Aereo CEO and Founder Chet Kanojia. Aereo
It’s a sad day for Aereo.
The two-year old startup, which allows people to stream broadcast television on their computers and mobile devices, has been fighting major broadcasters in court almost since its inception, and on Wednesday, that fight came to an end when the Supreme Court found in a 6-3 ruling that Aereo was, in fact, violating the Copyright Act.
It’s a decision that Aereo’s CEO and founder has long said would mean the end for Aereo. “I think we’re done,” he told WIRED back in April when we asked him what would become of Aereo if it lost in the Supreme Court. When asked if he was working on a contingency plan, Kanojia answered definitively: “No.” But the decision also secures the place of the country’s cable TV giants, preventing other upstarts from moving even more of our television viewing off closed cable systems and onto the more open internet.
Many who have been following Aereo’s case could have predicted this outcome. Aereo’s business has always been based on a workaround in copyright law. For $8 a month, users could rent their own micro-antenna to stream over-the-air TV stations. The antennae are stored remotely in warehouses in each city where Aereo operates. When a user opened Aereo, it would awaken a single antenna, which would stream a signal to that user, and that user alone. In doing so, Aereo claimed these antennae were effectively the same as rooftop antennae, except that they’re stored remotely. Aereo argued that this one-antenna-per-person model constituted a “private performance” of broadcasters’ content. As a result, Aereo did not feel it should have to pay the retransmission fees that cable companies pay for “public performances” under the Copyright Act of 1976.
Broadcasters never bought that argument, and as it turned out, neither did the Supreme Court. “Behind-the-scenes technological differences do not distinguish Aereo’s system from cable systems, which do publicly perform,” Justice Stephen Breyer said in his opinion. “Congress would as much have intended to protect a copyright holder from the unlicensed activities of Aereo as from those of cable companies.”
Analysts say this decision was expected. “I think that in essence the Supreme Court is a conservative body. They are, in general, reluctant to issue decisions that will be extremely distruptive to the status quo of business,” Andrew Frank, a Gartner media and marketing analyst, told us back in April. “They’re smart enough to realize this decision would be of that nature.”
Throughout their courtroom battles with Aereo, which included several wins for the young upstart, broadcast executives, including CBS CEO Les Moonves, threatened to pull their over-the-air content and launch their own Aereo competitors. That, Frank says, is precisely the kind of thing the Court would have wanted to avoid.
But while a loss in the Supreme Court effectively prevents Aereo from having much of a future, a win would not necessarily have secured Aereo’s future either. As Moonves so boldly pointed out with his grandiose statement, an Aereo win would have made it safe for other, more formidable competitors to enter the space. Imagine Netflix, already well-stocked with a catalog of content, added live broadcast television to its offerings. Even if Aereo won in court, it might have had a tough time surviving on its limited offering, anyway.
Now, of course, that’s no longer an option for Aereo or any of the other major players who have been watching this case closely. In a statement on Aereo’s blog, Kanojia said the decision “sends a chilling message to the technology industry,” and asked the question, “Are we moving towards a permission-based system for technology innovation?”
He did not, however, say as he has before, that Aereo might be shutting down for good. “We are disappointed in the outcome, but our work is not done,” Kanojia wrote. “We will continue to fight for our consumers and fight to create innovative technologies that have a meaningful and positive impact on our world.”
How he plans to do that, exactly, is still unclear. If Aereo wants to stay alive now, its only option may be to become what is called a “multi-channel video programming distributor,” like other cable channels, and begin paying retransmission fees for all of its content. But that will prove to be nearly impossible to afford on $8 a month subscription fees, alone.
Or, it could be that this David and Goliath tale is finally complete, and this time, the giants won.
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