After the Aereo decision: The future of Internet TV
Aereo may have gone down to defeat to ABC in its Supreme Court case, but the company remains defiant. Whether Aereo can come from legal death seems unlikely, but the greater issues the case brought up are far from resolved.
In a letter to subscribers, Aereo CEO Chet Kanojia announced that "We have decided to pause our operations temporarily as we consult with the court and map out our next steps." In a classy move, Kanojia also said, "All of our users will be refunded their last paid month."
Aereo hasn't given up. Kanojia continued, "The spectrum that the broadcasters use to transmit over the air programming belongs to the American public and we believe you should have a right to access that live programming whether your antenna sits on the roof of your home, on top of your television or in the cloud." Therefore, despite this "massive setback to consumers…our journey is far from done," concluded Kanojia.
The CEO also encouraged Aereo supporters to support their efforts at the Protect My Antenna site. Pragmatically speaking, the only way Aereo seems likely to come back is by striking a deal with the major broadcasters. I very much doubt this will happen.
Supporters of the same-old, same old business models celebrated the media companies' victory. Keith Kupferschmid, general counsel and senior VP of intellectual property for Software and Information Industry Association (SIIA), the principal trade association for the software and digital content industries, said, "We are pleased that the Supreme Court decided this case in a balanced manner. The decision protects legitimate cloud computing businesses from risks of infringement, while also protecting copyright owners and incentivizing them to continue innovating."
Mark Schultz, co-founder of the Center for the Protection of Intellectual Property at George Mason University School of Law, also sees good news in the case's results. "This decision is a boon, not a threat, to innovation. Studios and TV networks are investing hundreds of millions of dollars into new business models and are licensing their creative works to dozens of new entrants."
I'd find that theory more believable if I saw the media companies investing in Internet broadcasting. I don't.
Instead, I see the media companies, which work arm-in-arm with cable companies, doing their best to slow down Netflix. The one online video network that does have big media company support, Hulu, has had a revolving door in its executive suite as its owners — including News Corp., Walt Disney, and NBC — seem unable to decide what they want to with the service. [Media companies challenging Aereo include CBS, the parent company of ZDNet and sister-site CNET.]
Aereo is far from being alone in its unhappiness over this decision. James McQuivey, Forrester VP and principal analyst, said, "What we’re seeing is not a victory for copyright so much as a victory for the broadcasting industry, specifically using copyright as an excuse, even if it is a good one, to preserve the existing broadcasting business so we don’t undermine decades worth of value." In other words, this is a decision that protects the old media broadcasting business.
As for the decision being "balanced," Mark Cooper, the director of research for the Consumer Federation of America, disagreed. "This decision is bad for video consumers, who have lost an important low cost option for viewing the programming they want whenever, wherever and on the device they prefer. However, its full impact may be to unleash a flood of law suits that challenge much content distribution through the Internet cloud."
That's because the decision is not balanced from where Cooper sits. "When a decision says we don't know how we would rule in other cases, it is an open invitation to litigation, Cooper said. "Its failure to recognize the passive nature of Aereo's service will invite all manner of mischief with copyright holders suing anyone who simply passes signals to consumers of any type of content. In short, a cloud of lawsuits now hangs over cloud computing."
Cooper is not the only one who sees danger to cloud-based video services from this decision.
University of Notre Dame Law professor Mark P. McKenna, who specializes in intellectual property, trademark, patent and copyright law, said, "The Supreme Court today found that Aereo is similar to cable companies and publicly performs copyrighted works when it re-transmits over-the-air signals to its customers. Despite the Court's assurances that this is a narrow decision, it made no meaningful distinction between Aereo and other cloud computing services. The decision could therefore have enormous effect well beyond its particular context."
The most immediate affect of this decision won't be new services from the media companies, or an agreement that brings Aereo back online, but an increase in video piracy.
Cloud vendors are worried too.
Albert Lai, CTO of Media at video cloud services provider Brightcove, stated that "The industry takeaway from this case is the desire by consumers to have this type of (paid) access to broadcast content to satisfy their demand for any time, any screen consumption – we all need to work on a legal approach that creates value, not friction."
He's right, but I see no reason for the media companies to see it that way after their victory.
Still, as Mark Buff, CEO of cord-cutting startup and over-the-air (OTA) antenna OEM Mohu, observed, "The reason Aereo existed and became so popular was because it filled a real and growing consumer need: the freedom to watch the TV they want at a price they can afford – something cable companies couldn’t deliver. Even without Aereo, consumers still feel this way, which will continue to drive the ‘cord-cutting’ movement forward."
Buff has a point. In a world where cord-cutting is slowly but surely building up steam, these media companies may have cause to regret this "victory." By enabling the preservation of the status quo, I see the media companies sticking to its current hodgepodge offerings of Internet-borne TV sites and services. This in turn, annoys users.
These are the same users who are sick of pricey cable and satellite packages and want a la carte network and TV show access. I think the most immediate affect of this decision won't be new services from the media companies, or an agreement that brings Aereo back online, but an increase in video piracy.
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