Using Netflix in a Library

(by Peter Hirtle)

One of the things that Napster taught us is that just because it is easy to do something, it is not always legal. 

There is a recent post that has been getting some buzz.  In “Using Netflix at an Academic Library,” Rebecca Fitzgerald describes how Concordia College uses a Netflix subscription to supply movies to students.  She reports that using Netflix subscriptions has been a great success, saving the library over $3,000 so far by substituting film purchases and licensing with Netflix rentals and instant play. 

The program appears to be popular with the students and saves the college money.  It is easy - but is it legal?  I don’t see how. 

Here is the problem: As one of the commentators on her post notes, when you sign up with Netflix you enter into a binding contract with them.  The terms of that contract specify that “our DVD rental service and the content on the Netflix website, including content viewed through our instant watching functionality, are for your personal and non-commercial use only and we grant you a limited license to access the Netflix website for that purpose” (emphasis mine).  As far as the instant play service of Netflix, its end user license stipulates that Netflix grants the licensee “a non-exclusive, limited, personal and nontransferable license, subject to and conditioned on your compliance with the restrictions set forth in this License Agreement, to install and use the Software.”  To whom does this apply?  Netflix stipulates that the licensee includes “members of your immediate household for whom you will be responsible hereunder and users of the personal computer or Netflix ready device with which you are accessing the Netflix Service and for whom you will be responsible.”

I don't see how a library subscription to Netflix could be considered to be “personal” – not when the purpose of the subscription is to lend the movies to others, rather than watch them yourself (as if a library could even watch a movie.)  Nor can authorized users of a library be considered to be “members of your immediate household,” nor could library workstations be considered to be “personal computers.”  I am not even sure that we could consider Concordia’s use to be non-commercial, since its purpose is to avoid paying purchase, rental, and licensing fees – and avoiding purchasing an item has at times been considered to be “commercial.”

It looks to this non-lawyer like Concordia may not be complying with the terms of the license.  As a general rule, I think libraries should respect the terms of the contracts they enter into.  If you don’t like a license, regardless of whether it is the license that accompanies an e-book reader or a Netflix subscription, try to change it.  (At least one recent article suggests that we should be trying to negotiate different terms so that Netflix subscriptions can be used in higher education.) 

Of course, one can also ask how much risk does Concordia College face because of the library’s actions.  In reality, the answer is probably "not much."  Fitzgerald reports that to date “There have been no legal repurcussions (sic) involving our Netflix accounts.”  If Netflix found out about Concordia’s program and objected, it is most likely that it would simply cancel the library’s membership rather than also bring legal action.  I am a little more worried, though, about the possible response of copyright owners.  Movies that have been secured via Netflix in violation of the license agreement between Netflix and the end user (or that are used in ways that Netflix has not licensed) are no more legal than pulling the movie off of BitTorrent.  A copyright owner could theoretically sue Concordia College for willful copyright infringement (distribution, in this case), which carries with it a $150,000 fine per infringed movie. Until recently, however, suing schools and libraries was considered poor form, and so the risk of a lawsuit is likely still small.

Given the potential high risks that a Netflix lending program entails, though, I would only enter into such a program with the full support of my institution’s legal department.  I hope that Fitzgerald considers posting Concordia’s counsel’s legal assessment of the risks and benefits of the program.  (And let me credit Fitzgerald’s piece for at least raising the issue, something that a Library Trends article that she cites in her post fails to do.)

Is there any way a library can utilize Netflix in its collection development?  Certainly negotiating with Netflix for different terms would be a start (though it would not surprise me if Netflix’s agreement with the film distributors might actually prohibit anything but personal, non-commercial use).  A library could also consider buying individual memberships in Netflix for all of the students.  But until I see a legal justification for a Netflix borrowing program, I think this has to go into the “easy – but not legal” category.

UPDATE: An article on the topic in the Chronicle of Higher Education indicates that Netflix agrees with me that library use of a Netflix subscription is outside of the terms of use.  It does not discuss whether such a use would, in addition to being a contractual problem, also be a copyright infringement.

Image from dolphinsdock, http://www.flickr.com/photos/[email protected]/3078317546/, licensed CC-BY-NC-ND.

Comments

[Peter Hirtle]

Richard, thanks for the comments. You have hit the key issue here. Normally, when a library purchases a work, it can make fair use of the item or lend it to others (thanks to the first sale doctrine). When a library licenses a work, the license terms, and not copyright concepts such as fair use and first sale, govern what that library can do with the work. It is why even some book publishers have started wrapping their books with licenses: it allows them, rather than copyright law, to dictate the terms of use for that material.

[Richard]

Makes one think...when someone rents a DVD from Netflix or watches a program via Netflix instant streaming, does that mean that rights such as fair use do not apply even if digital restrictions are not an issue (i.e. someone is willing to legitimately work around digital restrictions by capturing content via the "analog hole"?) For someone who intends to do something such as incorporating a small amount of content into a critical commentary that will be publicly released, this could be an issue.

At the same time, when one rents a DVD or other work from a library (meaning a work that was legitimately acquired by the library for their collection), it does not seem as though restrictions on fair use are an issue or even come up that much, if at all (even though the physical medium belongs to the library.)

Incidentally, though delivering movies via Netflix instant streaming would probably require a license, one seems to believe that the public rental of legitimate physical copyrighted works (i.e. DVD discs) would be covered under the "first sale" doctrine (rentals of software and/or sound recordings being exceptions.) Along these lines, the following may be of interest:
http://www.hackingnetflix.com/2007/01/netflix_rents_b.html
http://uchicagolaw.typepad.com/faculty/2007/07/blockbuster-exc.html

[Burkert]

If is a sign "non-commercial use only" i think everything is ok. I think too Netflix doesn`t make any trouble for this or other libraries...

[Peter Hirtle]

Mariann, I believe that the library signs up as if it was an individual. In at least one case, the library also had to get a credit card in order to activate a membership.

Netflix doesn't appear to "vet" membership applications, but instead relies upon its users to read and adhere to its terms of service.

[Mariann Burright]

A very basic question -- how does a library obtain a netflix subscription, assuming the conract terms are designed for individual use only? That part is not clear to me.

[Tracy Thompson-Przylucki]

Thanks for the interesting post Peter. At NELLCO, as the result of an idea from one of member libraries (thanks Pitt!) we began thinking about ways to provide relevant video content to library users with all of the necessary permissions and with minimal barriers to access. The end result is a relationship we developed with Swank Motion Pictures for their Digital Campus. Our member law libraries can now offer on-demand access to streaming video (over 16,000 popular titles) for educational use. See this post (http://www.nellco.org/index.cfm?fuseaction=Feature.showFeature&featureid=72&pageid=490) for details.