Tenn. bans using others’ passwords to ‘steal’ media

Thursday, June 2, 2011

A new state law in Tennessee will criminalize the use of someone else’s log-in to obtain media services such as Rhapsody and Netflix. The law is designed to curb the sale and distribution of passwords so others can access online entertainment, but news coverage has emphasized the potential impact on consumers.

“Netflix sharing will be a crime,” reads one newspaper headline.

Any effort by the government to limit access to information can raise eyebrows, but there’s no First Amendment issue here. When an individual signs up for a pay entertainment service, the fine print generally specifies that use will be limited to that purchaser and his or her household. It’s a contractual relationship, an agreement to pay a monthly fee in exchange for a specified amount of access.

The problem for Netflix, Rhapsody and others, of course, is that the contractual provision is largely unenforceable. If someone shares his password with his four best friends, and somehow the provider becomes aware of that, the only real recourse is to stop providing service. No one’s filing suit over a $9.99 subscription.

This new legislation, set to go into effect July 1, provides an alternative way to curb abuse, particularly when the sharing is done for profit. The theory is that by sharing your password or distributing it for profit, you’re defrauding the company with which you contracted. Fraud is clearly an activity the government can prosecute.

“Stealing” more than $500 in media would be a misdemeanor under the law, with felony prosecution for higher levels of unauthorized access.

Of course, the best remedy for most providers is to develop technology that can proactively limit the distribution of content to those who have paid for it. To deal with a Napster generation accustomed to accessing music and movies as freely as possible, innovation, not legislation, will prove most effective.

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