[Kuiper]

My understanding is that Netflix just pays a fixed, pre-agreed amount up front (either paying a licensing fee for existing content, or funding the production of their own Netflix originals). If lots of people view a show, Netflix takes that data into account when deciding whether or not to renew the the licensing contract (in the case of existing shows) or order a new season (in the case of Netflix's original productions).

Because Netflix pays for their content up front, they have to take a bit of a gamble. (Maybe they spend a bunch of money for a new Coen Brothers film, but nobody watches it, so they take a loss on that project. Or, as was the case in 2008, maybe TV networks grossly under-estimate the value of their catalog of old shows, so Netflix gets to pay peanuts for the content that serves as the bread and butter.)