Streaming services like those offered by Disney and Hulu need to balance a desire to grow subscribers with a reluctance to anger customers
Raise your hand if you share your Netflix password. Now, quick — put your hand down before Disney sees you. When the company launches its Disney+ service later this year, it will begin what it calls “piracy mitigation” on day one, in part by preventing users from sharing passwords. Which raises the question: Is it really piracy to share your streaming login info with someone else?
If you were hoping to share your subscription with your nephew, you might run the risk of earning the Mouse’s ire.
In a joint press release between Disney and Charter Communications, the monolithic media giant stated that it would “implement business rules and techniques to address such issues as unauthorized access and password sharing.” In other words, if you were hoping to share your subscription with your nephew, you might run the risk of earning the Mouse’s ire.
What form that ire could take is anyone’s guess right now. In fact, it’s unclear how Disney might track who’s sharing passwords in the first place. At CES this year, a third-party company called Synamedia demoed a platform that could track things like where a user is watching, simultaneous streams, and viewing patterns, all in an effort to suss out likely password sharers. The goal would be to tell, with a high degree of confidence, the difference between someone sharing with a friend in another state — thus presumably denying a streaming service another subscriber — and a legitimate user who’s just traveling. Which is harder than it sounds.
But let’s say password sharers can be identified — what action could Disney take? The company didn’t respond to a request for comment, but the smart money is on either a very light punitive measure or, more likely, an upsell: “Hey, it looks like you’re sharing an account. Wouldn’t you like one of your own?” Even Synamedia told The Verge earlier this year that carrots work better than sticks.
When it comes to intellectual property, “piracy” isn’t a legal term at all. And if it were, it wouldn’t apply to sharing passwords.
However, according to Professor Jon Festinger of the Centre for Digital Media — a joint graduate institute between several Canadian universities that specializes in new media — going after password sharers is “extraordinarily dumb.” But he notes, “companies make mistakes… Disney is very, very serious about their intellectual property (IP) rights… so I don’t think it’s entirely shocking that they’d go down this road.”
While Disney may be well known for protecting its IP, its subtly aggressive stance may come as a bit of a shock. In the press release, Disney describes these efforts as “piracy mitigation.” There’s just one problem with that phrasing: When it comes to intellectual property, “piracy” isn’t a legal term at all. And if it were, it wouldn’t apply to sharing passwords.
“Piracy is a colloquialism. It’s not a legal word, except when applied to the high seas,” says Festinger. “As soon as you you’re talking piracy — and you’re not talking about the high seas — you’re not talking about the law… You’re being intentionally imprecise.” Disney, with its highly capable intellectual property lawyers, is certainly aware of what laws password sharers are and are not violating. Describing sharing passwords as piracy, therefore, isn’t a legal distinction. It’s a branding one.
Piracy, even as a colloquialism, has historically referred to making illegal copies of a piece of media. Downloading songs from Napster, torrenting movies, etc. But with streaming, there’s no copying being done. You play a movie from Disney’s servers, and it’s never stored on your device in its entirety. Sharing your password gives someone else access to that feature — access they would’ve had to pay for if you didn’t share with them — but it doesn’t enable any copying to be done. And so, there can be no copyright infringement.
That puts Disney in a murky area, legally speaking. In a few places, like Tennessee, sharing your password is explicitly illegal — though in practice this is mainly used to prevent people from selling access to their account to people in large quantities — but in most places, there’s no specific law preventing password sharing.
Describing sharing passwords as piracy, therefore, isn’t a legal distinction. It’s a branding one.
The only legal avenue they can turn to is in their terms of service. Buried in the massive legal document we all tend to gloss over are terms stating that a user agrees not to share their password with anyone. That’s not just something Disney could hypothetically include in the terms for its streaming service. Netflix, Hulu, and HBO all have it now. For example, here’s a passage from Netflix’s terms of use:
“The Account Owner should maintain control over the Netflix ready devices that are used to access the service and not reveal the password or details of the Payment Method associated to the account to anyone.”
If Netflix chose to, it could enforce this provision — but it won’t. According to Netflix CEO Reed Hastings in 2016, that’s because the company views password sharing as “a positive thing.” As he explains it, a child who grows up borrowing their parents’ password is more likely to eventually buy their own subscription. The broke college student borrowing their friends’ password may get their own subscription once they’re out of college and have a job. But that won’t happen if they don’t get addicted to the service in the first place. In this view, turning a blind eye to password sharing is the streaming equivalent of a grocery store handing out free samples.
In fact, Netflix goes the opposite route. A number of simultaneous streams is built into the cost of your subscription. The cheapest plan will cut off more than one stream at a time. The next tier will allow two. The most expensive plan would allow four people to stream at once. You can even create multiple user profiles so each user will get their own recommendations. If sharing your password is piracy, Netflix is flying the Jolly Roger right alongside you.
Notably, Hulu had these same features before Disney became its sole owner. It’s unclear if this will mean a change in policy, or if Hulu will simply start offering an unlimited screens add-on for an additional fee, like it does for its Live TV service. Or, perhaps, Hulu will start nudging password sharers to sign up for their own accounts with a pop up saying something along the lines of, “Wouldn’t you like an account of your own? Sign up here for $9.95!”
Whatever Disney does, it will have to be careful not to frustrate customers too much. While it has the legal right to enforce any of its terms of use, pushing too hard can create resentment in customers — and too much consumer resentment can translate into government action. “If you’re this harsh on enforcement, even though you’re allowed to be,” he says, “Does the resentment you’ve created… translate into government agencies looking more deeply into your practices?”
Of course, this wouldn’t be the first time that a rights-owner has had to weigh their enforcement options through the lens of how much they might piss off potential customers. The recording industry famously upset music fans by suing people who downloaded individual MP3s, a policy it finally ended in the late 2000s.
Ultimately, the issue may come down to a conflict between two of Disney’s core identities. On the one hand, it’s a fierce protector of its own IP, the most valuable in all of entertainment. On the other, it brands itself as a seller of happiness. Rebranding password sharers as pirates could end up villainizing some of their customers — many of whom don’t think doing so is wrong. It might increase revenue for their IP, but it could make a lot of customers very unhappy with the corporate owners of the Happiest Place on Earth.