UPDATE: The Supreme Court has ruled 6-3 that the signals from other networks captured by Aereo, Inc. are protected under by the transmit clause of the Copyright Act of 1976, and thus constitutes a performance of the petitioner’s works publicly. Here’s Poynter’s story on the decision.
The legal case is called American Broadcasting Companies Inc. V. Aereo, Inc. The stakes are hard to overstate.
Broadcasters say the very future of commercial broadcasting hangs in the balance of a Supreme Court ruling that could come Wednesday, Thursday or next Monday. The Big Four networks all want to stop Aereo from being able to capture their free over-the-air signals and then make the signals available to people who want to watch on mobile devices. Aereo offers to store up to 60 hours of content for $8-$12 a month. You choose what you want stored, you can watch it anytime, similar to a DVR.
Why wouldn’t the networks want Aereo to help more people to watch their programs on phones, tablets and computers?
Because Aereo would snag the signals from the air, store the data or send it along and charge for doing so, while Aereo pays broadcasters nothing for the signals it is capturing and sending along. Cable companies used to do nearly exactly the same thing, but now pay three billion dollars in licensing fees to stations, networks and other license holders, like the National Football League. If the Supreme Court says Aereo can do what it wants, there would be nothing to stop cable companies from doing the same thing.
Aereo says it is not selling content, it is leasing technology. In effect, it says, users lease a tiny antenna and pull in the signal. Aereo says it simply is providing technology, not programming.
The Supreme Court decision is likely to focus on how the 1976 Copyright Act (PDF) speaks to this issue. That Act protects a copyright holder from somebody “performing” a protected work. What is “performing?” This is what the Acts says:
[t]o perform … ‘publicly’ includes, among other things, ‘to transmit or otherwise communicate a performance or display of the work … to the public, by means of any device or process, whether the members of the public capable of receiving the performance or display receive it in the same place or in separate places and at the same time or at different times.”
Aereo says it is not performing. Aereo wants the Justices to believe that it is merely a company that owns millions of tiny antennas that customers control, unlike cable companies who take in signals and pass them along through their infrastructures. Aereo does not provide programming like cable companies.
Lower Courts have agreed. Aereo adds that broadcasters are using the public airwaves for free and that is their compensation.
A Cloud over “The Cloud”
When the Court heard the case a ticklish question arose over whether “the cloud” would be affected by a negative decision against Aereo. For example, if the Court ruled that Aereo could not pass along digital signals, how would that affect services like Dropbox that become cloud lockers for data that could be and often is copyrighted? Would anybody that makes money storing or passing along copyrighted material have to pay a fee? The difference, said the lawyers who were fighting Aereo, is that the files that storage clouds are holding were acquired legally, downloaded through iTunes, for example.
Look for whatever the Court rules to speak directly to this question. Much has been written about how a ruling will affect broadcasters, but this “cloud” question may have implications that are just as important.
What Happens if Aereo Wins?
As I reported in April, networks have said if they lose the case, they might just take their programs and turn them into pay services. The implications of that would be devastating for local TV stations whose value is woven deeply into their network affiliation. While this seems highly unlikely, it is not impossible, given the amount of money that could be in play here. A pro-Aereo decision would send broadcast media stocks plummeting.
Cable companies could lose big too. Recent polling shows half of Americans would dump their cable service if they could. Aereo might enable that.
If they lose the decision, networks and affiliates could run to Congress to side with them and just change the copyright laws.
What if Aereo Loses?
The company says for all practical purposes it would be out of business.