NEW YORK—Talk about disruptive. A new service backed by Barry Diller that streams broadcast TV over the internet threatens the core business model not only of broadcast television providers, but cable networks, too. Thus far, the courts are split on whether the service, called Aereo, is legal or whether it is in violation of copyright law, as the broadcasters naturally contend, but it’s also likely that the technology isn’t going anywhere, not least because consumers of media, especially the young ones, are increasingly cutting the cable for good, with no regrets and nary a goodbye, in favor of choice-driven products like Aereo, which currently charges New Yorkers $8 a month for 31 local channels and 20 hours of free DVR-like recording.
The potential for mass disruption appears real. According to Bloomberg News’ Rich Jaroslovsky in an interview with NPR, "With Aereo, you can get all the panoply of local stations. And then you could theoretically add apps to your smartphone or tablet so that you could then only subscribe to the channels that you actually want, as opposed to paying for a big package with many channels that you never view."
The adult industry can relate, of course. As awesome as the internet has been for porn in terms of opening up new markets and democratizing the very making of its products, it’s also been profoundly disruptive to the traditional distribution food chain, to say the least. The abuse of some of these newfangled technologies has also caused real and significant damage, to real businesses and real people, and the law has proven once again that it takes a long time, if ever, to catch up to reality on the ground. Sometime that’s a good thing, but it can also be fatal to some.
With Aereo, the broadcasters have been trying to get out ahead and kill the baby in its crib with the help of the courts, with mixed results. In New York, the only part of the country that Aereo currently services, the broadcasters have thus far not prevailed.
In a case originally filed earlier this year, the Wall Street Journal reported, “The federal courts [have] affirmed Aereo's legality, at least so far, based on a 2008 precedent set in a case between Cablevision Systems Corp. and broadcasters over copyright claims involving a cloud-based digital video recording technology.”
It’s a question of individual distribution and control. As Ars Technica has explained, “Cablevision argued that it wasn't vulnerable to copyright infringement claims because the user, not Cablevision, was ultimately in control of which programs were recorded and played back using the system. The court agreed, and its reasoning depended on the fact that Cablevision stored a separate physical copy of a program for each user who requested it, rather than storing a single copy and streaming that copy to every user.
“The thousands of tiny antennas in Aereo's server room, “the article continued, “is intended as an analogy to the thousands of redundant copies of TV programs created by Cablevision's remote DVR system.”
Thus far courts in the East have been agreeing with that sentiment. Out West, however, where another similar case has been brought, the outcome has been decidedly different. That case involved a product called… Aereokiller, which the WSJ described as “a copycat service launched in Aereo's wake last year by an entrepreneur named Alkiviades David, using a Web address of Barrydriller.com. Aereokiller streams broadcast networks over the Web, and has said it uses technology similar to Aereo's.”
Seemingly created to invite litigation, it succeeded beyond its wildest dreams. Not only broadcasters but Barry Diller immediately sued the startup, which folded right away in the latter suit, agreeing to cease using the Barrydriller.com domain.
But it didn’t fare well with the broadcasters, either. With no Cablevision precedent binding it, the California and circuit courts have come down hard. “A federal judge in the Ninth Circuit in California in December ordered Aereokiller to shut down its service,” reported the WSJ, “in part because the judge decided broadcasters were likely to win on their claims of copyright infringement based on Ninth Circuit precedent.
“The judge ruled, however, that his decision was applicable only throughout the Ninth Circuit, which covers much of the West Coast, because it conflicted with the earlier New York decision which covers the Second Circuit.”
Aereokiller has appealed, and lawyers agree that the differing Circuit results could wind up before the Supremes. In the meantime, Aereo, which has previously stated that it has no intention of expanding outside New York, is planning to do just that even in the face of legal uncertainties. One reported stop for 2013 is Austin, Texas.
Broadcasters are of course keeping a keen eye on the action, and making serious threats along the way. The Fox Network threatened this week to move its entire programming to cable if the courts fail to demolish the streaming model. Not every East Coast judge is pro-Aereo, however.
As the WSJ notes, “Judge Denny Chin, who took the broadcasters' side in the Second Circuit appeals court's recent split decision, wrote in his dissenting opinion that the fact that Aereo doesn't have a license from the content owners and can, for example, stream ‘the Super Bowl "live" to 50,000 subscribers’ means that ‘what Aereo is doing is not in any sense "private".'"
Even if the networks ultimately lose in court and Aereo-like services are allowed to exist and proliferate, it’s not as if the broadcasters can’t try to compete in that arena, too. In fact, they already are, with dongles.
The lessons would appear to be obvious by now that regardless of the industry, sitting around and waiting for help in the face of escalating and feverishly disruptive new technologies is not the answer.
Image: Aereo promotional image, courtesy of Aereo.com.
