Aereo first launched in New York in February 2012 and has since quickly expanded to 10 cities, with plans to expand further across the country. Subscribers pay $8 per month to receive live network TV streamed over the Internet, as well as 20 hours of DVR storage on the company’s servers. The service’s novelty is in how it provides this content: When customers connect, they are temporarily assigned a tiny, personal TV antenna located inside a nearby Aereo facility. Only one user is connected to any one antenna at a given time. This arrangement is exceptionally inefficient — it requires thousands of small antennas when just one large one would do — but it allows Aereo to cleverly outwit media regulations. Copyright law draws a distinction between “public” performances and “private” ones; if you buy a DVD, you can watch it privately all you want, but if you want to put it up on a big screen and invite the whole town, you need permission from the studio that owns the rights. This is the crux of the suit: Does Aereo constitute one big, illegal public performance, like a town movie night, or do the separate antennas mean that Aereo is merely facilitating thousands of individual private performances?
Aereo’s technology may be new, but the conflict is not. The rivalry between intellectual property and technological innovation is timeless; every new medium, from tape recorders to VCRs to DVRs, has provoked debate about how the rights of content creators should be reconciled with those of consumers. One thing, however, has remained constant: the media companies’ unceasing fight to keep a firm grip on content and its consumption. For as long as people have been creating art, others have been copying it; bootleg copies of Shakespeare were widely circulated in the 16th century. But that, like copying throughout most of history, was a relatively time-consuming and difficult affair. In the middle of the 20th century, this changed rapidly. A series of technological developments, beginning with cassette tapes in the 1960s and continuing with VHS in the 1970s, suddenly allowed anyone to record, copy and rewatch content at their leisure. These innovations greatly improved flexibility for consumers, but also presented a threat to the recording and motion picture industries, which feared a decline in sales.
By the 1980s, Hollywood had taken this fight to the courts. In the landmark 1984 case Sony Corporation of America et al. v. Universal City Studios, Inc., et al., the Court considered the legality of home tape recording. Sony had just released a VCR that allowed home users to easily record movies and television programs onto Betamax tapes. A group of film companies filed a suit arguing that by manufacturing a device that allowed consumers to record copyrighted content, Sony itself was guilty of copyright infringement and therefore liable for the actions of its customers. The Court ruled in favor of Sony by a vote of five to four. Writing for the majority, Justice John Paul Stevens gave two important reasons for the legality of the VCRs. First, just because a device can be used to infringe copyright does not make the device illegal, as long as it isn’t the only thing the device can do — otherwise, the same case could be made for prohibiting video cameras because of their potential to film movie screens. Second, time-shifting the viewing of a TV show by recording it at home and watching it later is legal fair use, even without authorization from the broadcaster. The ruling paved the way for the ubiquity of VHS and cemented the right to record programs in one’s own home. It is also a reminder of just how far-reaching the Court’s influence can be — and that the ability to enjoy many of the media services we take for granted is often not owed to engineers, but to lawyers.
Equally important to the Sony ruling, however, was television’s transition to the age of cable. Before the 1970s, TV was always broadcast freely. Anyone with an antenna could tune in, and programming was funded solely through advertising. The advent of cable was a revolution. It allowed for hundreds of channels to be transmitted directly into the home and was also excludable — access to the cable signal could be restricted to paying subscribers. Cable grew quickly, but because over-air broadcasts have long been the main way millions of Americans watch television, cable companies took these freely available channels and retransmitted them over their cable systems. The networks, wanting a cut of lucrative cable profits, cried foul, arguing that retransmission constituted a “public performance” prohibited under copyright law. The blood feud only ended when Congress stepped in; the Copyright Act of 1976 and the Cable Television Consumer Protection Act of 1992 expanded the definition of a public performance to allow networks to charge fees to cable providers in exchange for their content. In the years since, these lucrative fees, which totaled $2.4 billion in 2012, have become an integral part of the networks’ revenue streams.
The final piece of the puzzle was yet another court case, this time about a novel type of DVR built by the company Cablevision. In 2006, the company unveiled a new DVR system that stored recordings in the cloud on Cablevision’s servers instead of on the DVR itself. As with Aereo, separate copies were stored for each user. In Cartoon Network, LP v. CSC Holdings, Inc. (a case commonly referred to as “Cablevision”), a group of networks sued, alleging copyright infringement. On appeal, the Second Circuit (which covers Vermont, Connecticut and New York) ruled in favor of Cablevision, saying that if each transmission was made from a distinct copy, and only one person was capable of receiving that transmission, then each of those performances was a private, not public, performance — and thus permitted under the Copyright Act.
Aereo’s future hinges on the Cablevision precedent. After being sued by the networks, Aereo was initially exonerated in 2013, when the Second Circuit interpreted the Cablevision ruling in favor of Aereo. After the networks indicated their intent to continue to file suits in each new region where Aereo expanded, the company took the unusual step of supporting its opponents’ petition to the Supreme Court, seeking a definitive judgment.
The networks’ fear of Aereo is understandable. In recent years, the networks have become increasingly reliant on retransmission fees to supplement their advertising revenues. Aereo’s ability to avoid fees may harm its negotiating stance with cable operators and could even lead some operators to use Aereo’s precedent by voiding fees altogether. At the core of the networks’ argument is the idea that by aggregating all of the antennas in one place and allowing customers to connect to them conveniently over the Internet, Aereo has fundamentally changed the equation. Considering past arguments from media industries, this one sounds like a broken record. In the 1980s, the British Phonographic Industry fought back against a new technological crisis — the spread of homemade cassette mixtapes — through massive advertising campaigns with slogans like “Home Taping is Killing Music.” The project failed, and more than one billion cassette tapes were sold by 1989. The main legacy of the project now lies in the sarcastic cassette-and-crossbones logo of the popular file-sharing site The Pirate Bay. Cassette tapes did not kill music. Similarly, VHS and Betamax did not destroy the movie industry and DVRs have not ruined television. If anything threatens the entertainment industry’s survival, it is its inability to adapt to changing times.
CASSETTE TAPES DID NOT KILL MUSIC. DVRS HAVE NOT RUINED TELEVISION. IF ANYTHING THREATENS THE ENTERTAINMENT INDUSTRY’S SURVIVAL, IT IS ITS INABILITY TO ADAPT TO CHANGING TIMES.
The Court’s decision will be especially important in the context of a broader revolution where the Internet fundamentally alters entertainment consumption. New technologies promise new opportunities for consumers and content creators alike, but the survival of content creators requires an approach to copyright law that fosters creative development. Only the Supreme Court can guarantee the vitality of media innovations. Overturning Cablevision would have dangerous effects, especially on the burgeoning cloud computing industry, worth $47.4 billion in 2013. Based on the interpretation of public performance that the networks prefer, Dropbox, for example, could become an unauthorized public performer — simply because multiple users have uploaded the same song or video to their account, even if each of these users has an individual right to do so. The Court has two options: continue support of broad rights for consumers to enjoy content the way they choose or extend lifelines to an industry whose profit model depends on extracting rents and clinging to old ideas.
The courts were wise to adapt in cases like Sony and Cablevision. By transmitting content freely over the air, broadcasters give up a certain degree of control in exchange for access to a broader audience. Decades of copyright law have established an individual’s right to connect an antenna, watch television and record that same content to watch later. These rights can ultimately benefit everyone: Content creators can attract more viewers, and consumers get to enjoy that content at their leisure. In the short term, Aereo’s existence may be damaging to major networks’ current business models. But Aereo, and innovations like it, will usher in a world of possibilities for consumers everywhere — if the Supreme Court permits.
Ryan Lessing ‘17 is an Applied Math-Economics concentrator.