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Netflix can jump on Facebook at last — but does anyone care?

Jeff John Roberts — Thu, 27 Dec 2012 19:04:56 +0000

When Facebook introduced a much-hyped sharing feature in the fall of 2011, a goofy law prevented Netflix from taking part. Since then, the video company has been lobbying Congress like a kid nags his parents for permission to go to the big dance. Now, Daddy has finally said yes — but, by this time, Netflix may have missed all the fun.

The news, in case you missed it, is that Congress this week sent President Obama a bill that will update a 1988 law that prevents video companies from sharing rental histories unless a customer gives them permission to do so. This law prevents Netflix from tapping into the “frictionless sharing” feature on Facebook that can tell all your friends every time you read an article or listen to a song. For instance, my Facebook friends might see a story like “Jeff listened to the Backstreet Boys on Spotify.”

Netflix wants to share movie viewing in the same way and, this week, it finally got its wish (the news was overshadowed by an unrelated part of the bill related to email privacy). So how big a deal is it that Netflix can be on Facebook too?

The answer is that, despite Netflix’s big lobbying push, its victory in Congress may not matter much at all. This is because, in the 15 months since Facebook launched frictionless sharing, companies and users are taking a very different view of its value.

As my colleague Mathew Ingram reported this month, media outlets like the Guardian and the Washington Post are backing away from Facebook as a way to distribute their content. Likewise, Om just pointed to the Poke debacle to call BS on Facebook’s power of influence:

This quick decline in downloads raises some questions about Facebook’s ability to be kingmaker. It may have helped Zynga when social games and Facebook’s platform were brand new phenomena. Remember how their frictionless sharing was going to change everything, especially for media companies? Well, it didn’t change a lick.

Perhaps, things work differently in the movie space. Maybe, the power of Facebook will let Netflix transform the video-watching habits of tens of millions of people. And, just maybe, users will come to love spamming their friends with news that they’re watching the Princess Bride or Debbie does Dallas.

A more likely conclusion is that Netflix’s big effort to change an outdated law, while a good thing, will do little to help the company’s own business.

(Image by ollyy via Shutterstock)

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Netflix users object to video privacy settlement

Jeff John Roberts — Tue, 28 Aug 2012 16:34:33 +0000

Dozens of Netflix users are filing objections to a class action settlement that would see Netflix pay $9 million to be released from claims that it illegally retained customers video records. The objectors, who are filing their protest with a California court, complain that subscribers receive none of the money.

The settlement is meant to resolve dozens of lawsuits related to Netflix’s decision to retain subscribers’ rental histories for more than one year in violation of the Video Privacy Protection Act. The VPPA is a 1988 law that Congress passed to regulate video stores but, in recent years, it has become a headache for companies like Netflix and Facebook.

See also: Netflix craves Facebook, tell Congress: Scrap Video Privacy Law

The Netflix settlement, which affects tens of millions of subscribers nationwide, was proposed in February and a federal judge gave it a conditional green light in July. Since then, lawyers have been sending out millions of emails to notify customers. The judge also ordered them to place 60 million notification ads on Facebook like this one:

This notification process would normally pave the way for the court to rubber stamp the $9 million deal at a scheduled hearing in December. But that approval may now be at risk given that court records show more than 50 objection letters. The objections vary in length and sophistication but the underlying complaint is the same — that third party privacy groups and lawyers get the money while the subscribers get nothing. You can see another full example below but here is a sample letter from a Michigan woman who notes “We are the customer who was done wrong” :

These objections come as judges are growing skeptical about privacy settlements that fail to do anything for the consumers who are affected. This month, for instance, a California judge refused to approve a $20 million settlement over Facebook’s “Sponsored Stories” on the grounds that half the money went to the lawyers and none to users. In the past, similar settlements involving products like Google Buzz and Facebook Beacon have typically sailed through the courts with only a handful of objections.

See also: Facebook’s $10 million privacy pay-out – why you get nothing

Here’s a sample objection:

Netflix Objection

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Update: Netflix Pays $9 Million To Settle Video Privacy Lawsuit

Jeff John Roberts — Sat, 11 Feb 2012 06:10:32 +0000

Netflix (NSDQ: NFLX) disclosed this afternoon that it will pay to settle nationwide claims that it illegally retained customers’ rental histories. (Updated with Netflix statement)

The settlement, disclosed in a securities filing, grows out of a 2011 lawsuit that accused the company of violating the Video Privacy Protection Act and California consumer laws. The VPPA forbids video rental agencies from disclosing customer information and also requires them to destroy certain data within one year.

In the lawsuit, former customers said they discovered Netflix still had their personal information when they went to resubscribe to the service later on. This information includes viewing histories or “queues” that Netflix uses to predict what subscribers might want to watch next.

In a related legal filing, Netlix said it is working with plaintiffs’ lawyers to finalize the details of the $9 million settlement before seeking court approval. In these type of deals, lawyers typically take 25 percent of the award.

The VPPA has been an ongoing nuisance for Netflix. Congress passed the 1988 law in the VHS era after a newspaper published the video rental history of Supreme Court nominee Robert Bork; today, the language of the law also applies to newer technologies like streaming. The law, which forbids disclosing rental histories, is blocking Netflix from jumping onto Facebook’s frictionless sharing platform. The company is pushing Congress to amend the law.

UPDATE: Steve Swasey, VP of Corporate Communications for Netflix, provided the following statement:

Netflix has settled a lawsuit related to the company’s compliance with the Video Privacy Protection Act with no admission of wrongdoing. This matter is unrelated to the company’s concerns about the ambiguities contained in the VPPA, which keep Netflix from offering its U.S. members the ability to share their instant watching information with their Facebook friends, an experience Netflix members currently enjoy in 46 other countries.

Last year, streaming radio service Pandora (NYSE: P) tripped over a similar state law in Michigan where it is being sued for disclosing subscribers’ playlists.

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Hulu Missing Out On The Facebook Sharing Gold Rush

Jeff John Roberts — Sat, 31 Dec 2011 00:04:56 +0000

Facebook has super-charged a handful of lucky media companies selected to test-drive the social network’s frictionless sharing platform. But even though video-sharing site Hulu was on the early bird list, it failed to make a splash. Was this bad-luck or a botched strategy?

Recall that Facebook let Hulu and a handful of others unroll an app-based news feature that tells users what media their friends are consuming. The feature amounts to a powerful testimonial and has produced impressive popularity spikes for the Guardian, the Washington Post (NYSE: WPO) and music-service Spotify.

Facebook has so far made this sharing feature available to only 20 or so strategic partners but, starting in January, it plans to open the gate to a crush of other companies that are clamoring to offer sharing apps of their own.

Hulu, one of the chosen early-birds, in September announced that it was offering:

a fully integrated experience that enables you to watch Hulu videos without leaving Facebook. And because you are watching through Facebook, the videos you watch will be instantly shared with your friends if you choose to do so.

But the response to Hulu’s initiative has so far been decidedly overwhelming. Based on my own news stream, no-one is using Hulu’s sharing app (although Facebook tells me three friends have downloaded it). And on the company’s blog post announcing the feature, commentators have complained that it stinks and that it doesn’t actually facilitate sharing. Meanwhile, the tech media have ignored Hulu’s Facebook play altogether and instead focused on whether the sharing feature will save its competitor, Netflix.

What is going on? Why did Hulu decide to unroll a feature that could have given it an important first-mover advantage in social media but then fail to execute?

The most likely explanation is the Video Privacy Protection Act, a 1988 law that forbids video rental services from sharing customers’ rental history without their permission. The law is currently preventing Netflix (NSDQ: NFLX) from hopping onto Facebook’s platform. In Hulu’s case, however, media outlets reported that the company had found a way to work around the law.

The company declined at the time to explain just how it was complying with the VPPA. Hulu did not respond to an email today requesting details about its legal strategy.

It’s also possible that Hulu’s efforts to comply with the law are responsible for the complaints that its sharing feature is not frictionless. The Hulu feature as it’s now designed requires users to leave Facebook and watch content in a separate window — perhaps this additional step is actually a form of legal compliance. I’m at a loss to explain how this would work but I also feel Hulu must have done something to shield itself from the very large lawsuit that would arise if it violated the VPPA.

Whatever the explanation, the upshot is that Hulu may have blown an opportunity to use an early entry on social media to gain ground on Netflix and other video-streaming rivals like Amazon (NSDQ: AMZN) and Veoh.

As for Netflix, the company yesterday told TechCrunch, “Unfortunately US members can not currently connect their Netflix accounts to Facebook because of the ambiguous Video Privacy Protection Act.”

Netflix is trying to amend the law so that video rental companies no longer have to obtain customer consent on each separate occasion they wish to share information.

The House passed a law to this effect this month but the bill still awaits approval from the Senate and the President, meaning it could be months before Facebook users can automatically share their movie choices with friends.

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Congress struggles with Facebook’s frictionless sharing

Ryan Lawler — Wed, 12 Oct 2011 18:39:42 +0000

It’s no big surprise that Facebook wants to make it as easy as possible for users to share with their friends what they’re reading, listening to and watching. That was the key message at the social network’s f8 developers conference. But when it comes to video, a little-known law from the ’80s could hold back those ambitions, at least for users who want to seamlessly share what they’re watching on Netflix or Hulu.

The Video Privacy Protection Act (VPPA), which was enacted in 1987 in the wake of the Robert Bork’s Supreme Court nomination hearings (after Bork’s video rental records were released to a newspaper by his local video store), prohibits companies from sharing viewer records publicly. The act was also at the center of a class-action lawsuit aimed at Blockbuster after the rental store began sharing its records with Facebook back during the Facebook Beacon debacle of 2007.

As a result, some video companies — most notably Netflix — have shied away from integrating with Facebook’s Open Graph, at least in the U.S. While Netflix will allow users to share viewing history with Facebook friends in Canada and in Latin America, it doesn’t plan to roll out the same functionality in the U.S. until Congress removes some uncertainty around the VPPA.

The House Judiciary Committee is considering a bill that would amend the VPPA, but concerns from certain Congressmen could require users to explicitly opt-in each time they want to share what they’re watching. The bill, HR 2471, would clarify what is now ambiguous language about when and how users share their viewing information. In particular, it seeks to amend the type of disclosure necessary for companies like Facebook, Hulu and others to make such information available to others:

“to any person with the informed, written consent (including through an electronic means using the Internet) of the consumer given at one or both of the following times:

(i) The time the disclosure is sought.
(ii) In advance for a set period of time or until consent is withdrawn by such consumer.”

In other words, the amendment as it stands would now let users opt-in once to sharing information with friends and social networks. That is, until they withdraw such consent, or decide they don’t want to share anymore.

That would be a boon for Hulu, Netflix and other video distributors which seek to connect with Facebook’s Open Graph. But some Congressman have expressed concern about the lack of privacy oversight that comes from enacting such an amendment. In particular, Congressman Bobby Scott of Virginia and Congressman Mel Watts from North Carolina had voiced some concerns about the bill during the mark up hearing.

According to Tech of the Hub:

“Congressman Watts is concerned the current bill trades convenience at the expense of privacy. He offered an amendment to require a consumer’s permission explicitly each time video viewing data is shared as opposed to the current bill’s up-front one-time consent… Watts stated the bill ‘does not adequately address the realities of privacy in this age of instant and wide-spread information distribution and consumption.’”

Those concerns are due to the “dynamic nature of friend lists on social networks as well as the lack of safeguards for children.” Under Netflix’s current proposed implementation of Facebook Connect, for instance, only the Netflix account holder would be able to share his or her viewing history on the social network. But many Netflix accounts are shared within a household, which means that the history of multiple users could be broadcast under a single Facebook account — and as a result, a child’s viewing history can be shared without any controls placed on it.

It’s not clear which, if any, version of the bill will be put forward or if it will be passed. But it’s important to note the concerns about the effect that the sort of frictionless sharing would have on social networks, particularly as Netflix, Hulu and others haven’t implemented a satisfactory way to enable multiple Facebook-authenticated users to share the same account.

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Pandora Smacked With Class Action For Revealing User Profiles

Jeff John Roberts — Fri, 30 Sep 2011 23:48:10 +0000

Pandora (NYSE: P) is the latest company to stumble into the minefield of privacy lawsuits that are blowing up all over the tech industry. A new complaint says the Internet radio provider violated the privacy of its Michigan subscribers and demands it pay each of them at least $5,000.

The claim is based on a 1988 state law called the Video Rental Protection Act that imposes fines for disclosing a customer’s purchase or rental histories related to videos, books or sound recordings. The law is a more robust version of a federal one passed the same year after a newspaper created a privacy flap by publishing the video rental history of a Supreme Court nominee. That federal law, which some regard as a relic of the analog era, has been back in the news because it is preventing Netflix (NSDQ: NFLX) from participating in Facebook’s recently announced news ticker feature.

In the Pandora case, first reported this week, subscribers claim the radio service violated the law when it permitted anyone on the Internet to view their profile pages. These pages, which Pandora had said would only be visible to a limited number of other subscribers, contained information like a person’s user name and musical preferences. The lawsuit says Pandora committed a second violation when it merged users’ accounts with their Facebook accounts without notifying them. It says this forced integration “released sensitive listening information to all its users’ Facebook friends.”

The lawsuit, which was filed in California, seeks statutory penalties of $5000 for every Pandora subscriber in Michigan and another $5000 for those same subscribers whose accounts were merged with Facebook. If a judge agrees to let the class action go forward, Pandora and the plaintiffs will likely settle out of court for an undisclosed amount.

This is not the first time Pandora has been caught up in a privacy class action. In the past year, it has been sued over allegations it shared personal information that it obtained from its Apple (NSDQ: AAPL) and Android apps. Pandora has had a rocky time of it since going public in June. The money-losing company hit an opening day high of $26 per share but its stock has since bumped along closer to the $13 level.

The case may also be a cautionary tale for another Internet radio service, Spotify, which came under fire this week for forcing its users to access their account through Facebook.

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Netflix Craves Facebook, Tells Congress: Scrap Video Privacy Law

Jeff John Roberts — Sat, 24 Sep 2011 01:01:49 +0000

Poor Netflix (NSDQ: NFLX). On top of its other problems, an arcane law is spoiling its chance to participate in a new form of Facebook fun that lets users live-share their media experiences. The company is now renewing its push for Congress to revoke the law.

Netflix issued two blog posts yesterday urging people to support a bill repealing the Video Privacy Protection Act (VPPA), a quirky pre-digital law that prevents the company from sharing live information about what its subscribers are watching. The posts coincided with the hoopla surrounding yesterday’s news that Facebook plans to become an entertainment hub. Here is what Netflix hopes to accomplish:

The Netflix/Facebook integration empowers you as a Netflix member to share what you watch from Netflix with your friends on Facebook and to discover what your friends are watching both on Facebook and within the Netflix user interface. This makes it easier and more fun to find new television series and movies to watch.

But the VPPA means that Netflix will have to watch from the sidelines as music apps like Spotify and Clear Channel (OTCBB: CCMO) hop on to Facebook’s platform. As Joe Mullin explained in a smart piece this summer, the current law imposes strict fines on any company that shares someone’s video rental history without receiving that person’s consent.

Congress passed the law as a privacy measure in response to a Washington newspaper’s decision to publish the video rental history of a nominee to the Supreme Court. (Strangely, that nominee was Robert Bork and not Justice Clarence Thomas whose taste in movies gave rise to a moment of Senatorial infamy when, during confirmation hearings, he was asked by Sen. Orrin Hatch, “Did you ever use the term Long Dong Silver.”)

Today, the law is an anachronism but one which is tripping up Netflix because it requires companies that rent movies to obtain consent from a customer at the same time that they share their information. This means that Netflix faces the wildly impractical task of having to obtain permission every single time it plans to update a newsfeed describing who is watching what movie.

The VPPA applies only to Netflix’s American subscribers, leaving the company free to roll out its plan in Canada and Latin America.

It is not clear how popular Netflix’s proposed Facebook feature will be with viewers. I for one am relieved that, for now at least, no one will know if I choose to spend my weekends curled up with an Ally McBeal marathon.

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