The Supreme Court in a decision said that Aereo was functioning much like a cable TV provider but it was employing more elaborate technology and was not paying the requisite licensing fees to broadcasters. For not paying what they are due, Aereo was deemed to be infringing on the copyrights of broadcasters when it was in operation.
In response to the ruling, Aereo has ceased operations but the startup is not giving up without a fight. The company instead changed the licensing model it has been using, moving to a type of licensing referred to as a statutory license. "It is a royalty system set up in the Copyright Act of 1976 -- the same act the Supreme Court found Aereo to be violating -- that allows cable systems to retransmit copyrighted programming by paying royalty fees with the Licensing Division of the US Copyright Office," writes CNET.
Since Aereo is gunning for a compulsory license, it will not need approval from broadcasters to start business again. The company further counters that if it was classified as a cable TV provider by the Supreme Court, then the startup should be allowed to get a statutory license. Broadcasters are in disbelief with this kind of response from Aereo, calling it an astonishing tactic for assuming that the ruling transforms the nature of the company, most especially when Aereo itself has given statements to the courts refuting that it was a cable system.
Aereo started out with the mission to build legal technology that would increase the choices and alternatives consumers have when it comes to watching television. "We believed that providing an innovative cloud-based individual antenna would provide consumers with a convenient way to use an antenna to watch the live, free-to-air signals broadcast over public spectrum that belongs to them," said Chet Kanojia, Aereo CEO, in a statement.
Before the ruling by the Supreme Court, Aereo was enjoying a customer base of over 100,000 subscribers each paying between $8 and $12 a month for the company's services. With integrated antenna and DVR technology, the company was able to provide customers with access to live broadcasts via the internet.
If Aereo had its way, cable TV providers can follow suit and not pay licensing fees and this is going to hurt broadcasters. CBS, one of the plaintiffs in the case, earned $2.2 billion in subscription and affiliate fees last year which accounted for around 15 percent of the broadcaster's total revenue. Industry payments are estimated to go beyond $4 billion this year, a 30 percent increase from last year.
