39 Comments

Summary:

The Supreme Court’s decision to kill Aereo was bad from a legal point of view — and downright horrible from a policy and innovation perspective.

Source: Shutterstock / Refat
photo: Refat

It’s more than 24 hours later, and I’m still furious.

When news of Aereo’s demise broke yesterday morning, I did my best to calmly explain why six people used the law to kill the most innovative TV service in a generation. But now I might as well say how I really feel.

The Supreme Court, which ruled 6-3 that Aereo’s streaming service infringed on broadcasters’ copyright, was not just wrong. It was terrible, stupid and misguided.

Where to begin? First, there’s the slapdash legal reasoning that led the court to declare that Aereo engaged in a “public performance” when it rented antennas and DVRs that let consumers watch and record over-the-air TV. By the letter of the law, Aereo clearly did no such thing — but the good judges swept this aside with what the dissent rightly called “an improvised standard (“looks-like-cable-TV”) that will sow confusion for years to come.”

The court’s improvisation turned on the 1976 Copyright Act that, under a provision called the “transmit clause,” gave broadcasters new rights over-the-air signals sent to the public. The court, however, brushed aside the hard question of how exactly Aereo’s discrete one-to-one streams were “public,” and instead said it didn’t matter since it was a “behind-the-scenes” issue.

This legal mess, on its own, is almost tolerable. After all, courts pull this sort of slight-of-hand all the time when they try to stuff the square pegs of policy into the round holes of law. Instead, it’s the court’s policy choice that’s so plainly stupid and bad.

In crippling Aereo, you see, the six judges made a choice to entrench the current, badly broken model of TV. That model has let the TV business largely defy the logic of digital distribution, and instead impose a form of cartel pricing on consumers — requiring people to buy a slew of channels they don’t want in order to watch the handful of ones they do.

Have any doubts about the effect of the court’s decision? Just look at how the share price of old-line TV companies popped on Wednesday on the news that the Supreme Court had chosen to bless and protect the status quo.

But while CBS and ABC investors may be throwing around high fives at the sop from the Supremes, the average consumer just took a bath. Not only did the court just stick it to them by protecting the TV industry’s bundle rip-offs, consumers also lose access to a marvelous technology.

Aereo, you see, was different. It gave urban dwellers like me a cheap way to see over-the-air shows (which the broadcasters send out for free in the first place, don’t forget) on their computers and phones.

The service, to be sure, was from perfect. The show streams could be choppy, and in the case of sports, the short time delay could be frustrating — I would sometimes learn about a goal on social media right before seeing it on Aereo. And it lacked the lazy, channel-clicking pleasure of TV.

But Aereo did point out what could be: a commonsense way to watch TV over the internet at a reasonable price. Now, we’re stuck instead with the TV industry’s over-priced bundles and, in the case of mobile, a confusing and convoluted “TV everywhere” system that seeks to replicate an out-of-date form of linear TV watching that no one wants in the first place.

The defenders of the TV cartel claim that the entire entertainment industry sky might have fallen if Aereo had lived. Indeed, some said, even the mighty NFL was threatened by Aereo’s antennas! Nonsense.

History shows that the TV business has always thrown a legal tantrum in the face of new technologies, including cable TV and the VCR, but soon after adopted and even embraced them. In the case of Aereo, there’s a good chance that CBS and the rest of them would have pressured Congress to impose some sort of licensing regime on the company, and that Aereo in turn would have forced the TV business to get its act together in offering more internet-based alternatives. The net result would have been a better TV experience at a better price.

Instead, thanks to the Supremes, we’re stuck with the crummy status quo, in which the TV industry treats us as dumb jerks who are to be tethered to bad technology at inflated prices.

I could go on. There’s the fact that the broadcasters who killed Aereo are sitting on huge amounts of valuable public spectrum that is supposed to be used to provide free TV. There is also the chilling effect the court’s decision, despite its assurances of a narrow ruling, could have on other would be cloud-computing startups like Aereo.

But I’ll stop here. I have to go contemplate on how to replace the terrific, $8-a-month TV service the Supreme Court just took away for no good reason. Update: Aereo officially shut down on Saturday morning.

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39 Comments

  1. That’s what bothers me so much. They don’t go into detail about how exactly a one-to-one stream constitutes a public performance. Completely brushed it aside. In his dissent, Scalia said that wishy washy “looks like cable” standard still allows Aereo to do exactly what it’s doing, just not for live TV. So a user could record a show and then stream it the second it ends…that’s enough to differentiate it from “looks like cable.” I’d continue using it that way since that’s what I, and I’d venture many people, use it for anyway – an easy, inexpensive, cable-free DVR for broadcast TV.

    But even if Aereo has to charge another $5 bucks a month to cover licensing fees, it’s still worth it to me. That would be a shame but I’d hate to see it go away altogether. And to pull a ray of sunshine from this monsoon, that situation would actually help them out since they wouldn’t need to maintain a zillion antennas and 10,000 copies of the same show.

    1. Aereo could easily pay for the right to re-transmit and stay in business.
      Aereo was selling stolen property.

      1. Concerned international rocketx2 Thursday, June 26, 2014

        Its not stealing if it is free to begin with!

        1. It is when you profit from retransmitting it.

          1. So do the antenna companies have to pay fees? Essentially using an antenna in your house is unlocking the ability to receive the over the air channels, they profit by selling their hardware. As a person that refuses to pay the cartel structured plans in place with current cable and satellite companies I need an antenna to go along with my Hulu and Netflix, but wait… for whatever reason we can’t get an antenna to work in my neighborhood, nobody can. Aereo was a decent solution for me, an antenna located in a place that could get a signal and then sent over the web to my non-signal receiving house.

            1. Dave the antenna is a one time cost for hardware not an ongoing fee for service.

              Have Aereo send you the antenna they used for your account and put it on your roof.

    2. Jeff John Roberts Diar Thursday, June 26, 2014

      Thanks for the comment, Diar. I too would be willing to pay a little more if Aereo had to cover licensing fees. Unfortunately, I don’t think the TV industry will be willing to give them a license on reasonable terms — it would interfere with the bundle strategy, and their own efforts to parcel out mobile TV in a highly restrictive fashion.

  2. Hear hear! Great article.

    If Aereo had won, I would have been a customer as soon as they brought it to my city. Now I’ll have to keep torrenting.

    I want to pay someone a REASONABLE price to watch TV. With this loss it looks like it will never happen.

  3. You don’t have even a BASIC understanding of this case.

    This ruling had nothing to do with “cartel cable pricing”… ABC sued Aereo… ABC is a free to air network; every minute of their programming is ALREADY available to you for FREE.

    You’re furious because because you lost the ability to pay for something you get for free?

    You don’t understand the difference between free broadcast TV and pay cable, let alone copyright law. The Supreme Court rightly ruled that Aereo doesn’t have the right to STEAL.

    Why couldn’t Aereo pay for the right to re-transmit the broadcast signal?

    Put up a leaf antenna and buy a slingbox!

    1. The fact that Slingbox is legal actually makes Jeff’s point pretty well, I think. Why is it legal (by the court’s reasoning under the 1976 law) to put up an antenna on my house and then pay Slingbox to let me watch stuff anywhere, but not to cut out the middleman by just paying Aereo to handle the antenna business? As you said, it’s all free content anyhow.

      SCOTUS dodged the DVR question, but that seems like exactly the thing that differentiates the two (unless Slingbox allows that, too). And, as Scalia noted, the trial court could have ruled against Aereo on secondary infringement grounds — and he seems to think it should have (“I share the Court’s evident feeling that what Aereo is doing (or enabling to be done) to the Networks’ copyrighted programming ought not to be allowed.”)

      Not sure how that squares with SCOTUS’s decision to deny cert in Cablevision, but that’s a question for another day …

      1. Actually, it’s pretty consistent with the court’s jurisprudence in this area. The court has pretty consistently held that individual consumers have a right to use technology to create new use cases for copyrighted content (Betamax), but businesses do not have the right to sell you the means to do that as a service (Napster). Thus, Slingbox: legal; Aereo: not legal.

        1. Thanks for the comment, Paul, but I’m not sure the analogy is accurate. As people have pointed out, Betamax and Napster were about the “reproductive right” under copyright law — which permits private copies as a permissible fair use. The broadcasters knew this, which is they invoked the half-baked (IMO) “public performance” theory.

          And, as Derrick notes above, they let Cablevision (which concerned remote DVR’s) stand as good law.

  4. Seth Rosenblum Thursday, June 26, 2014

    This was the most infuriating passage in the whole opinion:

    “In sum, having considered the details of Aereo’s practices, we find them highly similar to those of the CATV systems in Fortnightly and Teleprompter. And those are activities that the 1976 amendments sought to bring within the scope of the Copyright Act. Insofar as there are differences, those differences concern not the nature of the service that Aereo provides so much as the technological manner in which it provides the service. We conclude that those differences are not adequate to place Aereo’s activities outside the scope of the Act.”

    So, it seems like cable TV to us, so prove to us that it isn’t without using the bounds imposed by reality.

  5. I put an antenna on my roof and I run a wire to my TV and that is okay.

    Rent a personal antenna from Aereo and make the Internet the wire and it is not okay.

    Then compare it to cable which receives the transmission and redistributes on shared resources…

    The cluebat was definitely needed at the SCOTUS.

  6. I think the court has it right. The law was designed by our elected reps to protect the OTAs. Aero was trying to find a loophole to circumvent the law. The “rent an antenna” scheme is a gimmick. The signal does not flow from the antenna directly into your ipad. It’s got to be digitized and stored on a server so it can be streamed, which makes them a rebroadcaster – not very different from a cable co. The difference is only in the size of the audience. In aeros case it’s an audience of 1.
    Whether or not our elected reps were right in making the law is a different issue. But the supreme court was right in defending the intent of the law and not letting anyone circumvent the law with technology.
    If you are upset that you can watch TV on your mobile device because of this law (which you can, just not as conveniently as aero made it) take ut up with the TV cos and your elected reps.

    1. All well and good, but it’s not the Supreme Court’s role to close loopholes in the law. If Aereo found a loophole and exploited it, then it’s perfectly legal. It’s Congress’ role to decide if they want to close the loophole.

      1. Exactly, what Aereo did was legal, had the Court follow the law, they should had ruled legal and pass to Congress the need to legislate about Aereo setup. But again, this is another case when the Court chooses to legislate instead of apply the law, they had done this again and again.

        The Judges know they are messing it with this resolution, and try to take their foot out of their mouth, by saying this should not affect other kind of services, but the true with this they are conflicting with the VHS ruling 30 years ago.

      2. Agree with you except in the time frame, they sent us back to 1984, before their ruling about the legality of the VHS.

        This ruling contradicts what they ruled 30 years ago, when deemed legal to record copyrighted content and watch it later in a limited fashion. This was what you did thru Aereo, except they could not or did not want to understand the similarities.

  7. “buy a slew of channels they don’t want in order to watch the handful of ones they do”

    If this is a lynch pin of your argument then you need to revisit.

    Lots of conflating issues here but on the whole…..

    First cable distribution is based on households not individuals. The average household watches 17 channels and the average cable bill is $100. A $5.99 per month per channel subscription cost is not outrageous by any measure (17 channels * $5.99 is $102). By and large with cable you pay for what you watch and you get TONS for free.

    Is it perfect, no? Is disruption needed? yep but this specious point about paying for channels you don’t watch needs to die.

    Even further, go construct your viewing ala-carte

    Hulu+ $7
    Amazon Prime $8
    Netflix $9

    Already at $24 per month….

    Say 8 ppv per month @ $2.99 is another $24

    You are now at $48

    add a monthly ESPN and HBO subscription @ $12.99 is another $25

    You are $75 with much much less available content and still have to add equipment and connectivity.

    I think a good semi- ala-carte or direct OTT option will arise but lets dispel the pay for stuff you don’t watch myth and get more real in an apples to apples comparison of costs.

    1. Matt G. Leger mike Friday, June 27, 2014

      >>First cable distribution is based on households not individuals. The average household watches 17 channels and the average cable bill is $100. A $5.99 per month per channel subscription cost is not outrageous by any measure (17 channels * $5.99 is $102). By and large with cable you pay for what you watch and you get TONS for free.<<

      You are SO full of it! Show me a cable provider – just one – that sells you bundles of only 17 channels. Most providers offer a minimum of 30 or so and there are plenty in that bunch I don't watch. Why am I paying for ESPN, Food Network and DIY Channel when I only watch the local broadcast affiliates, TNT, History, Sci Fi and USA?

      The argument you call "specious" is nothing of the sort; if the networks and cable companies would let us buy a-la-carte, cable bills would drop like a battleship anchor and people would be complaining a lot less…and there would be no need for a service like Aereo, nor a Supreme Court case around it.

      1. Thanks for the comment, Matt G. Needless to say, I agree — I would happily pay more than $8, provided I could get a bundle of my choosing (or at least one that didn’t contain so much irrelevant crap).

      2. False….

        Show me a channel that would be less than a few bucks a month…..netflix is A channel and its running $9 a month. Add 16 more, IF ala carte was offered, at $4.99 per month and you are $89 with MUCH less available to you.

        The savings thing is a fallacy. You get control, that is all.

        Go check your music spending with death by a 1000 cuts itunes and the like…..people arent getting massive savings there.

    2. Dave Armstrong mike Friday, June 27, 2014

      I think you have some of this wrong, no? HBO can only be legally subscribed if you have a cable subscription. I pay for Hulu+, I pay for Netflix, I can’t do PPV or HBO without having a subscription to let’s say Directv, lowest price is about $25 per month (for the first year), then add $12.99 to get HBO.

      My current bill:
      Netflix – $9
      Hulu+ – $7
      MLB.tv – $129(ish)
      Disc purchases – $50(ish) (Game of Thrones and True Detective)
      AppleTV – $99 (per year, I currently have 3)

      Total – $470 for the year
      Your estimate is about $1200 a year for an average cable bill, I pay much less than that. Any other costs I incur would happen even if I had a cable subscription, I would still pay for internet, I would still buy blu-ray copies of movies we want, etc. Truth be told, even if I had HBO and watched Game of Thrones live I would still buy the blu-ray/digital copy once it released.

      Now my biggest issue, I don’t want all the extra free channels. I don’t want MTV, E, CNN, Disney, etc. etc. etc. I want to have ESPN, HBO, History, the Local Channels, Food Network. Just like when you go to the movies and say you want a small popcorn, they say “for a quarter more you can get the super-sized bucket”, I don’t want the big bucket, I am going to eat it all and make myself sick, just give me the appropriate amount for me.

      Also I don’t want my money being used to support channels I don’t like. Why should one cent of my money be used to keep the Kardashians on the air, or whatever crap is on MTV this season? I understand that means some of my favorite shows/channels could be canceled, but that is how the market works. I want to decide where my money goes and what it supports.

      1. Well stated, Dave Armstrong. It would nice for TV consumers to directly support the channels they wished to watch, rather than being forced to subsidize dozens they don’t.

        As for your economics, that’s not far from my own. Aereo + MLB + maybe 12 $1.99 rentals from Amazon or iTunes = about $300 a year for me.

        Why final cost you may have not considered for cable is that Comcast et al are now charging you for the privilege of “renting” their set-top boxes..

  8. According to this blog I should legally be able to record and resell movies. Either way I am creating nothing, I have no agreements in place with anyone allowing this and I profit from it while they remain out of my cash loop.

    Pretty sure this was settled decades ago when cable tv was told that they had to pay for the same programming despite the fact that it was ad supported and free over the air.

    But but this is about technology disruption and and its good because I can stream it & pay rather than buy an antenna and watch cost free!

    Had Aereo won the case the networks would have removed the bulk of their profitable on the air programming and placed it in on cable networks they own. No more football, no more basketball, no more baseball on tv anymore. Prime time shows would be replaced by reruns of Andy Griffith and Aereo would have quietly gone under.

    All these disruption companies are attacking loopholes so they can profit. This one just got slapped into reality.

  9. American Born Thursday, June 26, 2014

    Enhance your intelligence by becoming familiar with Federal Copyright law. It actually pertains to more than just Television Broadcasters. Federal Copyright law is broken every day and since that’s OK, you and quite a few others feel entitled to break more federal laws. No wonder our government selects which laws they choose to enforce or abide to, the people do the same.

  10. Michael Johnson Thursday, June 26, 2014

    I think a more relatable analogy here would be if I created a news app for mobile devices where I copied articles like this and pasted to my own server. I could do this across several different popular websites so you wouldn’t need to comb the web. Then I could charge a subscription fee for this more convenient way of browsing news. No links, no ads, no popups. Sure your article is copy written, but you put it out there for free, so can I use it to make a profit?

    1. Thanks for your comment, Michael Johnson, but I believe you’re off the mark. Copying articles and distributing them to the public would violate the publishers’ exclusive reproduction right. The Aereo case was about the public performance right. Different issue.

    1. Yes, they are in contradiction with their 1984 ruling about the VHS, that deemed legal to record a show and watch it later in a limited fashion.

  11. @Jeff, It’s funny to read this blog post and see a difference in how you view rulings from the Supreme Court when compared to your previously stated views on patents. (For reference, just see our dialog in oyher blg comments.) If the Supreme Court made a wrong, terrible, stupid and misguided ruling here, who’s to say that they also have made other stupid rulings, or will make in the future? Quite ironic that you take a different view when you have some skin in the game. (You subscribed to Aereo.) Maybe you should try to obtain a legitimate patent and build and protect a business off of it, and let’s see if your views on patent protection rights finally shift toward supporting inventors.

    1. Jeff John Roberts mike Friday, June 27, 2014

      Hi Mike, thanks as always for your comment, but I’m not sure this a fair criticism. It’s true I think the Supreme Court botched this badly, while I have also praised the court’s patent rulings. But does anyone ever agree with every one of the Supreme Court’s rulings?

      As for your patent argument, as I’ve said in the past, I don’t believe we should abolish patents. I’ve just pointed out the economic and technological harm that can occur when the USPTO grants flimsy patents, and shell companies use them as a method of extortion.

      1. Thus, your prior use of Supreme Court rulings over-turning lower court decisions as evidence to support your argument that the patent system is bad has no merit then. Especially if the Court can botch decisions. Even if a SCOTUS decision is unanimous, it can still be victim of the democratic fallacy. In fact, the democratic fallacy — the principle that a majority opinion does not equal the right opinion — is the only way people here who say SCOTUS got the Aereo decision wrong can stand on their belief. (This includes you and me. I think SCOTUS got this wrong also.)

        But regarding my patent “argument”, as you put it, it really was a simple question. One that you have yet to answer and was at the very core of all of your patent reform articles regarding the Innovation Act. My question:

        “Would the Innovation Act have hurt small inventors and empowered large corporations in the small inventors pursuit against infringement from the large corporations?”

        Reference is here: http://gigaom.com/2014/05/21/patent-reform-dies-in-senate-as-leahy-pulls-plug-on-key-bill/

        You NEVER addressed this core underlying question in ANY of your patent reform articles, and this question is the most important question to address, as it serves as the very basis and reason the patent system exists.

        If the answer is “yes”, it would have hurt inventors, then this legislation was not patent reform. And we must be very careful not to just push laws through without proper analysis of the potential effects.

  12. Jeff John Roberts, as long as you continue your narrow focus on the law you’ll never see what was physically going on with Aereo. What was happening physically was that Aereo was capturing copyrighted signals and selling them to the public. That is what cable companies do. They’re allowed to continue it because they pay the broadcasters a *lot* of money not to drag them into court. Aereo refused to pay the broadcasters anything so they got dragged into court. It’s as simple as that.

    If you think the Supreme Court made the wrong decision, just be a little patient. The advance of technology will open content up to the public a lot more than it is now. No one – not even the broadcasters – can stop the advance of technology, and I doubt that technology will need 10 years to do its work. Aereo is gone but they were dumb. There will be others who are clever.

  13. First: The constant arrival of new delivery platforms and entertainment technologies may not be the death-knell of broadcast television, but it is certainly a symptom that foretells its metamorphosis into something completely different. Broadcast TV is faced with the same challenges today with which the movie industry was faced at the dawn of broadcast television. Adapt or die.

    Second: The recording industry thrives because of a model similar to the one Aereo offers. For music, BMI and ASCAP collect fees from radio stations, jukebox vendors, and performance venues to provide royalties to the recording companies and artists for performance of licensed music. A forward-thinking SCOTUS would have considered this, and a forward-thinking television industry would be would be working to meet the opportunities of the future (hinted at by startups like Aereo) instead of fighting to maintain the status quo.

    Broadcasters are licensed to operate in the public interest. The popularity of “alternative” delivery modes for programming makes it obvious that the public is interested in receiving their programming when and where they want it. Roku, Tivo, the DVR we rent from our cable companies, umpteen Internet outlets, and Aereo serve the public interest. The SCOTUS and television broadcasters? Maybe not so much.

  14. Ah, Contraire

    It is Aereo that set TV innovation back a decade by touting as new something that was quite old, and ignoring the rights of those creating and distributing programming. This is what happens when engineers with no ability in other domains set out to interpret court rulings.

    Can’t wait until the fallacy behind the dime-sized antennas prove to be false.

  15. João Guilherme Sousa Sunday, June 29, 2014

    Innovative in what? They didn’t provide a better service then cable, it was just cheaper (partly because they didn’t pay for copyrighted content).

  16. Nicolas Moulin-Fournier Monday, June 30, 2014

    Please don’t be too dramatic. It is ridiculous to say that TV innovation has been set 10 years in the past.
    Seen from the other side of the Atlantic, Aereo innovation concept of antenna farm was just a technical aberration (thousands tiny antennas to replace a single video feed , wtf !!!) to cope with re-transmission costs aberration (Free on the aerial, high cost for TV operators). It was barely a trick, not innovation.
    If you want to benefit TV on your tablet look at Tablo TV or Simple TV that do the same thing while not polluting the internet backbones and your internet access with linear TV…
    And if you want TV innovation, talk about catch-up, start over, second screen syncro … not an antenna far and cloud DVR…

  17. “Aereo, you see, was different. It gave urban dwellers like me a cheap way to see over-the-air shows” awwwwwww, too bad. you should have mailed in a friend of the court brief. Or whatever.

    Ends don’t always justify the means…