Adrian Lee is an editor in The Globe and Mail’s opinion section and the host of City Space, The Globe’s podcast on the future of cities.
Over the past decade-plus, subscription streaming services have transformed how we consume culture. Netflix has been the industry’s undisputed champion; its game-changing model brought infinite-seeming TV shows and movies straight to people’s homes for a remarkably low price, while producing billions in revenue. Even when competitors entered the fray, it remained the byword for streaming video-on-demand, with “Netflix and chill” helping to make the company what Kleenex is to tissues.
Eventually, though, a loophole emerged, and its use became rampant: Millions of paying subscribers were sharing their accounts to people outside their households. But during Netflix’s boom times, this didn’t seem to rankle Netflix’s leaders much; instead, their tacit allowance of password-sharing “helped fuel our growth,” as they acknowledged in a letter to investors. In 2016, then-chief executive officer Reed Hastings said password sharing was “something you have to learn to live with,” because “we’re doing fine as is.” And in 2017, the company infamously tweeted: “Love is sharing a password.”
Things are less fine today. For two consecutive quarters in 2022, the company suffered subscriber losses for the first time in a decade, and with revenue slowing, hundreds of Netflix workers were laid off. Now, to enforce language that was introduced to its terms of use in 2018, Netflix is extending its Latin American crackdown on password sharing into Canada, among other countries, by requiring account holders to identify a primary household. Anyone living outside that home can pay a fee to share the account, while people living together can continue to do so.
This has infuriated many subscribers. But when we get mad at Netflix for closing what is effectively a free-access loophole, that is ultimately entitlement – fuelled by expectations set over the years by venture-capital-rich companies too willing to play with fire and disrupt without responsible foresight, yes, but entitlement all the same.
This anger, to be clear, is entirely understandable. It’s simple economic psychology: We form expectations of how much we should pay for things based on how businesses price them over time, and when a product or service becomes a part of one’s life, bursting such expectations with a price hike can feel like a violation. Worse, households across North America are struggling with surging inflation; Netflix’s crackdown, in that context, stings.
But those of us who are angry about losing our shared access should ask ourselves: Should we have really expected to be able to hand out Netflix memberships for free? Should we really have considered this a feature, rather than a bug? Did we really think that using our friend’s password was “using Netflix,” or did we call it “password sharing,” a phrase in such clear defiance of cybersecurity norms that it required its own term? And when we demand password sharing, isn’t the premise that we’re demanding Netflix – and all of its content – to be basically free?
This kind of thinking has consequences, and the expectations that fuel it are hard to change. Netflix’s product, ultimately, is providing people with TV and movies – which is to say, art – and we cannot be owed cheap art. But consumer expectation of how much it is worth has been undermined by tech companies’ years-long race to the bottom. The popular belief that innovation should mean democratization has collided with the cold fact that the humans who make and do things need money to live in the world – and while our expectations have grown, this compensation has shrunk amid so-called innovators’ narrowing margins.
In the 1990s, for instance, music was primarily sold in albums recorded on CDs, which cost around $20. Then, in 2003, Apple launched iTunes, establishing a new standard price for music: 99 cents per song. This set the stage for lower and lower prices; now, we’re trained to expect every new and old recorded song to be at our fingertips for about $10 a month. To help make that expectation reality, music-streamers companies such as Spotify pass on fractions of pennies to the actual artists per stream, while social media platforms such as TikTok have further undercut consumers’ valuations of original music by effectively making songs free for content creators to use.
Meanwhile, Amazon has led consumers to expect that shipping nearly any object from across the continent should take two days, and be free; low-wage labourers are pressed to their limit in warehouses to make this happen. And one of the modern journalism industry’s original sins is that newspapers and magazines – confident that print-advertising revenue would flow forever – published their work on websites without paywalls in the mid-1990s, before understanding how the internet revolution would play out. That let consumers believe that online journalism, which of course requires labour, should cost $0.
For its part, Netflix has made people expect infinite, high-quality and brand-new TV shows and movies for less than $20 a month, even if it comes at the expense of actor stability for shows cancelled on a dime, or of the quality-over-quantity approach to movie-making. This expectation fuels that common grievance that, despite its thousands of titles, there’s “nothing good on Netflix” – and now, that we deserve to split the cost of the service, or access it freely.
Netflix bears most of the responsibility for the outrage. Eventually, if your big idea is ultimately to distribute something good as widely and cheaply as possible, you’ll become the victim of your own success. Netflix made things worse by sending mixed messages when times were good, and top dogs in industries of all kinds have consistently proven that in prosperous times, they believe their business models will be sustained forever, as if they’ve arrived at the end of history. This confidence is almost never earned. Rage-quitting on Netflix for its hypocrisy is justified. But we bear some responsibility too, for accepting this Faustian bargain – and then hungrily demanding more and more.
We should be clear-eyed about what we’re angry about. Netflix’s policy shift is a reminder of what physical-media advocates have long been warning, as movies and shows shuffle on and off various streamers, with some even falling through the cracks: With streaming services, we don’t own anything, so we aren’t owed anything, either.
Critics may now find it delicious that Netflix once claimed that password sharing is love. But nothing Netflix or any such business does is about love; we should never have thought otherwise.