplitude level, the sound is louder and more richer in the BB Trailers and the picture little better too.

But the reason that they gave in the blog is soooo...o lame.
They should be frank in saying the obvious in a diplomatic manner.
" Hollywood basically wants to extort us and our customers to provide the streaming service."

RE: They guessed wrong
By mcnabney on 7/15/2011 10:08:25 AM , Rating: 2
Don't believe the Netflix lies.

They have Hollywood by the short and curlies.

Hollywood paid them an enormous amount of cash to just 'delay' when they would offer movies. If a studio asks for more money in licensing fees, Netflix could just as easily not license ANY of the studio's back-catalog. They have enough users that they can set the terms for licensing.

RE: They guessed wrong
By borismkv on 7/15/2011 1:53:44 PM , Rating: 2
Really? So me going from a 20 dollar a month subscription to an 8 dollar subscription will will be *more* profitable for them? You're a democrat aren't you...

RE: They guessed wrong
By medavid16 on 7/14/2011 12:51:01 PM , Rating: 5
you're doing everything they want you to do... i'm just going to cancel altogether and spam all my networks to dump them. Stream what, old content that I've already seen? F netflix

RE: They guessed wrong
By quiksilvr on 7/14/11, Rating: -1
RE: They guessed wrong
By Brandon Hill on 7/14/2011 1:07:02 PM , Rating: 5
Their streaming movie library is pretty crappy. Whenever I have an urge to stream a particular flick that I'm in the mood for (even hugely popular films), all I see is "Available on DVD only"

RE: They guessed wrong
By JediJeb on 7/14/2011 1:13:34 PM , Rating: 2
But the question I want answered is, "Who else do you go to if you want to stream with a selection better than Netflix?"

Everyone here talks about crappy selection and canceling their service, but none ever say where they will go to get the same level of content.

RE: They guessed wrong
By Taft12 on 7/14/2011 1:22:11 PM , Rating: 5
That's because the alternative internet-based service is less, how shall we say, legitimate.

RE: They guessed wrong
By Wiggy Mcshades on 7/14/2011 1:43:22 PM , Rating: 2
I'm gunna guess they either use the less legitimate service, or just do something else besides watch a movie/show. it's just a way to blow time, it's not like anyone needs the content netflix is offering.

RE: They guessed wrong
By Samus on 7/14/2011 2:30:59 PM , Rating: 1
The important thing about the streaming library is that they get TV shows available on it. There is demand for that (look at Hulu.)

RE: They guessed wrong
By rudy on 7/14/2011 7:57:10 PM , Rating: 2
That is because we don't need that level of content. What is the point in old reruns and really old movies I have already seen all of them. I need new stuff and not just a select few items. Me personally I was just about to upgrade to DVD service because I had run out of things I cared to watch streaming. So now if I look at it I can probably just drop netflix all together and go with redbox for cheaper.

RE: They guessed wrong
By nafhan on 7/14/2011 2:07:07 PM , Rating: 2
At the same time... it's good enough of a selection that if I just want to see something interesting that I haven't seen before, I can usually find something without much of a problem. This puts it on at least equal footing as basic cable with a significantly lower cost (IMO).

RE: They guessed wrong
By inperfectdarkness on 7/14/2011 3:22:14 PM , Rating: 2
try streaming ANYTHING with the word "star trek" in the title.

selection is piss-poor. f**k netflix.

RE: They guessed wrong
By nafhan on 7/14/2011 3:43:59 PM , Rating: 2
Interestingly, I looked at this yesterday. They've got all the TV shows except DS9. At the same time, "how much Star Trek do they have" generally isn't going to be a deciding factor in these types of things for me...

RE: They guessed wrong
By wrekd on 7/14/2011 3:52:35 PM , Rating: 2
Hmmm I just started the Voyager series, and TNG is on there too. They also stream the recent Star Trek reboot and seasons 1-3 of the original series. What issues are you having?

RE: They guessed wrong
By Chernobyl68 on 7/14/2011 7:08:55 PM , Rating: 2
season 1-3 IS the original series.

RE: They guessed wrong
By omnicronx on 7/14/2011 1:53:55 PM , Rating: 2
Actually I'm guessing this is exactly what they were thinking. I'm going to guess that a lot of Netflix users flat out don't use the DVD service (i know i don't). As a result the shift is easy for these customers, merely shift your account to streaming only service and you were right back where you started.

They are not losing money as you are still paying the same amount as you did previously, while profiting on those that use (and will continue to use) the entire service.

RE: They guessed wrong
By mattclary on 7/14/2011 2:34:16 PM , Rating: 2
so I'll be ditching the DVD plan altogether and switching to Streaming only.

Pretty sure that is their plan. It's a lot cheaper for them to provide streaming to you than DVD shipments.

RE: They guessed wrong
By borismkv on 7/15/2011 1:56:40 PM , Rating: 2
Not when I had the 3 CD out option and didn't use it because I didn't care enough to switch to streaming only. I'll be saving about 10 bucks a month because they chose to raise my rates twice in a year.

RE: They guessed wrong
By navair2 on 7/14/2011 8:02:34 PM , Rating: 2's an idea:

Offer something to people that is irresistible, drive your competition (a.k.a Blockbuster, Hollywood Video, and every other video store) out of business, get your customer base used to the idea of easy, reliable and predictable (also known as budgetable) access to your product, and then...

RAISE THE @#$%^&! PRICES! \o/

Hey, why not...they do it with gasoline, food, clothing and EVERYTHING ELSE, why not Internet entertainment?

Greed at its very best, the CORE of inflation.

"I want more", says one guy..."why?" says the customer. "Because...I just want more, so I'm raising my prices. What are you going to do about it now that I've got you hooked?" "What CAN I do?" says the customer. So he pays more for the same thing, getting LESS value for his dollar.

Meanwhile, Greed continues ebbing and flowing, leading the poor customer by the nose until he gets so sick of it he QUITS USING THEM...

Ahhh...peace at last.

RE: They guessed wrong
By jhb116 on 7/14/2011 9:11:59 PM , Rating: 2
I'd drop them.

I think this single move is the best news Blockbuster has had in awhile. I'd rather switch over to a 25 ish plan that I can get games with as well then continue with Netflix under this new system where I have to wait to get new DVDs (sometimes weeks) and there doesn't seem to be anything current on the streaming service......

who cares
By wushuktl on 7/14/2011 1:04:18 PM , Rating: 3
Clearly i'm in the minority. But whoTF cares? Everyone knows Netflix is a for-profit company that doesn't want to take a loss on the dvd mailings, so who's surprised? And if you can afford to pay for a netflix subscription then you can afford another $5, and if you can't then buy one less whopper a month for DVD's being sent straight to your house from a selection that's significantly larger than any redbox

RE: who cares
By ClownPuncher on 7/14/2011 1:15:10 PM , Rating: 4
They were a for profit company before the price hikes, too.

I cancelled because after being a customer for 3+ years, there isn't much left for me to watch. Waste of $16 a month at this point.

RE: who cares
By Taft12 on 7/14/2011 1:26:18 PM , Rating: 1
They were a for profit company before the price hikes, too.

Yes, but a for-profit company that was not all that profitable. That moment comes now that they have gained critical mass. This is why investors' pants are getting tight.

RE: who cares
By ClownPuncher on 7/14/2011 1:54:18 PM , Rating: 2
I'm not an investor, so I was never really that concerned with how profitable they were.

Now, if they offered NEW movies streaming or blu ray, I wouldn't cancel. I've basically exhausted their library at this point.

RE: who cares
By JediJeb on 7/14/2011 1:26:24 PM , Rating: 2
Exactly. If you are single it may be giving up two cheap meals at Taco Bell, if you have a family then one meal anywhere per month would pay for the streaming plus a two DVD out at a time plan from Netflix.

As I posted in the previous thread about this a couple days ago, the streaming only price from Netflix for a year is less than the $100 deposit you had to make to get a membership for video rentals back when video rental places first opened for business in the 80s. Also back then on top of the deposit you paid maybe $5 per video for one or two nights max and got charged half again for every night you went over.

Have people gotten so spoiled in the last 5 years by not having to pay late fees, drive to the video store only to find out the movie you wanted was out of stock, and prices of $3 or more per rental that they now whine like babies over something like this?

RE: who cares
By Topweasel on 7/14/2011 1:40:07 PM , Rating: 2
You are being kind of simple minded. They have done a couple of price hikes through the years. My original subscription was for 16.99, now I was paying $23. With this hike I am increasing a service by the amount mine have increased in 10 years in 1 month. It not just about the actual cost but incredible increase in general.

You wonder why none state approved Monopolies are illegal, this sets the table for it. These are the practices they are afraid that will happen. A company out-prices competition, to the point where the last real competitor files for bankruptcy and then increases prices "for better sustainability". Now I am keeping streaming to see if this drastic increase is to push streaming as a standalone.

But if this is just an act of more profitability in a low competition environment, within months I will cancel the subscription that I have had since 2000 completely.

RE: who cares
By JediJeb on 7/14/2011 2:00:54 PM , Rating: 2
Simple minded maybe, but also pointing out that even with the new price the deal is better than what was available even a few years ago for most people.

I can stream three movies per month now and have paid less than what I did a few years ago renting the same three movies from Blockbuster or Movie Warehouse and I don't have to worry about a wasted trip there to find out it is out of stock or calling ahead to reserve a copy for the night. For everyone else here maybe this is some huge increase in their entertainment budget, but for me even if I got the streaming and DVD option I would still be spending less than I used to if I rented a couple movies each week.

I do think it will eventually go higher on pricing. The MPAA and the movie studios would love to make as much from each viewing of a movie as they do at the box office or each sale of a DVD so they will push and push until they find the max they can gouge the consumer for. Netflix is just getting ahead of the curve on future pricing increases they know are coming from the studios. No one else is offering a better service and pricing because I imagine they would not get the pricing contracts that Netflix has had for so long.

RE: who cares
By Topweasel on 7/14/2011 2:52:25 PM , Rating: 2
Again on an entertainment per dollar its not bad. But its a bad and whether or not you mind the price hike an evil practice to price your competitors out of business and then start hiking up the prices.

RE: who cares
By tallcool1 on 7/15/2011 1:55:54 PM , Rating: 2
If you are single it may be giving up two cheap meals at Taco Bell, if you have a family then one meal anywhere per month would pay for the streaming plus a two DVD out at a time plan from Netflix.
Yes, give up a necessity like FOOD so that you can get your Entertainment... :-p

RE: who cares
By JediJeb on 7/15/2011 3:11:33 PM , Rating: 3
Is Taco Bell really FOOD? :)

RE: who cares
By kattanna on 7/14/2011 2:19:05 PM , Rating: 1
i for one do not care about this price hike. its still hands down one of the best deals going for entertainment.

and i seriously doubt even 10% of the extreme whiners i have seen on various boards about this stating they are quiting.. will in fact quit.

Just wait...
By Raiders12 on 7/14/2011 12:50:29 PM , Rating: 3
This is the 2nd price increase in less than a year. With Netflix's customer base growing, more media integration, and movie studio greed, the prices will only go up. A majority of Netflix's movie studio contracts are set to expire here in the next year. They will expect Netflix to pony up the cash, because 3-4 yrs ago, Netflix wasn't the powerhouse it is now, on almost every media device out. That is the cost of business and cost/demand. Luckily customers have the simple choice of cancellation.

RE: Just wait...
By medavid16 on 7/14/2011 12:56:39 PM , Rating: 2
Exactly my thoughts, I'd thumbs up this if i could

RE: Just wait...
By Raiders12 on 7/14/2011 1:00:07 PM , Rating: 2
In a few years it won't be a question of cutting your cable and utilizing Hulu, Netflix, or Blockbuster, but whether you want to pay $50 for digital cable or $50 for streaming service...Got to love capitalism.

RE: Just wait...
By quiksilvr on 7/14/2011 1:03:24 PM , Rating: 3
Except you'll get to choose from multiple sources instead of just two (Cable or Satellite) so that $50 stream price won't happen.

RE: Just wait...
By killerroach on 7/14/2011 1:33:10 PM , Rating: 3
Except they're all getting their content from the same places - monopoly pricing still holds. Regardless of how many streaming services emerge, the major differences will likely be in pricing strategies, with prices among providers offering similar pricing strategy (unlimited streaming, X videos per month, on-demand) and similar amounts of content being pretty much equal.

All "competition" among streaming services does is help develop optimal methods for content delivery and customer service when it's not in the interests of content holders to play into the hands of a price war.

I'm surprised
By kraeper on 7/14/2011 3:20:27 PM , Rating: 2
I'm surprised that the anger is being directed at Netflix and not the MPAA, as it should be.

RE: I'm surprised
By darckhart on 7/14/2011 4:08:07 PM , Rating: 2
should be directed at both: mpaa for being stupid about licensing costs, netflix for being stupid about pricing. i have the stream+dvd. i dont use the dvd much, but when it's roadtrip time, or visiting the grandparents time, having the ability to get a dvd to bring along is great. not sure what i'll do at this point, but probly i'll just find a real hobby and cancel the entire thing.

I'll be cancelling
By overlandpark4me on 7/17/2011 12:26:56 AM , Rating: 2
right before the increase. I've had them since 01 when they had only the San Jose distribution center. At the time I had 4 out at a time for cheep, just to soften the blow with the delay in the mail. Now it's near that price for the combo they are trying to ram down my throat.

RE: I'll be cancelling
By The Raven on 7/18/2011 3:00:23 PM , Rating: 2
If that is your feeling, you must've orgasmed when they announced free streaming for all plans.

No one seems to remember that other side of it. Taking something that was originally free, isn't that bad. It went from an incredible deal to a credible one. So not that bad y'all. That goes for the new subscribers too.

Nor the fact that Netflix doesn't have you roped into a long-term contract. If you don't like it... there is the door. Try that with a cable or satelite company since they have been known to run 6-24 mo contracts.

Netflix is still a bargain
By Hakuryu on 7/14/2011 2:21:05 PM , Rating: 2
When I signed up for Netflix, I got the streaming and 1 DVD plan, and wondered how in the hell they could offer that for so low a price.

I get a DVD every 4-5 days or so, watch a movie on average every night streaming, and sometimes 2-3 movies in a night. I even get to see things I would never have seen otherwise, like interesting documentaries (that cost $4.99 each on Time Warner).

For less than the price of one DVD a month... I still find Netflix to be a bargain.

What's Netflix? :)
By Lalakai on 7/14/2011 2:25:31 PM , Rating: 2
We told the kids they had a choice...cable or internet. They choose the net. We'll rent an occaisional movie, but don't use the net for video streaming or even watching tv. If you don't like the treatment you are receiving, you can always choose to reduce your bills and give them your response via your wallet. Pool with your friends and swap movies there; visit your library and see what they have. lol but to complain about the pricing and then continue to use their services...................

Movie execs
By Swampthing on 7/14/2011 3:04:43 PM , Rating: 2
The movie studios and such don't like netflix because it's devalued their product. People saw that TV and movies could be had for a reasonable price and that they had been getting gouged for years.

Simple solution is stop paying those dolts they call actors these multi million dollar salaries for doing something that isn't remotely work and get prices of production down so their profit margins go up without having to gouge consumers for overpriced entertainment.

By ender707 on 7/14/2011 3:25:48 PM , Rating: 2
To me the only thing Netflix had going for it was their incredible value. I was happy that Netflix beat Comcast when Comcast wanted to charge us more for using their connection to use Netflix, but now my connection through Comcast sucks in the evenings due to increased traffic (partially due to the high number of HD Netflix streamers) and I have to pay more to Netflix?

This is the definition of a "Lose Lose" situation for all of us. Screw their shareholders.

By jah1subs on 7/14/2011 3:39:18 PM , Rating: 2
I believe that this is only the beginning of price increases for wired Internet entertainment. I will not be surprised to see both cable and phone companies set up tiered pricing in the next few years.

Maybe everyone will go back to renting at the local stores. Will the Blockbuster brand be resurrected?

By rangrangang on 7/14/2011 8:23:25 PM , Rating: 2

I tide fashion Good-looking, not expensive Free transport

Won't Work For Long
By mindless1 on 7/14/2011 8:30:43 PM , Rating: 2
The further we delve into the information era, the less the individual blocks of (data) are worth.

I can see wanting to move people away from the physical DVD model of distribution and their not wanting to lose money, but the answer there is to charge the same and keep increasing value added content to keep customers, not drive them away with ever increasing prices to do the same things they've always done.

It's insulting and that will turn people away without even considering the value in the service. Besides which, people like change of pace and this makes them stop and think about other things they've been missing out on while growing roots between their arse and the couch cushion.

Blockbsuter Still An Option
By FormulaRedline on 7/15/2011 11:28:00 AM , Rating: 2
I just wanted to point out to all my disgruntled Netflix using friends that Blockbuster Online is still there. I switched from Netflix to Blockbuster back when Netflix decided they wanted to charge more for Blu-Ray access.

My particular usage pattern is low quantity (2/month) but high quality (new releases, Blu-Ray). I've been paying ~$5 a month for Blockbuster's 2 a month plan for a long time now and been very happy with their service. Their plans and offerings won't of course be for everyone, but I highly recommend taking a look!

Perhaps better selection...
By storm96441 on 7/15/2011 11:45:32 AM , Rating: 2
The streaming selection of BRAND NEW movies is rather dismal. I'm okay with the price hikes so long as I don't have to go to blockbuster when I want to watch a movie thats been relased in the past 10 years.

By vciucxx on 7/16/2011 11:00:56 PM , Rating: 2

I tide fashion
not expensive
Free transport

By bishanliu on 7/17/2011 8:32:38 AM , Rating: 2
Free transport

What a joke
By adjlfkjlfkjsalkj on 7/14/2011 10:05:15 PM , Rating: 1
It's obvious that some dark skinned person is now running netflix.

Only the ape human cross (called people nowadays) can be so downright greedy and stupid.

No wonder they fill up our jails and never want to work...

Hello planet of the apes....

I'm an Angry American Consumer
By GTVic on 7/14/11, Rating: -1
"There is a single light of science, and to brighten it anywhere is to brighten it everywhere." -- Isaac Asimov

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