Tennessee Bans Password Sharing

Tennessee Bans Password Sharing

A new Tennessee law bars people from sharing passwords with non-family members on streaming services like Netflix, as content distributors seek ways to protect their online interests.

Anyone convicted of giving his or her password to an entire dorm room or sports team would face a fine, which would be based on the cost of the content viewed. For example, if the unauthorized viewers watch less than $500 worth of videos, both they and the password distributor could face fines up to $2,500 and a year in jail. Any movie-watching over $500 becomes a felony with much stricter fines and prison sentences.

Tennessee Governor Bill Haslam today approved the law, originally proposed by Representative Gerald McCormick. McCormick’ interpretation is that it’s ok under the new law to let family members watch Netflix or Hulu Plus movies or listen to Rhapsody-streamed music on the same account, but “what becomes not legal is if you send your user name and password to all your friends so they can get free subscriptions.”

Whether they agree with the law or not, people may well wonder how it will ever be enforced. Netflix says it already has protections in place to restrict users from spreading their passwords around by tracking IP addresses, but this is an imperfect system. For example, if someone logs into her Netflix or Rhapsody account from a friend’s PS3 and they both watch a movie, it’s still unclear whether this would be illegal under Tennessee law.

Netflix lets users register up to six devices at a time, depending on how many DVDs they are signed up to receive each month. Ostensibly someone on the six-DVD plan could safely share his account information that number of people in his “household,” a murkily defined term that doesn’t distinguish among biological relatives, housemates and visiting friends.

While it may confuse Tennesseans, the law clearly gives media streaming companies more power to identify and report illegal sharing. Sony Music Entertainment, BMI, Warner Music Group and EMI pushed for this legislation to end the billions of dollars in losses they say come from illegal file sharing. All of these companies have offices in Nashville, Tenn., one of the entertainment capitals of the U.S., and the law is a strong show of support for the hometown industries.

Beyond just video streaming, there is the question of how this law will affect music streaming services like Amazon’s Cloud Drive and Google Music Beta. Neither company has secured rights to stream music from their online servers, insisting this isn’t necessary as they only provide storage for people’s pre-owned songs.

Apple, on the other hand, has cemented paid deals with four major record labels for its iCloud music streaming service. Warner Brothers, 20th Century Fox, EMI and HBO all signed up to stream their tunes, and possibly movies, on Apple’s service, hoping Apple’s compliance in purchasing their copyrights will rub off on Google and Amazon.

Time will tell how courts interpret Tennessee’s new law. If the past is any indication — pirating sites like Napster, Limewire and KaZaa are now long sunk — this legislation will definitely help content distributors fight file thievery. But it could also hamper ordinary citizens from relaxing while watching a movie or listening to songs with friends.

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