Update: We’ve received word that the new API Terms of Use aren’t as sinister as on first glance. From VentureBeat:

We are not prohibiting sites from showing competing services, however we do not want anyone to use Netflix content such as titles and descriptions to advertise a competing service. We’re not prohibiting developers from monetizing their applications by selling them directly to consumers. We will not, however, permit resale of our information in a business-to-business fashion.

This definitely goes a long way to remove the uncertainty around the new API Terms. We feel that the inability for users to retrieve their viewing history and ratings remains an issue, but we’re glad to learn that existing, mutually-beneficial uses of the API (such as ours) appear to be still valid.

Update 2: TechCrunch and TheNextWeb have now confirmed this. I wouldn’t be surprised if we see an updated Terms of Use from Netflix in the near future to put the issue beyond doubt. We’ll update here again if that occurs.

On Friday afternoon, Netflix published a blog post announcing a breaking change to their API, and dedicated a small paragraph to the fact that their API terms of use had been updated. On a technical level, these changes will cripple many apps currently integrating with Netflix, but the legal changes may be even more significant. Netflix customers should be aware of not only the upcoming changes to any 3rd party apps they might use, but what this says about Netflix as a business.

You can find the announcement on their developer blog. What they are announcing is that from September 15th you will no longer be able to export your viewing history and associated ratings through their API. All API endpoints that expose rental history, and other parts of the API that tangentially supply that information will be removed. All they’ve said regarding motivation for that change is that they are changing their API so that it “is aligned with our broader objectives”. It appears Netflix considers what films you’ve watched and what you thought of them as their data, not yours.

More significant are the changes to the API terms of use, softly mentioned in the post as: “The Terms of Use has been updated […]. To view the revised Terms of Use, go to http://developer.netflix.com/page/Api_terms_of_use.” Checking the latest version against the google cache, we noticed several significant additions under section 1.9

Under the new terms, the following are no longer allowed (Update: Netflix clarification indicates that these are not targeting consumer-facing applications - see update at top of post):

distribute Content to any third party other than directly to end users through your own Application;

charge, directly or indirectly, any fee (including any unique, specific, or premium charges) for access to the Content or your integration of the APIs in your Application, or use the APIs to build an enterprise application (e.g., that you distribute to other companies);

use or display Titles in an Application for search and discovery of content linking to competing services;

use or display Title Metadata in an Application unless it is used solely to facilitate or enable the search and discovery of Netflix services. For example, if your Application enables users to search for the availability of a movie or TV show from Netflix as well as from other services, you may only display Title Metadata in association with the availability of the movie or TV show from Netflix, not the other services;

The first implication of these additions: if you decide you just want to create a “Netflix” app, and add significant value on top of the Netflix service, you cannot charge your users for that value. You can do something positive for Netflix, but not for yourself. There is no incentive for you to build something useful for Netflix customers, and if you’ve already built your app, you have three months left.

The second implication of these additions: if you want to play with Netflix, you must close your eyes and pretend that no other online streaming services exist, or might have films your users want to see. We know that a lot of our users are Netflix customers, but we also understand that they don’t only use Netflix. So we integrated with Netflix to help people find the best films to watch in whichever way best suits them. We think that’s of mutual benefit to Netflix and our users.

This looks to us like a play to keep users from moving their viewing history onto competing services, and to stop their users from seeing gaps in their content library that may be available for purchase elsewhere. While this might be in their short term interest, in the longer term, making it harder for people who want to spend money watching films legally online cannot be a good business decision.

In an industry as fragmented and combative as online streaming, the consumer’s experience is, sadly, often the first to be compromised. Please let us know your thoughts in the comments.