Throughout America’s business history, the victories and spoils went to the visionaries who made all manner of things — actual things like cars, pharmaceuticals and entertainment.
But more and more, many of the splashy business victories are going to companies that find a way to put a new skin on things that already exist. Uber does not own a single cab, yet it has upended the taxi industry. Airbnb doesn’t possess real estate, yet it has become a huge player in the lodging market. WhatsApp remapped texting on existing telecommunications infrastructure and — thanks to its acquisition by Facebook — has as much as $19 billion to show for it. The list goes on, but you get the idea.
Since 2012, Chet Kanojia has been building a business, backed by the media mogul Barry Diller, with ambitions to join that cohort. His start-up, Aereo, uses tiny remote antennas to capture broadcast TV signals and store them in the cloud, where consumers can watch them on a device of their choosing — no cable box, no cable bundle and most important, no expensive cable bill.
Instead, consumers pay $8 to $12 a month to watch almost live — there is a delay of a few seconds — and recorded programs from the major broadcast networks and public television. It’s a threat to both the lucrative cable bundle and the networks that receive rich fees for being part of that cable package. Aereo would give so-called cord cutters the means to assemble a more affordable package of online streaming options like Amazon Prime, Apple TV or Netflix, and still spend a Sunday afternoon watching the N.F.L. and “60 Minutes” immediately afterward. As antenna-driven viewing has dropped and digital consumption has surged, Aereo is a way to put old wine in a new bottle.
It is a crafty workaround to existing regulations, which rides on the Cablevision court ruling in 2008, which held that consumers had the right, through their cable boxes, to record programming. But then, cable companies pay broadcasters billions in so-called retransmission fees while Aereo pays them exactly nothing. (And the case is not just about Aereo — it opens the gate for cable companies or others to build a similar service and skip the billions in payments to the networks.)
The broadcast networks have a technical legal term for this particular innovation — theft — and they have been trying to shut down Aereo from the start.
It all collides on Tuesday, when the Supreme Court will hear the case American Broadcasting Companies v. Aereo. It will be up to the court to decide whether the service is a consumer-friendly reskinning of the broadcast universe or just one more example of an Internet pirate trying to loot copyrighted content. In some senses, the case is as big of a deal as the Betamax ruling in 1984, which allowed consumers to record programming.
“This is the Sony Betamax of this century,” Mr. Kanojia said on the phone last week, citing a case that is likely to come up a lot on Tuesday.
The entertainment industry hated the Betamax decision and said it would lead to ruin — it didn’t — and the networks are just as opposed to a federal appeals court ruling last year to let what they see as Aereo’s chronic, classic infringement continue. In the broadcasters’ brief asking the Supreme Court to reverse that decision, Aereo was described as “an entire business model premised on massive and unauthorized commercial exploitation of copyrighted works.”
As a matter of copyright law, television programs can be shown only by those who have that right or a license to do so. That’s why bars and hotels must pay a fee for the programming they show on their televisions. And broadcasters say that Aereo is similarly a middleman that should pay for what they consider a public performance.
Aereo was conceived in the belief that because the consumer is the one who is pushing the button to watch live or recorded programming, that transaction is one-to-one and not a public performance. That the DVR is in the cloud and the antenna is remote is, in Aereo’s view, beside the point. In its arguments, Aereo embraces both the past (consumers have been using VCRs and then DVRs to record programming for decades) and the future (everything from Dropbox to Google Drive lets the consumer store what he wishes without any liability on the provider’s part). (...)
I spent time in Hollywood last week chatting with various executives, and Aereo was described variously as “a fencing operation peddling stolen goods” and “thieves masquerading as innovators.” That’s about as friendly as it got: Aereo may be small — Mr. Diller called it “a pimple” — but it represents something mighty important. If Aereo is allowed to store and transmit signals without payment, the television industry will be profoundly reconfigured.
But more and more, many of the splashy business victories are going to companies that find a way to put a new skin on things that already exist. Uber does not own a single cab, yet it has upended the taxi industry. Airbnb doesn’t possess real estate, yet it has become a huge player in the lodging market. WhatsApp remapped texting on existing telecommunications infrastructure and — thanks to its acquisition by Facebook — has as much as $19 billion to show for it. The list goes on, but you get the idea.Since 2012, Chet Kanojia has been building a business, backed by the media mogul Barry Diller, with ambitions to join that cohort. His start-up, Aereo, uses tiny remote antennas to capture broadcast TV signals and store them in the cloud, where consumers can watch them on a device of their choosing — no cable box, no cable bundle and most important, no expensive cable bill.
Instead, consumers pay $8 to $12 a month to watch almost live — there is a delay of a few seconds — and recorded programs from the major broadcast networks and public television. It’s a threat to both the lucrative cable bundle and the networks that receive rich fees for being part of that cable package. Aereo would give so-called cord cutters the means to assemble a more affordable package of online streaming options like Amazon Prime, Apple TV or Netflix, and still spend a Sunday afternoon watching the N.F.L. and “60 Minutes” immediately afterward. As antenna-driven viewing has dropped and digital consumption has surged, Aereo is a way to put old wine in a new bottle.
It is a crafty workaround to existing regulations, which rides on the Cablevision court ruling in 2008, which held that consumers had the right, through their cable boxes, to record programming. But then, cable companies pay broadcasters billions in so-called retransmission fees while Aereo pays them exactly nothing. (And the case is not just about Aereo — it opens the gate for cable companies or others to build a similar service and skip the billions in payments to the networks.)
The broadcast networks have a technical legal term for this particular innovation — theft — and they have been trying to shut down Aereo from the start.
It all collides on Tuesday, when the Supreme Court will hear the case American Broadcasting Companies v. Aereo. It will be up to the court to decide whether the service is a consumer-friendly reskinning of the broadcast universe or just one more example of an Internet pirate trying to loot copyrighted content. In some senses, the case is as big of a deal as the Betamax ruling in 1984, which allowed consumers to record programming.
“This is the Sony Betamax of this century,” Mr. Kanojia said on the phone last week, citing a case that is likely to come up a lot on Tuesday.
The entertainment industry hated the Betamax decision and said it would lead to ruin — it didn’t — and the networks are just as opposed to a federal appeals court ruling last year to let what they see as Aereo’s chronic, classic infringement continue. In the broadcasters’ brief asking the Supreme Court to reverse that decision, Aereo was described as “an entire business model premised on massive and unauthorized commercial exploitation of copyrighted works.”
As a matter of copyright law, television programs can be shown only by those who have that right or a license to do so. That’s why bars and hotels must pay a fee for the programming they show on their televisions. And broadcasters say that Aereo is similarly a middleman that should pay for what they consider a public performance.
Aereo was conceived in the belief that because the consumer is the one who is pushing the button to watch live or recorded programming, that transaction is one-to-one and not a public performance. That the DVR is in the cloud and the antenna is remote is, in Aereo’s view, beside the point. In its arguments, Aereo embraces both the past (consumers have been using VCRs and then DVRs to record programming for decades) and the future (everything from Dropbox to Google Drive lets the consumer store what he wishes without any liability on the provider’s part). (...)
I spent time in Hollywood last week chatting with various executives, and Aereo was described variously as “a fencing operation peddling stolen goods” and “thieves masquerading as innovators.” That’s about as friendly as it got: Aereo may be small — Mr. Diller called it “a pimple” — but it represents something mighty important. If Aereo is allowed to store and transmit signals without payment, the television industry will be profoundly reconfigured.
by David Carr, NY Times | Read more:
Image: G. Giraldo
