Aereo is latest example of how broadcasters try and kill innovation

April 29, 2014
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Aereo-Logo-2013

Broadcasters hate innovative products. It is a broad statement but can someone look at their past and come to any other conclusion?

“But now we are facing a very new and a very troubling assault on our fiscal security, on our very economic life and we are facing it from a thing called the video cassette recorder and its necessary companion called the blank tape. And it is like a great tidal wave just off the shore. This video cassette recorder and the blank tape threaten profoundly the life-sustaining protection…on which copyright owners depend” – Jack Valenti, Head of the MPAA in 1982, speaking in front of Congress.

Betamax

In 1984, the Supreme Court ruled that creators of the Sony Betamax VCR and other new technologies could not be held liable for acts of copyright infringement as long as the device is capable of substantial legitimate uses. Broadcasters told the Courts that this new product would lead to the destruction of the American film industry. In recent news, revenue for movie studios went up four percent globally in 2013 to $35.9 billion.

In fact, Jack Valenti, the head of the Motion Picture Association of America, went in front of Congress and told them about the “savagery and ravages” of the VCR, and comparing its effect on his industry to that of the Boston Strangler on a woman home alone.

Because of Betamax, the Supreme Court has had an established precedent saying it’s acceptable for consumers to record TV shows for future use.

YouTube

Recently, Google (who acquired YouTube) settled a copyright lawsuit in which Viacom Inc accused the Internet search company of posting its programs on the YouTube video service without permission. Viacom fought YouTube for more than seven years without any significant legal victory for the Broadcasters.

Viacom had originally filed a $1 billion lawsuit against YouTube and others in 2007, and eventually accused the Google unit of illegally broadcasting 79,000 copyrighted videos on its website between 2005 and 2008.

The settlement was announced 11 months after a U.S. District Judge rejected Viacom’s damages claims. The judge rejected what he called Viacom’s “ingenious” yet “extravagant” argument that YouTube should monitor the content of videos being uploaded at a rate of more than 24 hours of viewing time per minute. Viacom had been appealing that decision to the 2nd U.S. Circuit Court of Appeals in New York, and oral argument had been scheduled for March 24.

Cablevision

Broadcasters went after and lost against Cablevision over network-stored DVRs as the Supreme Court refused to over-turn a ruling by the U.S. Court of Appeals in New York who found that Cablevision’s new service did not infringe the copyrights of the media companies that produce movies and television programs.

Content providers like Cartoon Network, CNN, Twentieth Century Fox, Universal, Paramount, and Disney, as well as the major networks, sued Cablevision because they said the network DVR operated more like a video on-demand (VOD) service than a DVR and therefore should be required to obtain licenses from each provider before allowing customers to view the content.

Dish Network

They went after Dish Network over their Hopper DVR and its ability to automatically skip commercials by claiming that such a helpful feature violates copyright law. In court, the TV networks basically argued that anything that hurts their business model must be illegal.

Jamie Kellner, chairman of Turner Broadcasting Systems, claimed that people who skip commercials were “stealing” television and that because of the Dish Hopper and TiVo, we all are going to have to pay an extra $250 a year to watch TV. That reminds me of the times in the past where file-sharers were compared to car thieves and drug dealers.

Sigh.

Aereo

Now, Aereo is in the broadcasters sights. Broadcasters acknowledge that anyone has the legal right to put up an antenna and connect it to their TV. But, they also seem to claim that doing the exact same thing remotely is illegal.

By the way, broadcasters have been granted billions of dollars in public spectrum at zero cost and are therefore obligated to provide the public with widely available, free programming. Some, like CBS, have stated that if Aereo is found to be legal, they will halt over-the-air broadcasting.

So, will they promptly return their spectrum to the public to be used for wireless Internet and other productive uses

How does this affect the wireless industry?

Aereo lets their customers stream broadcast television to laptops, tablets and smartphones. This will (if not already) create a new market by extending today’s broadcasts to additional platforms. Therefore, Aereo customers can watch TV wherever they want and when they want.

This is the future of content delivery, as more than half of U.S. adults stream content on laptops, and roughly one-third stream content on smartphones and tablets, according to a Consumer Electronics Association study. Already, the Wall Street Journal has reported that Aereo has had talks with AT&T and Dish Network to form a possible partnership in which AT&T would sell data subscriptions paired with Aereo’s video service.

Cloud-computing companies like Dropbox and Google should be a little nervous about the ramifications of an Aereo loss at the Supreme Court. To be fair, broadcasters don’t have problems with cloud computing companies like Dropbox, Amazon or Google, but those companies could still find themselves affected by a decision that broadly rules on the legality of cloud-based storage services.

In a joint filing, the Center for Democracy and Technology and the Information Technology Industry Council (which represents Google, Apple, IBM and Facebook, among others), argued cloud computing services depend on the legal understanding that remote storage and transmittal of data is not a public performance:

“If that understanding were thrown into doubt, cloud computing services would face a serious predicament: Their core functions would become susceptible to copyright claims from a virtually limitless class of possible claimants, with the potential for ruinous statutory damages,” the trade associations wrote in a brief. Tech companies also don’t want to be put in the position of having to determine whether customers’ content is infringing copyright protections.”

Also, what happens if Aereo wins and the networks go off public airwaves? That would give mobile providers access to more broadcast spectrum under a developing Senate bill that would essentially punish any broadcaster that moves certain programming from over-the-air availability to cable by requiring the FCC to auction that broadcaster’s spectrum.

PBS-Aereo

 

The bill is primarily aimed at giving cable and satellite operators the option of offering à la carte service or losing the blanket license that allows them to carry broadcast programming without having to negotiate individually for rights to carry the programming. But it is the Aereo-related provision of the bill that could have significant implications for mobile broadband spectrum, particularly in major TV markets being targeted by Aereo.

Wrap up

When will broadcasters recognize that it helps the industry and public to embrace new technologies rather than stifle it completely? Innovative technology, like Betamax, didn’t kill the content industry but gave consumers easier access to their entertainment experiences. The Aereo case pits consumers’ home entertainment rights against established industry powerhouses, echoing the Betamax decision.

Market disruptions that rattle the status quo often face difficulties. Just look at the recent challenges faced by innovative startups such as Uber, Makerbot and Tesla.

Comments

  • Shark Bait

    I hope they stifle! and I hope netflix, you tube, yahoo, xbox and everyone else starts making great programs and actually embrace new technologies with an up to date business model.
    Just ask nokia and blackberry about how well standing your ground against new technology play out.

  • Jaime

    Wow! excellent article William! Hats off to you sir

  • TheFluffyOne

    Aereo doesn’t sound wildly different to the Slingbox. Maybe it’s the DVR part that’s the issue for those forward-thinking TV execs.

  • Guest123

    When Hollywood is paying $70 million to an actor for a single movie, and a game show host $40+ million per year. . . they can suck my left nut.

  • Timmy

    I’ve been using Aereo since it first became available in my city about a month ago. Streaming through my Roku has been flaky at best with lots of pixelation and random buffering. I’ve got a 30MB connection and Netflix, Hulu+, etc all look perfectly fine even with simultaneous streams on TVs, tablets and PC. The Aereo stream on my PC has provided the best results but sometimes it too will buffer and pixelate.

    The recordings display much better but it’s so much like having Hulu+ that I’m not sure if it’s really much of a benefit . The main attraction I see is the ability to view live “local” broadcasts and not pay for an overpriced cable subscription or you can’t get good reception with an antenna. Depending on where you live, the local news may be worth watching live.

    “Skipping commercials is stealing television”??? Really? I wonder why they haven’t created a channel dedicated to only showing commercials 24/7….or maybe they have and I’ve not seen it yet because like most everyone else, I don’t want to watch commercials…except during the big football game we’re not allowed to talk about.

    • Rob McLaughlin

      Skipping commercials is stealing television. How do you think that local news team you like so much gets paid? Advertising on their station pays the bills. If everyone skips the commercials, businesses stop advertising and local broadcasting stations go under.

  • Ruz

    Aereo is a superb innovation.. Broadcasting is as it is dying and
    obsolete technology and the reason is who likes those big Antennas and
    box to be carried everywhere with them? Here comes the Aereo which is so
    small and compact which will do away with the antenna.

    Secondly
    it is a boon to the broadcasting industry as it will excite people to
    watch live TV on their mobiles, tablets and PCs where advertisers can
    take extra benefit which they couldn’t in-case of Netflix, youtube, etc

    Thirdly
    it will only capture free to air channels and not encrypted ones where u
    again require a set top box to decode the same. So whats the harm? Even
    today u can get free to air for life with DTH or DVB-T.. so this will only make ur life simple and gain more subscribers in that region since not everyone can afford to pay for 1000s of channels these days..

    Personally i dont see any harm here to the industry or broadcasters.. infact it works infavour of them.. It is not possible for Samsung S5 to come with TV anteena in their mobile.. so watching is only restricted with internet which again requires wifi or unlimited network data.. So having Aereo will be so much beneficial in future that each mobile sold will have to bundle this anteena onto them..

    My advise to Aereo is even if your technology fail to make any mark in US, dont worry and hesitate urseelf, come to India as you will have a huge demand and choice here to make a mark for yourself..

  • cee

    Theft of creative work is theft.

    They steal content and sell it, I am guessing that you think that when you go to a store you can steal from the owners?

    So it’s okay if I break into your house and take what I want?

    You have a job where you create nothing of value and hate on those that do.

    I am guessing that this is a copy of someone elses writing. If it isn’t please feel free to copy and sell it. Who cares if the originator loses money.

    Vile behaviour by a corporation, even worse are the cretins who support it.

    • Gibscreen

      Read the article. It discusses how broadcasters use public airwaves to broadcast the signal and anyone can put up an aerial to receive the signal for free. It also talks about is how is ok to record things for later use. Aereo combines these things. Aerial and dvr.

      A better analogy is whether you’re stealing air when you’re in someone’s place of business.