In a landmark decision, the Supreme Court issued a 6-3 ruling against Aereo, a video startup founded in 2012 that streams both live and delayed television broadcasts to paying subscribers.
In 2013, ABC and a coalition of other broadcast companies filed against Aereo with the Supreme Court (American Broadcasting Companies, Inc. v. Aereo), claiming that the Aereo’s business model violated copyright by disseminating content without permission.
Aereo subscribers pay a fee starting at $8 per month to both watch and record television, the latter employing Aereo’s “Cloud DVR” technology. Aereo’s argued that it functions more as an equipment provider than a content or cable provider, though the court ruled against that line of reasoning. Aereo’s CEO and Founder Chet Kanojia responded to the ruling on the company’s blog:
Today’s decision by the United States Supreme Court is a massive setback for the American consumer. We’ve said all along that we worked diligently to create a technology that complies with the law, but today’s decision clearly states that how the technology works does not matter.
This sends a chilling message to the technology industry. It is troubling that the Court states in its decision that, “to the extent commercial actors or other interested entities may be concerned with the relationship between the development and use of such technologies and the Copyright Act, they are of course free to seek action from Congress.” (Majority, page 17) That begs the question: Are we moving towards a permission-based system for technology innovation?
The ruling indeed seems to set a precedent for streaming technologies that charge users for content that they do not pay to license from the copyright holder. For many companies—including otherwise successful ones—paying out those fees to broadcast and recording conglomerates can prove crippling, even as they scale up.
While it’s understandable that any startup would want to avoid cutting that “deal” with TV executives by any means necessary, it’s not yet clear how the ruling will affect other companies that employ a similar business model. The ruling did note that its limited scope doesn’t intend to restrict future streaming innovations:
We agree that Congress, while intending the Transmit Clause to apply broadly to cable companies and their equivalents, did not intend to discourage or to control the emergence or use of different kinds of technologies. But we do not believe that our limited holding today will have that effect.
We’ll likely see soon enough how and if that bit of the ruling will play out in future cases pitting disruptive tech companies against copyright holders.
Lead image courtesy of Aereo