Good news for cord cutters and fans of streaming services such as Netflix and HBO Now: Sharing your paid login credentials with friends or family members is no more likely to get you in serious trouble today than it did yesterday. That’s despite a federal court ruling this week that made it illegal to share computer password.
Headlines such as “Sharing your Netflix password is now a federal crime,” may be excellent clickbait, but given the realities of the business world, they makes little sense.
Enjoy Netflix password sharing while you can
Today’s free ride, however, won’t likely last. Similar to how supermarkets give away cheese samples and publishers drop magazines into mailboxes without subscriptions, Netflix, Amazon and their smaller competitors probably view password sharing as a way to seed the market. At some point, they’ll decide they have enough of a customer base and start to crack down on freeloaders.
And that’s fair. Netflix spends hundreds of millions of dollars to bring you movies and custom-made programs, including “Orange is the New Black” and “House of Cards.” The company doesn’t do these things just to be nice. If making money in the future means luring new users with free passes today, that’s what Netflix will do … until it determines it no longer needs to.
Of course, this week’s ruling by the U.S. Ninth Circuit Court of Appeals wasn’t specifically about services such as Netflix. Instead, it had to do with an employee of a headhunting firm who quit to start his own business. When he left, the employee held on to his login credentials so he could use his former employer’s database. Such a move is now a crime, under the federal Computer Fraud and Abuse Act. As a result, the defendant, a man named David Norsal, was sentenced to prison time, probation, and fined nearly $900,000 in restitution.
Netflix, HBO are fine with password sharing … for now
Some consumer advocacy groups, including the Electronic Frontier Foundation, have been concerned for some time that the computer fraud act, “can be used to turn millions of ordinary computer users into criminals.” There may well be some merit to that argument, but in reality Netflix is unlikely to sic law enforcement on password-sharing college students. (Netflix declined to comment on this story.)
As pointed out by TechCrunch.com, top executives from Netflix and HBO have said password sharing is, from their point of view, a marketing tactic and not a crime. “As kids move on in their life, they like to have control of their life, and as they have an income, we see them separately subscribe,” Netflix CEO Reed Hastings told reporters at the 2016 CES in January. “It really hasn’t been a problem.”
When these companies decide they want to stop password sharing, they’ll have plenty of ways to make it difficult that don’t involve the feds. They could easily throttle accounts that access content with too many streams at once, for example, or limit access to specific devices that customers would have to authenticate.
The record industry made many enemies when it targeted kids who pirated music, and it failed to solve the problem. The streaming-video industry won’t likely make the same mistake — no matter what those clickbait headlines say.