What is Aereo? Why Should I Care?

Do you like to watch TV? Do you like paying high fees for your TV? Do you wish there was a better and cheaper way to access your favorite shows? If you answered YES to any of the above questions, keep reading because the Aereo decision is for you! (I perhaps should lay off writing while watching late-night infomercials.)

Contrary to what the name sounds like, Aereo is not the latest air freshener distributed by Febreze, but rather the name of the company in a copyright battle that has made its way to the Supreme Court of the United States. Last week, the Supreme Court of the United States agreed to hear the case. The implications from the decision will impact television, regardless of the outcome. Here is everything you need to know, in a very simplified form, about Aereo and why you should care.

towerAereo is a company started only two years ago in February 2012. They are now in 10 larger markets across the United States, including places like Boston and New York, but have yet to branch into smaller areas of the country. Aereo’s main product is tiny antennas that Aereo customers use to receive free over-the-air TV signals. Those tiny antennas then send the programs, via the internet, to the customer’s laptop, computer, tablet or if they have one, Smart TV. The programs are stored and can be viewed at a later date, similar to a DVR and VCR set-up. In fact, if you go to Aereo’s website it states, “Record and stream live TV online with Aereo cloud DVR. Coming to more cities.”

If you are thinking the viewing at a later date sounds a lot like recording a program via DVR and then playing it back later, you are not alone. Further, you have hit upon Aereo’s main argument as to why the activity they are doing is not copyright infringement. However, unlike DVR or recording on a VCR, the broadcast industry contends that Aereo is committing copyright infringement because it has not paid the retransmission fees to the stations (ABC, NBC, CBS, PBS and FOX) for the channels it provides to the customers who have subscribed to Aereo and use one of the antennas.

A review of Aereo’s website shows that they view their product as similar to the rabbit ears that use to be on all televisions prior to cable and satellite. Albeit the antennas Aereo provides are smaller, think coin size, and are Superman equivalent compared to the rabbit ears of yesteryear. The programming is streamed to computer based devices or Smart TVs, and customers of Aereo can also access programming via any mobile device. They tout on their website that there is “no more rushing home to view kickoff.” An Aereo customer can simply access the programming via their smartphone.

The arguments presented by both parties rely on the distinction in the copyright act of “public” versus “private” performances of copyrighted material. According to the copyright statute, only the copyright holder can publicly perform a copyrighted work. For more information on the exclusive rights held by copyright holders, be sure to review a previous post titled Magic Wands of Copyright.

Broadcasters contend they are the only ones who have the required permission to the content. Therefore, for Aereo to intercept and offer the content on these channels, is viewed by the broadcast industry as copyright infringement. Broadcasters believe that Aereo, like cable and satellite companies, should have to pay in order to deliver the channel.

In the alternative, Aereo contends that what they are doing is private. They give customers individual antennas and those customers can then choose how to use the antennas in their homes. To them, it is no different than having a pair of rabbit ears and not subscribing to cable television. They are simply using new technology to provide free over-the-air television, which people can still receive without Aereo and simply by purchasing rabbit ears.

MoneyTo understand why the free over-the-air broadcasters are upset, let’s look at how the money flows. You and I pay for cable or a satellite service in order to watch television programming without rabbit ears. Who wants to adjust those regularly every time you change channels? Depending upon how much you pay depends on which channels you can view. Meaning, with the basic package you cannot view HBO or Showtime, but if you are interested in those channels you pay a bit more each month to view them. The cable or the satellite service then turns around and pays all the channels money from each customer. That money is called retransmission fees. The retransmission fees are then paid to large groups like the NFL in order to obtain a copyright license in order to show the football games to you the viewer/customer of cable or satellite company.

So, what could a favorable decision for Aereo mean to you the average viewer? If Aereo is successful, it could mean the dissolution of free television especially in the realm of sports. Major League Baseball and the National Football League filed briefs in support of the Broadcasters. From my example above, you can understand why the NFL is supportive of broadcasters. They want the broadcasters to have those retransmission fees so that the broadcasters can then have the ability to pay the licensing fees set by the NFL.

A favorable Aereo decision could see the fleeing of programming that is best viewed in live/real-time to cable channels, which would be able to charge a fee to customers and could then pass that fee onto the NFL in the form of licensing fees. Said another way, a positive Aereo decision would give the average person access to a less expensive form of television; however, the more popular programming would shift to cable channels that are not free over-the-air.

Regardless of the outcome, I contend the landscape of television will begin changing even more. We already see a significant changing trend with companies like Netflix offering original programming and services like AppleTV and Hulu where cable or satellite is no longer necessary. With a copyright statute dating back to 1976 and one that more than needs a makeover, the decision on this case will speak to how new technology in the future will affect television and speak to how consumers will get access to programming. Will programming be purchased per channel as now or per program? What role will a following of a television show play when it has no network that it is tied to? It’s an interesting time to see how broadcasters and consumers adapt to a new landscape. How do you think the Court should rule? Take part in the conversation below and Stay Tuned In!

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