Television broadcasters are freaking out. Certain that the courts would see things their way, companies like CBS, Comcast and News Corp. instead found that the Second Circuit Court of Appeals ruled in favor of Aereo, an Internet TV service they've been trying to shut down for a year.
With Aereo's second legal victory under its belt, it might be time for broadcasters to focus on Plan B: to start, y'know, innovating like crazy.
So Aereo Is A Go. For Now
At issue is whether or not Aereo violates the broadcasters' copyrights by retransmitting local, over-the-air channels so its subscribers can access them from smartphones, tablets and an array of smart TVs and streaming set top boxes. When Aereo launched in New York last March, the broadcasters immediately asked a judge to shut it down via preliminary injunction, arguing that indeed, it violates copyright law by generating a legally forbidden "public performance" without paying compensation.
In its defense, Aereo has argued that the way it's retransmitting broadcasts — using tiny, remote antennae rented by its customers — does not constitute a public performance, since its use by individual viewers was inherently private. Aereo won a first round in court last July. Today, in a 2-1 decision, the Second Circuit Court of Appeals upheld the earlier ruling.
The networks will undoubtedly continue pushing their case, opening the prospect of a full trial and eventually, a possible Supreme Court ruling. Broadcasters, of course, have every right to pursue a legal case against Aereo. This is yet another example of how technology has evolved faster than the law can keep up and how we, as a society, need to figure this stuff out.
In the meantime, broadcasters should prepare themselves for the possibility that Aereo will win in court, allowing its expansion to continue.
Why Aereo Exists
Aereo is a pretty attractive service, especially for the cord cutter set. And for those who haven't yet considered canceling their cable subscription, products like this make it more tempting. It remains to be seen how much overall demand there is for Aereo, but the fact that it exists at all is pretty telling.
The legal niceties aside (those will be decided by courts, not blogs), Aereo is doing something innovative that empowers media consumers in a way that wasn't previously possible. That's because nobody — least of all broadcasters — made it possible. Now somebody is.
When the Internet rose to prominence, newspapers didn't have the luxury of suing its brains out. They had to deal with the ways in which their landscape was shifting, which was ultimately better for consumers. Similarly, broadcasts may not turn out to have that luxury with Aereo. Trying to sue them out of existence is not an unexpected response, but it may not succeed. They need a backup plan.
Should broadcasters have come up with this idea? It's nice to talk about how industries should disrupt themselves, but that's rarely how things actually work. It would have been totally counterintuitive for broadcasters to band together and develop the type of functionality that Aereo is offering. Smart, yes, but not necessarily a sound business decision within the framework in which these people generally think.
What Should Broadcasters Do?
It's a fruitless debate anyway. Broadcasters didn't come up with Aereo. Aereo did. Now the Comcast and News Corps. of the world need to think about what they'll do in the event that the disruptive little startup prevails in court.
Aereo has already filed four patents that cover the precise technology its using, so it's probably not feasible to recreate its functionality. But what does Aereo do for viewers? It provides cheap, multi-channel, high-definition access to broadcast TV from an array of devices and allows for DVR recording. It lets you do all of this without paying for a cable subscription.
To their credit, cable companies are already working on ways to bring live TV to tablet and smartphone owners. Comcast's TV Everywhere initiative clearly anticipated trends in the way people watch programs that could threaten their core business model, so they moved on it.
But while services like TV Everywhere and XFinity Streampix are nice, they're add-ons to a cable subscriptions, which some people simply don't want to deal with in the first place. It's unlikely that Comcast or Verizon is going to come up with a worthwhile Internet TV offering that doesn't hinge on their existing models — and the sky-high fees that support them.
Broadcast networks might not be able to rent out tiny antennae, but they don't need to, either: They already have much of the infrastructure in place to provide live Internet TV signals and make them available from mobile devices and connected TVs. If they band together and offer enough programming, they could charge a small subscription fee. Think Hulu for live broadcast TV. In fact, yes, just tack this onto Hulu for a couple extra bucks. Bingo.
There may be sound business reasons why broadcasters wouldn't consider doing this. Their relationships with cable providers may not allow it. But that rigid, no-we-mustn't mentality is exactly what created the void that allowed Aereo to crop up in the first place. It might be time to change that mindset.
Lead photo by schmilblick