It was good while it lasted

It's been an exciting week for Blockbuster. First came news that it was dropping its bid for Hollywood Video. Now, as Reuters reports, it's been spanked by six state attorneys-general over its bizarre "no late fee" program.

Since the Cranky Economist isn't a Cranky Lawyer, I'll leave it to others to debate the relative merits of the legal case against Blockbuster. Instead, I'll just point out that it was a really bizarre tack from a business standpoint. Blockbuster has been under pressure from the simple, low-cost options now available to consumers in the form of Netflix and its ilk. To which Blockbuster responded by what -- simplifying its rental program? Oh no. It merely tried to put some very complicated (and, it would seem, deceptive) lipstick on its old-fashioned-business-model pig. The result being a mass of confused, angry and overcharged consumers who are probably even more willing now to try another rental chain or Netflix than they were before.

The main point being that just because we Cranky Economists like big corporations doesn't necessarily mean that we think they're very smart all the time.