What Does Spotify Have That Netflix Doesn’t?

As social media continues to grow into the world’s most dominant platform for communication, people share everything about themselves, from favorite movies to books to recording artists, all via social media pages.

Facebook recently created an app that allows users of Spotify to give live streaming updates of the songs they’re listening to on the music service. The move is an aim to get a network effect to challenge Pandora Media (NYSE:P) and Sirius XM (NASDAQ:SIRI) for radio listeners.

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But because of the Video Privacy Protection Act of 1988, you can’t legally share your Netflix (NASDAQ:NFLX) rentals or any other movie rentals the same way without submitting a written letter of consent.

Representative Bob Goodlatte (R-Virginia) is supporting a modernization of the current law that would allow consumers to electronically authorize Netflix to share information with their friends.

Signed into law before the average household even had a computer, and the idea of watching movies on one was the stuff of Sci-Fi movies, the Video Privacy Protection Act is certainly outdated, and threatens an important means of advertising for media companies: the 21st century’s version of word-of-mouth promotion.

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Unfortunately, with the entire world at their fingertips, this modern generation is the most impatient generation, which often translates into lazy. Spotify users are unlikely to keep track of every song they listen to and share it with their friends — that’s what the app is for.

The same goes for users of video services Netflix, Amazon on Demand (NASDAQ:AMZN), or Hulu (NASDAQ:CMCSA) (NYSE:DIS). Unless a movie is spectacular, people are unlikely to make an effort to share it with friends. A social media app that does that for them would allow Netflix to promote its service and content to networks of people that could number in the hundreds or even thousands, all through a single user.

The one hitch is that written letter of consent. The extra effort it takes to write and mail in a letter means a large portion of would-be promoters probably won’t get around to it, and services like Netflix lose free access to millions of social media users.

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