Basically, when you buy or rent something like a movie, you’ll only be granted a “license” for a certain number of people to watch it. If Kinect detects more people in the room than you had a licence for, it can stop the movie, and even charge you extra.

So if Microsoft has its way, you won’t just be renting movies any more. You’ll have to decide how many people are watching, and no doubt pay more. And if one extra person turns up to your movie night? So help you God, you are going to pay.

What will they do if I don't own an Xbox or a Kinect?

 I would claim that it was a ghost every time. . "Microsoft figures out that many houses in the US are haunted" would be the next headline

I'll read a book.  Spy on THAT! 

 amazon records or library...

 True. I'll give you my acct/library card info. Here's what you will find:  1. I should prob buy the books bc I never return them on time, ergo I end up donating lots to libraries, which I think is a fundamentally good cause. 2.I am a colossal nerd. My Amazon purchases do not make me look any socially cooler.  Anyone remotely cool will look at my nerdly book purchases and say, "Oh no, she didn't." And anyone nerdly will ask to borrow. Then the library can't trace the geekiness any further.  One small point for privacy. 

You're making a voluntary contribution to libraries. That's good of you. :) 

 It was suggested that I might return books on time responsibly and then contribute if I felt so civic-minded.