Once Again, Sharing Streaming Passwords Is Not 'Piracy' Or 'Freeloading'

from the we've-been-over-this-already dept

We'll apparently have to keep making this point until it sinks in.

For years now, streaming video providers like HBO and Netflix have taken a relatively-lax approach to password sharing. Netflix CEO Reed Hastings has gone so far as to say he "loves" password sharing, and sees it as little more than free advertising. Execs at HBO have similarly viewed password sharing in such a fashion, saying it doesn't hurt their business. If anything, it results in folks signing up for their own accounts after they get hooked on your product, something you'll often see with kids who leave home, or leave college and college friends behind.

In other words, the actual streaming providers consistently say they see password sharing as a form of marketing. And most of these services have built in limits on the number of simultaneous streams per account that can operate at any one time, deflating much of the utility for heavy users looking to piggyback on others' accounts. That caps the phenomenon from operating at any scale that could prove truly harmful (say by 20 users sharing one Netflix account).

That doesn't stop folks from conflating password sharing with "piracy." You'll see older cable executives occasionally whine about this subject, not understanding how any of this works. You'll also see stories like this one pop up every so often, insisting these companies are losing "X" millions because they're not cracking down harder on password streams:

"As many as 1 in 5 people today are mooching off of someone else’s account when streaming video from Netflix, Hulu or Amazon Video, according to a new study from CordCutting.com. The report estimates Netflix could be losing $192 million in monthly revenue from piracy — more than either Amazon or Hulu, at $45 million per month and $40 million per month, respectively.

Millennials, not surprisingly, account for much of the freeloading."

Is there nothing we won't blame Millennials for? Poor souls.

Of course potential lost sales are not the same as guaranteed lost sales, as you don't know these users would necessarily sign up for service if they weren't allowed to share the account. Many might just actually pirate the content instead.

Meanwhile, calling it "freeloading" (as Techcrunch does) or "mooching" (as the study authors do) is also misleading. The account owners have signed off on the sharing, it's an idea that's built into the core business model, and the streaming operators themselves have repeatedly stated they're not only fine with it, but often see it as beneficial. Again, here's what Netflix said about the practice a few years back:

"We love people sharing Netflix," CEO Reed Hastings said Wednesday at the Consumer Electronics Show here in Las Vegas. "That's a positive thing, not a negative thing."...A lot of the time, he said, household sharing leads to new customers because kids subscribe on their own as they start to earn income."

And this is what former HBO exec Richard Plepler told BuzzFeed a few years back:

"It's not that we're unmindful of it, it just has no impact on the business," HBO CEO Richard Plepler said. It is, in many ways, a "terrific marketing vehicle for the next generation of viewers," he said, noting that it could potentially lead to more subscribers in the future.

"We're in the business of creating addicts," he said at a BuzzFeed Brews event in New York.

So if it's sanctioned and a form of free marketing, calling it "piracy" is arguably silly. Could you possibly make more money by being a hard ass about the practice? Maybe. But you'd cancel out the net benefit of ingratiating people to your brand and service. Is it possible Netflix and HBO begin cracking down on the practice now that the former is part of the MPAA and the latter is owned by legacy-minded AT&T? Probably. They likely just wanted to grow initial market share, then figured they'd clamp down on the practice later once they'd grown powerful.

But that still doesn't make password sharing "piracy" or "freeloading." And by cracking down on the practice you risk driving this accumulated base of would be customers to piracy instead, in which case you've arguably played yourself. Given that every broadcaster and its grandmother is expected to launch a streaming platform over the next few years, the market is about to be flooded with options. Being semi-casual about sharing could prove to be a competitive advantage, and being a hard ass could, again, either drive those customers you egotistically see as automatically "yours" to piracy, or to a more open-minded competitor.

Filed Under: losses, password sharing, piracy, streaming
Companies: hbo, netflix


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  1. This comment has been flagged by the community. Click here to show it
    identicon
    Anonymous Coward, 1 Mar 2019 @ 6:26am

    I had a feeling this article was going to show up here.

    It's from a website known to spew garbage and is nothing more than an ad platform for cable/streaming devices.

    Techdirt "Streisand Effect"ed it.

    Good job.

    reply to this | link to this | view in thread ]

  2. icon
    PaulT (profile), 1 Mar 2019 @ 6:48am

    Re:

    So, which method would you suggest for them to debunk the article without mentioning it? Bearing in mind that from the link in the article and your own comment they seem to be far from the first to link to it?

    reply to this | link to this | view in thread ]

  3. identicon
    Anonymous Coward, 1 Mar 2019 @ 6:49am

    Blame

    "Is there nothing we won't blame Millennials for?"

    Well, it's their own fault that we do!

    reply to this | link to this | view in thread ]

  4. icon
    PaulT (profile), 1 Mar 2019 @ 6:52am

    "As many as 1 in 5 people today are mooching off of someone else’s account"

    ...something which should be taken into account when setting licensing fees for services that include this expressly as a selling point.(Hint: look at the number of devices included in the account. Then, look at the requirements that you personally own all said devices. Report back if you find something, because I've never seen it).

    "The report estimates Netflix could be losing $192 million in monthly revenue from piracy "

    An interesting fact, if true. But, what does that have to do with people legally using a service they pay for within the bounds of its terms & conditions?

    Strangely enough, you know who I never hear bitching about piracy? Netflix. Even though if you go to pirate websites, their exclusive content is right next to the big blockbusters on the same list....

    reply to this | link to this | view in thread ]

  5. identicon
    ANON, 1 Mar 2019 @ 7:00am

    So...

    My in-laws have our old Apple TV device. hey have watched a few shows on Netflix (IIRC they binged the available seasons of Homeland). But they do NOT watch $10 worth of TV a month with it, I suspect they have not turned it on for 6 months now. Technically, it's our device so within the terms of the agreement with Netflix. I suspect the same with any millennial who still has his parents' account - they probably helped pay for that device being used...

    When you add in the CP, the phones, the iPad, the smart TV (probably 2 of them) I have trouble imagining there being enough "slack" in connection count for several moochers as well.

    reply to this | link to this | view in thread ]

  6. identicon
    Anonymous Coward, 1 Mar 2019 @ 7:18am

    Use what we have, pirate the rest

    We have Verizon Fios tv, Netflix and Amazon Prime Video yet we still encounter many times when the show we want to watch is not available streaming through one of our legitimate ones, we use other streaming to view it. Old shows and movies that haven't been released in multiple decades should be available on every streaming service for no additional cost yet the gatekeepers are squeezing so much money out of their active stones that they will never agree to this. We need an American Revolution 2.0 to set things right in modern times.

    reply to this | link to this | view in thread ]

  7. icon
    That Anonymous Coward (profile), 1 Mar 2019 @ 7:28am

    Maybe if they didn't try to have 50 different streaming services with exclusives trying to drive membership numbers...

    reply to this | link to this | view in thread ]

  8. icon
    PaulT (profile), 1 Mar 2019 @ 7:38am

    Re: Use what we have, pirate the rest

    You missed the point, I think. They're not complaining that you're pirating to access the stuff that's not on the services you pay for. They're complaining that you're letting a friend use the spare connection that you paid for but aren't using.

    Oh, they'll whine about the piracy as well, but in this case they're arguing that sharing what you pay for should be illegal.

    reply to this | link to this | view in thread ]

  9. identicon
    Anonymous Coward, 1 Mar 2019 @ 7:43am

    Re: Blame

    Is it? Or have they been raised to be the way they are? If so, whose fault is that?

    reply to this | link to this | view in thread ]

  10. identicon
    Anonymous Coward, 1 Mar 2019 @ 7:45am

    If it is a "potential sale," then it's either lost revenue (for now) or freeloading. CNBC's take on it was that once they forced people to subscribe, they would, and that this would likely drive subscriber growth once the generic growth they see now is done.

    It is freeloading but it's not illegal and it's not piracy.

    reply to this | link to this | view in thread ]

  11. identicon
    Anonymous Coward, 1 Mar 2019 @ 7:46am

    Re: So...

    What is "CP" in this context? Child porn?

    reply to this | link to this | view in thread ]

  12. identicon
    Anonymous Coward, 1 Mar 2019 @ 7:49am

    Re: Use what we have, pirate the rest

    Old shows and movies that haven't been released in multiple decades should be available on every streaming service for no additional cost

    Is it free for those hosts to stream content with no license fees? Are their internet connections no-cost?

    And since when do any of those providers charge extra for access to old content?

    reply to this | link to this | view in thread ]

  13. identicon
    Anonymous Coward, 1 Mar 2019 @ 7:59am

    Re:

    Which is better for streaming companies, students watching on their parents accounts, and latter getting an account themselves, or students switching to YouTube, and never buying account?
    Prevent those students, and children struggling to become independent from staying with a streaming service using their parents account, and they will find alternatives, and many will not comeback when they have money to spare.

    reply to this | link to this | view in thread ]

  14. identicon
    Anonymous Coward, 1 Mar 2019 @ 8:06am

    Re: So...

    I suspect the same with any millennial who still has his parents' account - they probably helped pay for that device being used...

    Or it's the other way around. At this point "millennials" is basically the 19-37 age demographic. If they're sharing a Netflix account with their parents, odds are decent it's their account, on a device they bought and their parents possibly reimbursed them for. A device obtained either so that their parents would have access to streaming services while babysitting the grandkids, or obtained so that the parents would have access to the streaming services which replaced video rental stores.

    reply to this | link to this | view in thread ]

  15. icon
    PaulT (profile), 1 Mar 2019 @ 8:25am

    Re: Re: So...

    If we're applying labels, I'm "gen X" rather than "millennial", but the same applies to me. The only person that normally uses my Netflix account outside of members of my household is my mother. She uses it on an Amazon Fire TV stick she was bought for Christmas last year, and she watches maybe 2 movies a month on it.

    She wouldn't buy her own subscription if I was wasn't sharing it, so they wouldn't gain a subscription if they blocked sharing. In fact, they'd be far more likely to lose me as a subscriber both out principal and because they'd probably interpret my own sometimes out of the norm viewing patterns as sharing and stop me getting any use out of it at all.

    "the streaming services which replaced video rental stores"

    Interestingly enough, I don't recall the studios whining that people would let other people watch the VHS tape they rented or that friends were recording TV shows for friends that didn't have the channel in question. Well, I suppose they were doing the latter to a degree, but this imaginary income has always been "lost" to them, it's just that new tech is allowing them to hallucinate the idea that they can monetise it.

    reply to this | link to this | view in thread ]

  16. identicon
    Anonymous Coward, 1 Mar 2019 @ 8:26am

    I pay for the streams, I can let anyone I want use them. How is this freeloading or piracy? If I'm over the limit someone gets kicked off.

    reply to this | link to this | view in thread ]

  17. identicon
    kallethen, 1 Mar 2019 @ 8:49am

    Netflix and Hulu both have in their plans that you can watch simultaneously on X number of screens, with higher tiers allowing for more screens. The plans are specifically designed with sharing in mind. If you are sharing, you are more likely to be paying for a higher tier to get the extra screens. So they are already making money on the sharing.

    Old dinosaurs just can't understand that.

    reply to this | link to this | view in thread ]

  18. icon
    Gary (profile), 1 Mar 2019 @ 9:31am

    Sharing

    Well we know that the studious hate anyone sharing anything, ever.

    Especially they hate sharing their profits with the actual creators:
    https://www.techdirt.com/articles/20190227/11564841690/hollywood-accounting-rears-ugly-hea d-again-foxs-false-testimony-aversion-truth-leads-to-179m-fine.shtml

    reply to this | link to this | view in thread ]

  19. identicon
    Anonymous Coward, 1 Mar 2019 @ 9:35am

    Re: Re: Blame

    r/woosh

    reply to this | link to this | view in thread ]

  20. identicon
    Anonymous Coward, 1 Mar 2019 @ 9:44am

    If sharing is supposed to be a bad thing maybe we should stop trying to teach kids to share in kindergarten. Otherwise we should be sending executive back to elementary school until they can figure out that hoarding doesn't help anyone, not even themselves.

    reply to this | link to this | view in thread ]

  21. icon
    radix (profile), 1 Mar 2019 @ 9:44am

    Re:

    I suspect there are a fair number of people who pay for accounts who do not consume enough content to make the purchase worthwhile on their own. It's only because they are allowed to share the account that the service becomes a viable purchase.

    A crackdown on such accounts might well lose a significant number of subscribers.

    e.g. Unrelated roommates (or a parent/child living apart, whatever) all use the same account, but each only watch 1-2 films/shows per month. Neither would pay the $12 alone, but it's worth it for half that amount, so they split the cost. Netflix cracks down, so they cancel altogether rather than pay double for the same service that each individual person barely uses.

    reply to this | link to this | view in thread ]

  22. identicon
    Anonymous Coward, 1 Mar 2019 @ 9:51am

    Many might just actually pirate the content instead.

    No. They might access it without authorization from the copyright holders, much as people sharing passwords do. If you're willing to use the term "piracy" for things other that nautical pillaging, password-sharing is not the place to draw the line.

    reply to this | link to this | view in thread ]

  23. icon
    James Burkhardt (profile), 1 Mar 2019 @ 9:55am

    Re: Re: Re: So...

    They railed hard against the VHS home rental market and tape trading markets. They took video rental to court. They issue was the right of first sale shut down any legal recourse. And rulings around the home copying of radio broadcasts made recording broadcasts legal. There was no way to track tape trading and prove 'distribution'. Copyright didn't give them the ability to control those physical copies.

    New tech has given rise to new forms of media, media that doesn't play by the rules of physical media, and so the old benefits of physical media no longer apply.

    The metaphor of the VHS tape is a good one. Much like those tapes, you can only have so many people viewing at once, and it is settled that so long as you don't make unauthorized copies, you can legally share these tapes, have friends over for a viewing, ect. If you were enterprising, you could even set up a system in which you maximize the number of people who could watch it, while never duplicating the tapes. The number of simultanious streams you purchase should be viewed as a number of tapes. But they can control more now.

    reply to this | link to this | view in thread ]

  24. identicon
    Bruce C., 1 Mar 2019 @ 10:08am

    Even if it is "freeloading"

    that's not against the law. legacy media companies that want to force streaming services to become more draconian in their streaming policies should look to the license agreements they sign with said services. If they're getting paid per user-id, they may have an argument that the services are stiffing them out of unique views. But that can be addressed by changing the license to pay by unique streams and time viewed without screwing over end users.

    So once again bad due diligence on the part of the rightsholder is being blamed on the customers.

    reply to this | link to this | view in thread ]

  25. identicon
    Anonymous Coward, 1 Mar 2019 @ 10:53am

    What kind of crap is this? Streaming is very much so "freeloading".

    Freeloading is when someone is in your home and they're eating your shit and using your home without paying. What the hell do you think sharing passwords is?

    reply to this | link to this | view in thread ]

  26. icon
    Gary (profile), 1 Mar 2019 @ 11:12am

    Re:

    That makes some assumptions about the arrangement that aren't necessarily true. If five people are sharing the same account, they may very well be sharing the cost.
    If someone eats your pizza, you have less pizza. If you share your Netflix, you both a the full experience. So yes, this is nothing like "freeloading."

    reply to this | link to this | view in thread ]

  27. identicon
    Anonymous Coward, 1 Mar 2019 @ 11:19am

    Re:

    Freeloading is when someone is in your home and they're eating your shit and using your home without paying. What the hell do you think sharing passwords is?

    So what's the alternative? Change your password so they have to get their own account rather than using up your Netflix? Except, it doesn't get used up, so they'd lose while you don't gain.

    I mean, yeah, it's technically freeloading, but only technically. The usual connotation is in conjuction with rivalrous goods.

    reply to this | link to this | view in thread ]

  28. icon
    That Anonymous Coward (profile), 1 Mar 2019 @ 11:20am

    Re: Re:

    or 1 roommate picks up netflix, the other gets hulu, and the 3rd one will pick up the Disney one when it starts...

    Why would they each need their own accounts?

    reply to this | link to this | view in thread ]

  29. identicon
    Anonymous Coward, 1 Mar 2019 @ 11:41am

    Re: So...

    The CP?

    That's another can of worms.

    reply to this | link to this | view in thread ]

  30. identicon
    bob, 1 Mar 2019 @ 11:42am

    Re: Re: Re: Re: So...

    Be kind, please rewind.

    reply to this | link to this | view in thread ]

  31. identicon
    Anonymous Coward, 1 Mar 2019 @ 11:43am

    Comcast lets (or used to let) subscribers view content on the web for the most part, so someone with a home connection can have their password shared, to the point where the second party doesn't need to subscribe, assuming they can get broadband elsewhere (only in a few places they can).

    I was able to gut my cable for several months because of this.

    reply to this | link to this | view in thread ]

  32. This comment has been flagged by the community. Click here to show it
    identicon
    Anonymous Coward, 1 Mar 2019 @ 11:50am

    Re: Sharing

    The studios have to pay the talent up front, at the bare minimum the "scale" wages that are $900 a day or more for actors, a ton for writers, etc.

    They are professionals. Indies, who often forget things like insurance (productions involve physical risk), and often pay "deferred compensation," can't compete with "high paying."

    https://www.sagaftra.org/rate-sheet-television

    Hollywood pays a lot of money up front, so they're not screwing anyone out of anything. Even the Lifetime Movie players are on contract for something like $50-100k a year.

    reply to this | link to this | view in thread ]

  33. icon
    Thad (profile), 1 Mar 2019 @ 12:06pm

    Re: Re: Sharing

    Hollywood pays a lot of money up front, so they're not screwing anyone out of anything.

    Well that's fallacious reasoning.

    If you're given less than you're owed, then you're being screwed out of what you're owed. "But we paid you a lot!" is not a defense if "a lot" is less than the amount you were actually promised.

    reply to this | link to this | view in thread ]

  34. identicon
    Anonymous Coward, 1 Mar 2019 @ 12:23pm

    Re: Re: Use what we have, pirate the rest

    Is it free for those hosts to stream content with no license fees? Are their internet connections no-cost?

    The sentiment, probably, was that the providers should be able to stream orphan works legally—not that they should be forced to.

    reply to this | link to this | view in thread ]

  35. identicon
    Anonymous Coward, 1 Mar 2019 @ 2:17pm

    Re:

    You've never shared a pizza with anyone? You poor lonely soul.

    reply to this | link to this | view in thread ]

  36. icon
    Toom1275 (profile), 1 Mar 2019 @ 5:07pm

    Re: Re: Re: Sharing

    Especially in the music industry, where the "up front" money is considered a loan that needs to be repaid (forever).

    reply to this | link to this | view in thread ]

  37. identicon
    Smartassicus the Roman, 1 Mar 2019 @ 7:23pm

    Hang on a minute

    I know of at least one state where it has been defined by lawmakers and signed into law ans being piracy, so technically it's piracy for some people.

    reply to this | link to this | view in thread ]

  38. icon
    PaulT (profile), 1 Mar 2019 @ 11:51pm

    Re: Re: Re: Re: So...

    "But they can control more now."

    They THINK they can control more now. The problem is that any action they make is likely to be counter productive to what they actually want to get. For example, they think that cracking down hard on password sharing will result in a gold mine, but they're just as likely to lose a lot of people back to piracy. Not because people want something for "free", but because they're yet again reducing the usefulness of paid legal services, which are currently being used perfectly legally despite their whining. When the services you pay for start screwing you around and offer rapidly lower value for money, why would you pay for them?

    reply to this | link to this | view in thread ]

  39. identicon
    Anonymous Coward, 2 Mar 2019 @ 10:24am

    Re:

    everyone is losing money by selling services to homes or accounts. why, never mind password sharing, you never know how many kids or friends might be hanging out on the couch watching god-knows-what!

    until they can stream directly into our brains, with no hope of "sharing content", and all monitors/tvs and libraries, etc., are disintegrated, they are all losing money. those poor, wretched folks suffering at the hands of viewers... uh... making them famous or something.

    reply to this | link to this | view in thread ]

  40. identicon
    Anonymous Coward, 2 Mar 2019 @ 10:46am

    Re: Re: Use what we have, pirate the rest

    it's more that they don't have shit for older content.

    well, really, none of the services seems to have much of anything, full stop.

    reply to this | link to this | view in thread ]

  41. identicon
    Anonymous Coward, 2 Mar 2019 @ 10:51am

    Re: Even if it is "freeloading"

    i was put in prison for 50 years, because i would leave the room every time the commercials came on. argh, matey.

    reply to this | link to this | view in thread ]

  42. identicon
    Anonymous Coward, 2 Mar 2019 @ 11:10am

    Re: Re: Blame

    It seems that every generation, as they age, looks back upon their generation as totally cool, while viewing the older gens as stuck in their old ways and the younger gens are messing everything up.

    Why is this? Because none of these silly generalizations of the various generations has any basis in fact.

    If one is frustrated about something, how does blaming it upon others make anything better?

    reply to this | link to this | view in thread ]

  43. identicon
    Anonymous Coward, 2 Mar 2019 @ 11:14am

    Re: Re:

    Pizza sharing should absolutely be illegal!!!!11111

    And using the restroom during commercial breaks

    Think of the popcorn farmers for a change

    reply to this | link to this | view in thread ]

  44. icon
    nasch (profile), 2 Mar 2019 @ 12:51pm

    Re:

    (Hint: look at the number of devices included in the account. Then, look at the requirements that you personally own all said devices. Report back if you find something, because I've never seen it).

    "The Netflix service and any content viewed through our service are for your personal and non-commercial use only and may not be shared with individuals beyond your household."

    https://help.netflix.com/legal/termsofuse

    In other words, sharing with someone who doesn't live with you (e.g. adult children) is not allowed.

    reply to this | link to this | view in thread ]

  45. icon
    That One Guy (profile), 2 Mar 2019 @ 6:42pm

    Re: Re: Re: Sharing

    It's also a blatant attempt at shifting the goal-posts, since the last time they tried that in another thread someone pointed out that not a few days past was a story about a Fox shafting their workers out of what they were owed(strangely enough, they had no response for that...), so now apparently the focus is on what they get paid up front.

    reply to this | link to this | view in thread ]

  46. identicon
    Anonymous Coward, 2 Mar 2019 @ 11:15pm

    Re: Blame

    Really at this point I suspect that if Millennials were found to have drastically lower rates of child pornography consumption the response wouldn't be "any number greater than zero is still too high" but "Millennials are killing the child porn industry!" because Millennial bashing has become an end to itself.

    reply to this | link to this | view in thread ]

  47. icon
    PaulT (profile), 2 Mar 2019 @ 11:53pm

    Re: Re:

    Huh, OK you proved me wrong.

    But, I would love to see how they can actually enforce that without disenfranchising a crapload of legitimate users.

    reply to this | link to this | view in thread ]

  48. identicon
    Qwertygiy, 3 Mar 2019 @ 3:19pm

    Re: Hang on a minute

    As the ancient holy saying goes,

    [CITATION NEEDED]

    It's entirely possible that you're right. It's also entirely possible that you're recalling a bill that was later revoked, or was never passed. And also entirely possible you're remembering a law that said something else entirely, but are misremembering or misunderstanding it.

    reply to this | link to this | view in thread ]


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