The U.S. Supreme Court reached a 6-3 decision against TV streaming service Aereo on Wednesday. The court found that despite Aereo's claims that its service was not illegal under current copyright law, the end result was that Aereo was acting much like a cable company without paying content creators to broadcast their material.
Aereo's business model was based on a loophole in copyright law. Cable companies rebroadcast over-the-air TV signals to their customers through their existing networks. In order to do this they must pay a retransmission fee to the content creators, allowing them to provide what the court calls a "public performance" without violating copyright. Aereo constructed a large number of antennas and rented them out to subscribers for $8 per month. When a subscriber accessed the service, an individual antenna was turned on, and streamed the TV signal to only that one user. Under copyright law, Aereo argued, this constitutes a "private performance," and is not subject to retransmission fees.
However, six of the nine Supreme Court judges felt differently. The majority decision was that these "behind-the-scenes technological differences" don't matter. The end result of Aereo's broadcasting is the same as that of cable companies, so the two should be treated the same, they ruled. While the other three judges agreed that Aereo should be shut down, they did not agree that doing so was within the tenets of current copyright law. They argued that a new law should be created to address the specific issue rather than vaguely expanding the interpretation of the existing law.
"It will take years, perhaps decades, to determine which automated systems now in existence are governed by the traditional volitional-conduct test and which get the Aereo treatment," writes dissenting Justice Antonin Scalia in the decision. [PDF] "The Court vows that its ruling will not affect cloud-storage providers and cable-television systems ... but it cannot deliver on that promise given the imprecision of its results-driven rule."
Traditionally, service providers have not been held responsible for what their customers do with their service. For example, a cloud storage service such as Dropbox cannot be held accountable if a person uses its service to allow others to download copyrighted content. According to the ruling, the fact that Aereo was merely providing the antennas and delivering the transmissions picked up by those antennas did not absolve them of responsibility for the copyrighted material that was being transmitted.
The decision will likely shut down inexpensive content streaming services like Aereo. Since Aereo is now required to pay expensive retransmission fees, the cost would have to be passed on to subscribers, making the service far more expensive than the current $8 per month. Of course, the price is the only thing drawing users to Aereo instead of traditional cable service, so the business model is likely no longer supportable. The ruling is likely to affect a number of similar service providers as well, but given the imprecision of its application, only time will tell.
