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Sharing a Password: Will Someone Have to Pay?

Published onJan 11, 2018
Sharing a Password: Will Someone Have to Pay?

With over one-fifth of young adults streaming hit shows like “Game of Thrones” using another person’s account, password sharing is certainly popular. But is it illegal? According to a decision from the Ninth Circuit Court of Appeals last year, it theoretically could be. There is little chance the FBI will come knocking on your door, however. If there is any crackdown on streaming, it is more likely to occur in the marketplace.

News headlines about password sharing have been confusing (compare “Yes, Sharing Your Netflix or HBO GO Passwords Is Actually A Federal Crime” with “Relax, you’re not going to jail for sharing your Netflix password”), so it is important to understand what is really at stake for consumers. The confusion arises from the Computer Fraud and Abuse Act (CFAA), a vague thirty-year-old federal statute that’s been called “the worst law in technology.” Aimed at hackers, the CFAA makes it illegal to “access[] a protected computer without authorization, or exceed[] authorized access.” But what constitutes “access” and when is it “without authorization”?

In the Ninth Circuit case, United States v. Nosal (“Nosal II“), the court held that the defendant violated the CFAA when he used a former colleague’s password to take client data from a recruiting company in order to start his own. The defendant argued that such a broad interpretation of the CFAA could criminalize acts like sharing a password among family members, to watch Netflix, for instance, or to check-in for a flight. A dissenting judge agreed. The majority said their interpretation would not apply to those situations. The U.S. Supreme Court declined to review the case, so we are unlikely to get greater clarity anytime soon.

The more tangible problem lies in the business world, where industry insiders have called password sharing everything from “theft” to “piracy lite” and, alternately, a “terrific marketing vehicle.” To be sure, sharing your password very well may violate your contract with a content provider. As an example, the terms of HBO Go, which many of us likely do not read, grant “limited, non-exclusive, non-transferable license to access. . . . [to the] account holder alone.” Under those terms, sharing your password with someone outside your household could constitute a breach of contract on your part. It is impractical for content providers to sue you for doing so, though.

What is more likely is that content providers may eventually become averse to password sharing because of market constraints. The business models of Netflix and HBO depend on growing their subscriber bases faster than their costs. Netflix’s original series pay dividends over time because the company does not have to pay licensing fees for the content, and the shows attract new subscribers.

Both Netflix and HBO currently embrace password sharing, betting that those who do not pay now eventually will. If subscriber growth ever slows, however, that could change. Netflix’s American subscriber base has already started to lag. If overall growth slows, the company could face pressure to act.  According to one estimate, content providers lost $500 million in revenue in 2015 due to password sharing.

Industry enforcement would likely mean either limiting the number of devices that can be used with an account or raising fees. (Some critics think that was the motivation behind Netflix’s recent price hike.) In the meantime, the music industry and newspapers may offer cautionary tales, with one financial analyst pointing out that the New York Times and Wall Street Journal owe their recovery partly to “cracking down on free riders.” Until then, it appears you can share away, that is unless you copy the company’s content or start charging your friends.

Currently, a second-year law student at Wake Forest, Greg Volk is an Emmy-winning television writer who has penned jokes for David Letterman and trivia questions and factoids for “Cash Cab,” “Who Wants To Be a Millionaire” and “Pawn Stars.” 

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