Post Written By: Rikki Bahar
Hulu, Roku, Amazon TV, Netflix – we all thought that this was the new way to watch television. But Aereo took free TV to a whole new level. And now SCOTUS is finally putting its foot down.
Aereo provided customers with the ability to stream broadcast television programs, only a few seconds behind the live program, by connecting to small antennas housed in a centralized warehouse. SCOTUS found that this equated to “performing” copyrighted works and performing them in “public” within the meaning of the Copyright Act.[1. Am. Broad. Companies, Inc. v. Aereo, Inc., 13-461, 2014 WL 2864485 (U.S. June 25, 2014) (“In 1976, Congress amended the Copyright Act to clarify that to “perform” an audiovisual work means “to show its images in any sequence or to make the sounds accompanying it audible.” § 101. Thus, both the broadcaster and the viewer “perform,” because they both show a television program’s images and make audible the program’s sounds. Congress also enacted the Transmit Clause, which specifies that an entity performs when it “transmits … a performance … to the public.” Ibid. The Clause makes clear that an entity that acts like a CATV system itself performs, even when it simply enhances viewers’ ability to receive broadcast television signals. Congress further created a complex licensing scheme that sets out the conditions, including the payment of compulsory fees, under which cable systems may retransmit broadcasts to the public. § 111. Congress made all three of these changes to bring cable system activities within the Copyright Act’s scope…Aereo also performs petitioners’ works “publicly.” Under the Clause, an entity performs a work publicly when it “transmits … a performance … of the work … to the public.” § 101. What performance, if any, does Aereo transmit? Petitioners say Aereo transmits a prior performance of their works, whereas Aereo says the performance it transmits is the new performance created by its act of transmitting. This Court assumes arguendo that Aereo is correct and thus assumes, for present purposes, that to transmit a performance of an audiovisual work means to communicate contemporaneously visible images and contemporaneously audible sounds of the work. Under the Court’s assumed definition, Aereo transmits a performance whenever its subscribers watch a program]
Petitioner American Broadcasting Companies, Inc. (ABC), and television producers, marketers, distributors, and other broadcasters alike, who own the copyright to these programs, are angry. While they license their programs to cable networks to air live, Aereo comes along and circumvents the system giving viewers the option to opt out of their cable packages all together and still enjoy their regularly broadcast programs. For the mere price of $8 to $12 a month and few-second delay.
Others are grateful for the decision and the opportunity to capitalize on Aereo’s former subscribers. Only a few days after the decision, Simple.TV tweeted, “Former Aereo customer? Join the Simple.TV Family.” Simple.TV sells hardware that allows viewers to stream television to digital devices or watch web video on television sets. They provide users with their own antenna and box to record programs on a hard drive, which they can then connect to the device. So, what’s the difference? Aereo owned the antennas and captured the signal for users in a remote location. “Where you capture the signal makes all the difference,” said Simple.TV’s owner, Mark Ely. His company, on the other hand, “fits squarely in fair use.”[2. Emilly Steel, After Supreme Court Ruling, Aereo’s Rivals in TV Streaming Seize Opening, N.Y. Times (June 29, 2014), http://www.nytimes.com/2014/06/30/business/media/after-supreme-court-ruling-aereos-rivals-in-tv-streaming-seize-opening.html?_r=0]
Consumers seem to side with Mr. Ely and creators of companies like Aereo. Cable subscriptions are down by seven percent in the U.S., while use of streaming services has increased by about thirty percent.[3. Id] But what does this downfall really mean for the advancement of technology? Well, if there is no more cable, then no more ABC. Eventually, this could stop the number of televisions shows being produced and Aereo-type companies would have to create their own shows (a la Netflix). Some think the decision will halt new technology, but sometimes you have to play the game to create fair competition and keep the incentive to continue producing shows.
The better way to keep innovation alive, while incentivizing broadcasters and producers to create new content is best summed up by Leslie Moonves, the chief executive of CBS. “We are not against people moving forward and offering our content online and all sorts of places, as long as it is appropriately licensed. Innovation is still alive and well and thriving.”[4. Id] So to all those innovators out there: when in doubt…get a license.
Aereo has some serious implications for the broadcasting industry. The fear is that this decision has limited consumer autonomy in an “over-bundled” cable world. While I believe companies like Aereo should proceed under licenses, they are providing broadcasts to the public at a cheaper, more available, rate (doesn’t that further 1st amendment principles?). Networks must adapt to the consumer demand of cloud-based broadcasts (and perhaps provide more user-choice in deciding which channels to subscribe to). Cloud-based broadcasting a booming industry which many new players will enter into soon. The question is how long can they circumvent the Aereo definition of “public” & “fair use.”
I agree that obtaining a license to stream a companies online is the best way to avoid these issues. But also, the “Aereo-type companies” must create their own content because they have an effective way of gauging consumers interest based on the content preferences data that they collect from their users activity. This would give the “Aereo-type companies” leverage to negotiate better deals with the television producers, and in turn keep them competitive within their niche industry.