Peter Redford: Thoughts on Aereo

written by: Peter Redford

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aereocourtCopyright infringement is a serious crime that can sink any business faster than a fishing boat in a typhoon. Aereo, a startup dedicated to streaming live and time-shifted content to any internet connected device, learned this the hard way after TV producers, marketers and broadcasters teamed up to sue them for violating their copyrights.  

Last month, the U.S. Supreme Court ruled in against Aereo in a 6:3 decisions, a result that has been highly debated since. The startup operates by allowing users to rent individual micro antennas that can be used to obtain and stream broadcasts on any device. CBS, FOX, ABC and other broadcasters argued this technology would’ve forced them out of over-the-air transmissions.

At first glance, it seems obvious that Aereo should be punished for streaming content without the consent of the networks, but like most cases, there is grey area. The three judges that ruled in favor of the startup dissented that TV networks and affiliates were wrong to sue it for publically performing their works because it technically doesn’t perform. It doesn’t provide users with prearranged video-on-demand, but assigns customers an antenna used to obtain available broadcasts. It’s no different than having a library card and using it to check out books.

From this perspective, it’s easy to side with Aereo because of the innovation behind the startup. It claims no ownership of content, just provides a means to connect broadcast networks to any device. Its business model has been called innocent by some, but in reality, there isn’t much innocent about it. Their antenna concept appeared to be contrived and was bound to irritate broadcasters and judges.

Basically, Aereo found a loophole in the system and exploited it until affected organizations caught on. It’s almost baffling to think CEO Chet Kanojia didn’t anticipate consequences when founding it because it eliminates the need for a cable TV provider. Why pay hundreds of dollars per month for a clunky box top when you can pay $8 for access to the same content on any device? Anyone in their right mind would chose the latter, precisely why broadcasters had to act before they lost a large chunk of change from cancelled subscriptions and retransmission fees.

Just because it isn’t innocent, does it necessarily mean it’s wrong? Before reaching the Supreme Court, lower courts ruled in favor of Aereo, which makes sense seeing that it was being sued for “public performance” or providing content intended for large audiences. In doing so, broadcasters argued that it should be subject to the same rules as cable and satellite companies, paying for permission to transmit programs.

In its defense, broadcasts taking place inside one’s home don’t necessarily constitute as public transmission; a prime example of one of the few loopholes in its business model. Despite this, the majority didn’t care how Aereo managed to tiptoe around the law and ruled that it acts as a cable and satellite provider, looks like one and therefore should be treated as one.

Many speculate that this will be the end of Aereo, financially crushing them to the brink of extinction. Though it’s a setback, the startup can still make alterations to their business model in order to make it legal. It can start by negotiating with its opponents, gaining the permission to stream their content as long as they pay for it. Sure this may double or triple the original monthly price of $8, but it’ll still offers a much cheaper alternative than competitors that charge more than $100 per month.

Some, including Kanojia, think the ruling inflicts a wound on cloud storage providers like Dropbox, as well as future cord-cutting innovators. This isn’t necessarily true, this case just represents another example of big business successfully lobbying to stifle competition. It’s comparable to what is happening with patents. Big companies like Sony, Microsoft, IBM and HP are constantly lobbying to make them difficult to enforce, and have succeeded in turning the public against “patent trolls” who are mostly startups and inventors without the means to fight the establishment.

Overall, the final ruling was consistent seeing how years ago, TV networks and cable companies signed a retransmission consent that required cable and satellite providers to receive permission from networks in order to broadcast their programs. However, it was unjust to rule against Aereo because the original retransmission consent is wrong since it was opposed by big businesses (TV networks) on smaller ones at the time (cable companies). The bottom line is, we should be encouraging innovative new tech, not harming it in favor of large corporations.

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