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Tennessee outlaws sharing passwords to Hulu, Netflix, Rhapsody and other sites

June 2, 2011 |  3:48 pm

Bill Haslam

Tennessee Gov. Bill Haslam signed a bill into law Thursday that would make it a crime to share passwords for subscription-based online streaming sites like Hulu, Netflix, Rdio and Rhapsody.

If convicted, someone who watched or listened to $500 or less of entertainment would be sentenced to a misdemeanor punishable by up to one year in jail and a fine of $2,500. Chronic abusers would get popped with a felony and suffer harsher fates.

The law doesn't mean that you're committing a crime if you allow your spouse or family member to view a movie on Netflix under your own roof, Rep. Gerald McCormick (R-Chattanooga), the bill’s House sponsor explained.

"What becomes not legal is if you send your user name and password to all your friends so they can get free subscriptions," McCormick told the Associated Press.

Jared Newman of PC World writes that the law is unnecessary and contrary to the inherent nature of Web-based streaming sites. He also feels the law, which is a first in the nation, would be difficult to enforce.

"Subscription services are meant to be accessed from lots of places," Newman argues. "Between computers, smartphones and tablets I already access the streaming music service MOG from six devices, and that number could balloon to dozens in the years ahead. Enforcing the law against consumers may be impossible because normal usage permits access on lots of devices."

Netflix, one of the larger companies that would stand to benefit from such a law seems to agree with Newman that the measure is unnecessary.

"Netflix applauds any efforts to stave off video piracy.  However, Netflix already has provisions in its Terms of Use that restrict passwords to the member’s household," the company said in reference to the Tennessee bill, according to Tom Cheredar of MediaBeat.

The Republican governor and the Tennessee lawmakers appear to be primarily protecting the interests of the music industry, which has a big presence in Nashville with the likes of Sony, BMI, Warner Music Group and EMI, and could be damaged by the illegal streaming of music, Cheredar speculates. However, he says they are targeting the wrong side.

"The state legislation seems to ignore the notion that the burden of preventing account sharing should be the responsibility of the streaming service and instead gives those companies more of an incentive to police the service for wrong doing. That approach is similar to the strategy most commonly used by the Recording Industry Association of America (RIAA)," Cheredar wrote.

ALSO:

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YouTube counting on former Netflix exec to help it turn a profit

Netflix chief Reed Hastings extols the virtues of writing big checks in Hollywood

-- Tony Pierce
twitter.com/busblog

Photo: Gov. Bill Haslam listens to a reporter's question after a tour of the Tennessee Technology Center in Nashville, Tenn., on Wednesday, March 16, 2011. Credit: Erik Schelzig / Associated Press

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