Netflix, Spotify, and the U.S. Census approach the idea of household differently : The Indicator from Planet Money Love is sharing a password, but maybe not anymore. With streaming services cracking down on account sharing, this got The Indicator team wondering, what exactly is the definition of a household?

What is a 'household'?

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: [POST-PUBLICATION CORRECTION: An earlier version of this episode incorrectly introduced Greg Peters as the CEO of Netflix. Peters is the COO and Chief Product Officer of Netflix.]

SYLVIE DOUGLIS, BYLINE: NPR.

(SOUNDBITE OF DROP ELECTRIC’S "WAKING UP TO THE FIRE")

ADRIAN MA, HOST:

This is THE INDICATOR FROM PLANET MONEY. I'm Adrian Ma.

WAILIN WONG, HOST:

And I'm Wailin Wong. A few months ago, some of us on the team were talking about Netflix and how it's cracking down on password sharing. I ended up on the Netflix help section of their website looking at the rules for who's allowed to be on one account. And here's what the website says - a Netflix account is for people who live together in a single household.

MA: Then we thought about it some more, and then we realized the definition of a household is not at all simple. There are all kinds of complex human relationships and living arrangements that stretch the notion of what a household is. And here on THE INDICATOR, we like to dig into these nuances.

WONG: We know that the household is, like, this atomic unit of measurement for economists and demographers and statisticians. And the way it's defined can have big implications for economic policy.

MA: So on today's show, we're going to tease out some of the different definitions of households and why companies like Netflix are paying attention to it now.

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WONG: Here in the U.S., we've been counting the number of households in the country since 1790. In the Census Bureau's last decennial census in 2020 - that's the big one that happens every decade - the bureau tallied up 127 million occupied households.

MA: So what does that mean? To find out, we briefly called Dan Weinberg out of retirement. He used to work for about 25 years at the Census Bureau.

DAN WEINBERG: It's a pretty fun place if you like data.

WONG: It was definitely the place for Dan. He was assistant director for the decennial census, and he says the definition of household is a settled question for the Census Bureau.

WEINBERG: Every residential address in the U.S. is on a list called the master address file, and it's either vacant or occupied. And each occupied dwelling unit contains one household. So therefore, a household is everybody living together in one dwelling unit.

MA: Party at my dwelling unit...

WONG: (Laughter).

MA: ...This Friday. So yeah, the econ heads call a household everybody living in the same dwelling unit, which seems simple enough. But, you know, trying to determine what that means - to live together - that can actually be kind of tricky. So, like, think about multigenerational families where grandma floats between the homes of different adult kids, or think about parents who share custody of their kids, or commuter workers - those are people who keep a separate residence close to their jobs.

WEINBERG: The Census Bureau has a definition of a household, and that's what it is for its surveys. That doesn't mean that everybody has the same mental definition of a household.

WONG: Take college students - per the rules of the decennial census, students who live in campus housing should be counted there by the college, not at their parents' house. Students who live in off-campus housing are considered their own households, so they're supposed to fill out their own census form.

MA: But parents of college students tend to list those children as being part of their household, and that can lead to overcounting of college-age people.

WEINBERG: Like, my daughter's away at college, say - even though the University of Kentucky is going to report her as living in this particular dorm, she's part of my household. She comes home on the holidays. She eats my food...

WONG: (Laughter).

WEINBERG: ...Drives my car, whatever. So in people's minds, these definitions are flexible.

WONG: Dan's daughter, if you're listening, do your laundry at school.

(LAUGHTER)

WONG: Don't bring it home. So in addition to the once-a-decade survey, the Census Bureau also does the American Community Survey. That tracks population changes on a yearly basis. Then there's the Survey of Income and Program Participation, which interviews members of the same households over a four-year period.

MA: Federal and state governments use this mountain of data to decide how to divvy up money from everything from highway construction to public school lunches to rural waste disposal.

WONG: And when it comes to programs like Medicaid or SNAP, formerly known as food stamps, defining a household is a crucial part of figuring out who's eligible for benefits. Like, SNAP defines household as everyone who lives together and purchases and prepares meals together. Fun fact - children under the age of 22 are considered part of the SNAP household, even if they buy and make food on their own.

MA: OK. But can these adult children be on their parents Netflix or HBO Max accounts?

WONG: Great question. And that brings us back to password sharing and how streaming services define household. Christina Warren is a software developer and former business and technology journalist who still likes to opine on the media industry.

CHRISTINA WARREN: Most of the video services, at least in the past, the way that they either defined a household was much more vague or was almost saying five people on an account, similar to the way that you would do kind of a family cellphone plan.

MA: By contrast, Christina says music streaming services have been historically stricter about sharing. So for example, she says she had friends on her Spotify family account who got kicked off back in 2018. She says Spotify actually requires all the people on a family account to reside at the same address, and they verify that by using GPS coordinates.

WARREN: And we knew that that could happen, right? Like, it was a frustrating thing, but Spotify had never pretended to define a household any other way than they had.

WONG: Video streaming services like Netflix and HBO Max, they had not been so strict about this historically. In fact, back in March 2017, Netflix tweeted this from its official account - love is sharing a password.

MA: Love is not keeping track of how many passwords you're sharing.

WONG: Yeah. So the video services wanted eyeballs. And if that meant a college kid using their parents credentials at school, that was OK because that college kid was hopefully building loyalty to that service and would pay for their own account after they graduated and got their first apartment.

WARREN: For many years in their earnings calls, when they would be asked about it, did not seem worried at all about what made up a household and if people were in the same physical space. They wanted to grow, and they weren't concerned about anything else.

MA: Yeah. But that calculus is changing now as subscriber growth has slowed down and even reversed. Netflix said last week it lost almost a million customers in the second quarter, and this was actually a way better result than they were expecting. But it's still concerning. And the company says widespread account sharing undermines their ability to improve the service.

WONG: Here's COO Greg Peters on an earnings call in April.

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GREG PETERS: So if you've got a sister, let's say, that's living in a different city, you want to share Netflix with her, that's great. We're not trying to shut down that sharing, but we're going to ask you to pay a bit more to be able to share with her so that she gets the benefit and the value of the service, but we also get the revenue associated with that viewing.

WONG: This increased scrutiny on sharing means enforcing the definition of household. For Netflix, they're going with the U.S. Census definition - people living together. The company tracks this by looking at the IP addresses of devices using the service.

MA: So Netflix's new focus on the definition of a household, it's kind of frustrating for Christina. She says Netflix already had a pretty reasonable way to limit the number of people who could use an account, and that was by limiting the number of screens that could watch at the same time. So for example, Netflix's premium plan says, you pay 20 bucks, you can have four people watching at the same time.

WARREN: Netflix had all been about number of screens versus, you know, where people are located or what their familial relationship is, and that's shifting.

WONG: Netflix is testing some new features in countries outside the U.S. In Peru, Chile and Costa Rica, it's charging subscribers to add a viewer to an existing account. In some other countries like Argentina and Honduras, it's testing a fee to add extra homes to an account. We reached out to Netflix, and they told us that in both cases, the additional viewer or location won't take away from the max number of screens a subscriber can have.

MA: Now, none of these new tests are affecting the U.S. yet, but Netflix estimates 30 million households in the U.S. and Canada are using a shared password. So regardless of how we might personally define a household, it is pretty likely that a change is on the way for us, too.

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MA: This episode of THE INDICATOR was produced by Jamila Huxtable and Corey Bridges, with engineering from Josh Newell. It was fact-checked by Kathryn Yang. Viet Le is our senior producer. Kate Concannon edits the show. And THE INDICATOR is a production of NPR.

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