Supreme Court Essentially Kills Aereo, Broadcasters Breath A Sigh Of Relief
Aereo CEO Chet KanojiaIn a 6 - 3 ruling today, the Supreme Court said that Aereo's service, which lets subscribers watch broadcast TV over the Internet, violates the Copyright Act. Aereo works by renting individual TV antennas to each user and then beaming that signal to the person's mobile phone or tablet giving him the ability to record and playback shows.
Aereo has argued that the playback was the same as a person recording TV in their own home and watching it. The court said t hat Aereo is creating a public performance of the shows and therefor has to pay a license fee in order to use the copyrighted material.
The decision basically destroys Aereo's business model. CEO Chet Kanojia has said that a loss would mean the end of his company. Today was a very decisive loss for Aereo, which is back by Barry Diller.
The entrenched players in Hollywood are enjoying a hefty dose of schadenfreude with their coffee this morning as news of the Aereo decision gets out. Disney quickly released a statement saying, 'We're gratified the Court upheld important Copyright principles that help ensure that the high-quality creative content consumers expect and demand is protected and incentivized.'
From Fox : '21st Century Fox welcomes the U.S. Supreme Court's ruling, a decision that ultimately is a win for consumers that affirms important copyright protections and ensures that real innovation in over-the-top video will continue to support what is already a vibrant and growing television landscape.'
It would be impolite to outright dance on Aereo's freshly dug grave.
But the decision is a huge victory for broadcast companies. Aereo was such a disruptive technology that at one point, two of the big four networks threatened to go to a paid cable model if Aereo was allowed to continue to exist.
Aereo gave users a very viable alternative to expensive cable and satellite subscriptions. For as little as $8 a month you could get all of the broadcast TV you wanted. Combine that with Netflix , Hulu and iTunes and suddenly cable looks like a big waste of money.
Now cable and satellite companies will continue to keep a strong hold on your wallet. Aereo showed them the writing on the wall that said people want to watch more content over the Internet. They've responded with apps like WatchESPN which this month is giving millions of people the ability to watch the World Cup from anywhere there's Internet access. In order to use the app though, users need to authenticate that they are in fact paying cable or satellite customers.
Expect this trend to continue. One day we will all be able to watch broadcast TV on our iPads, we'll just likely be paying a cable company, not a tech startup like Aereo. This deal suits the broadcast networks as they earn millions every year in retransmission fees.
It remains to be seen if the decision will have a chilling effect on new technologies that might try to circumvent the established TV players. Aereo, of course, now has the option to pay a license fee for the content it provides but that would kill the business. Congress is also free to alter the Copyright law to reflect the reality of changing technology, but it is hard to imagine politicians putting up a fight against businesses that donate millions to their campaigns.
But Hollywood should never underestimate the power of tech entrepreneurs. I remember writing about Kanojia back in 2011 when his company was called Bamboom. His company seemed like an elegant work around for people who still wanted some broadcast TV but did most of their viewing on their laptops. Even then Kanojia knew that his company would be tested by many court cases. It will be exciting to see what he comes up with next.
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