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Aereo and the Aerial: Innovation by Loophole

Aereo has figured out a loophole for legally rebroadcasting over-the-air TV onto the Internet, and it has already withstood two court challenges. They do it by installing thousands of micro HDTV antennas in a datacenter near you, and hosting the DVR in the cloud. In other words, you’re paying them to maintain a TV receiver, antenna and DVR on your behalf for $8 per month.

The recent victory in the US Court of Appeals in New York prompted the lone dissenting judge to write the following:

Aereo’s “technology platform” is, however, a sham. The system employs thousands of individual dime-sized antennas, but there is no technologically sound reason to use a multitude of tiny individual antennas rather than one central antenna; indeed, the system is a Rube Goldberg-like contrivance, over-engineered in an attempt to avoid the reach of the Copyright Act and to take advantage of a perceived loophole in the law. After capturing the broadcast signal, Aereo makes a copy of the selected program for each viewer, whether the user chooses to “Watch” now or “Record” for later. Under Aereo’s theory, by using these individual antennas and copies, it may retransmit, for example, the Super Bowl “live” to 50,000 subscribers and yet, because each subscriber has an individual antenna and a “unique recorded copy” of the broadcast, these are “private” performances. Of course, the argument makes no sense. These are very much public performances.

Currently only available in NYC, Aereo will likely be launching in other US cities within the year. Fox, CBS, NBC and PBS execs have all decried the court decision, with Fox COO Chase Cary threatening to pull their free broadcast programming and moving to a pure subscription model if this trend continues. CBS Exec David Poltrack is also on record, as is Les Moonves:

“It is clear that the whole premise of Aereo is to make money off the back of the hundreds of millions of dollars we invest in programming,” he said. “We pay the N.F.L. $1 billion a year. Right now we have a lot of correspondents in Rome. We think it is patently illegal to take our signal and those of the other networks and resell it without paying for it. It is so wrong on so many different levels.”

What they fear is not just a rogue startup, but that the startup is funded by media tycoon and former Fox CEO Barry Diller and his company IAC Interactive, which controls streaming giant Vimeo among other properties.

But let’s face it – everybody now expects all media to be instantly delivered to their many media-consumption devices for a low monthly fee. And that expectation is only growing more insistent by the day. Because it turns out that $700 iPads and flatscreen TVs have something very powerful in common: They all come bundled with a well-developed sense of entitlement.

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