Tennessee just made it illegal to share your Netflix account

Sharing the user name and password of any streaming media account is now considered against the law in Tennessee, according to a web entertainment theft bill signed into law yesterday by state Governor Bill Haslam.

The bill makes it a crime for anyone other than account holders to log into services like Netflix, Hulu Plus, Rdio, or Rhapsody. It also empowers streaming media companies that identify illegal sharing to contact law enforcement authorities to press charges.

So, a college student who gives access of his Netflix streaming account to half the residents in a dormitory can now be punished, according to the bill’s sponsor Gerald McCormick.

But while the new bill allows for greater legal penalties, it’s unclear if streaming services will acknowledge the state law over its official terms and conditions.

“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 stated in regards to the state bill.

According to the terms of use, sharing an account password outside of a household will result in termination of the user’s subscription. Beyond that, the company can choose to terminate a subscription any time it chooses.

But even if Netflix did choose to exercise its right to press charges under the new state law, the streaming service’s restrictions don’t allow multiple streams to load on the same account. (The only exception to this is if a user subscribes to a plan that allows for multiple DVDs to be rented out at the same time. So, if a subscriber can rent up to five DVDs, his or her account is able to load up to five separate video streams before the restrictions kick in).

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).

So, it’s not surprising that the legislation was pushed by recording industry officials who want to put an end to the billions of dollars in losses they attribute to illegal file sharing. Tennessee’s capital is home to many of the major record labels, including Sony Music Entertainment, BMI, Warner Music Group and EMI.

While the bill doesn’t make very much sense for video streaming services, it could cause headaches for Tennesseans who plan to use a music streaming service. Apple, Amazon and Google have all announced plans to launch cloud-based music services, which record labels will have some degree of authority over.