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Netflix is an American company that provides video rental and on demand video streaming by way of either the mail or streaming through the internet. The company was founded in 1997 in Silicon Valley California by Marc Randolph and Reed Hastings. The idea for this DVD rental service came about when Reed Hastings was charged with a late fee when renting a movie and he questioned why he should have a time restriction on how long he is able to rent the movie. In April of 1998, the Netflix website was launched and they developed the concept of unlimited rentals with no shipping fees or late fees. In September of 2002, an article in The New York Times article stated that Netflix had around almost 670,000 subscribers. At the end of 2002, the company had one million subscribers and in 2006 they had close to 5.6 million subscribers. After these first important milestones, the company’s growth became exponential. In the fall of 2004, a consumer filed a class action law suit against Netflix in Frank Chavez v. Netflix, Inc. The lawsuit was due to claims of false advertising in which the company said they provided “unlimited rentals” within a “one day delivery.” Netflix denied making any mistakes within their advertising. A month later, Netflix decided to give anyone who was a member before January 15, 2005, a membership renewal with one free month included. The final settlement came to around 4 million dollars. This caused a change in the Terms of use which went into effect in January of 2005 and the term “throttling” was created. Throttling is when the mail is delivered so fast that Netflix customers who pay for the "Unlimited" plan can send their discs back fast enough so they can receive enough shipments in a month in that the company's actual cost of delivery will exceed the actual subscription fee. This restricts the company from making any profits. According to a

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