Aereo's attitude toward the intellectual property of broadcasters is the same as that of a 15-year-old who believes that he has a god-given right to anything he is smart enough to download or stream off the Internet — be it the complete works of the Beatles or Glee or Marvel's The Avengers in HD. As an investor and the public face of Aereo, Barry Diller is endorsing that kind of juvenile thinking. I’m surprised he would be associated with such a venture.
JESSELL AT LARGE
Diller And His Aereo: He Should Know Better
I’ve long admired Barry Diller, not just for his much celebrated success in launching the Fox network in 1986, but for his barely remembered failure in launching USA Broadcasting in the late 1990s.
USA was a badly needed effort to reinvent local TV broadcasting. With a mix of original local programming, news and pro sports, Diller’s string of major market TV stations would engage their communities as no independent stations had done before. Diller would show the way.
WAMI in Miami was the flagship. With such a catchy rhyme, how could it miss?
But it did. All that live production was expensive and it didn’t come close to capturing the viewership needed to pay for it all. Diller abruptly pulled the plug in 2001, selling all of the stations to Univision.
Diller deserves kudos for the venture. At least he tried. But now I’m thinking the USA experience left Diller with bitter feelings toward broadcasting.
How else to explain his peculiar involvement in Aereo, an outfit that expects to retransmit TV broadcast signals on the Internet to paying subscribers without the permission of the broadcasters and without compensating them in any way?
BRAND CONNECTIONS
Aereo’s attitude toward the intellectual property of broadcasters is the same as that of a 15-year-old who believes that he has a god-given right to anything he is smart enough to download or stream off the Internet — be it the complete works of the Beatles or Glee or Marvel’s The Avengers in HD.
As an investor and the public face of Aereo, Diller is endorsing that kind of juvenile thinking, which I cautioned my own children against when they first discovered the “free” movies and music on the Web.
But Diller is a grownup — 70 years old, in fact — and should know better. His whole career is built on enforcing and respecting program copyrights. He now runs businesses at IAC whose success relies on them. Not to respect those of broadcasters now is hypocritical.
In an interview with The New York Observer last week, Diller downplayed the impact Aereo would have on the broadcasters’ retransmission consent revenue: “It may affect the absolute amount, but the amount is going to be large regardless of Aereo.”
Translation: It may be stealing, but it’s not costing the broadcasters a lot so what’s the big deal?
The broadcast networks have asked a federal court to enjoin Aereo on copyright grounds. The tactic has worked before, most recently with ivi.tv and FilmOn.com.
But Aereo thinks it has a chance because it has come up with a Rube Goldberg contraption designed specifically to exploit a loophole in the copyright law.
Rather than just picking up the broadcast signals and streaming them on the Web as ivi.com and FilmOn were doing, Aereo has rigged up what it contends is an individualized TV reception service.
It envision building vast arrays of tiny broadcast antennas so that it can assign individual ones to each subscriber and feed him or her broadcast signals via the Internet to be watched on any kind of computer — desktop, tablet, smartphone.
The service is enhanced by a user interface that lets subscribers search for shows, and a virtual DVR that allows them to record shows for playback at their convenience.
The whole setup is intended to take advantage of a case in which Cablevision Systems was able to convince the federal courts that its remote DVR service did not infringe upon the copyright of programmers.
Like Aereo is now doing, Cablevision characterized its service as merely providing technology for each subscriber’s use. That the technology is located at the cable headend rather than in the subscriber’s living room should make no difference.
In other words, Cablevision successfully argued, when a subscriber watched a show on his own remote DVR, it wasn’t a performance triggering conventional copyright liability.
Oral arguments on the networks’ request for an injunction against Aereo were heard Wednesday and Thursday. To get the injunction, the networks have to show that they have a likelihood of success on the merits of the case and that they will suffer irreparable harm without the injunction. A ruling is expected in a month or so.
Using the same language as Aereo’s lawyers, Diller has repeatedly defended the venture and has lent an air of legitmacy to Aereo that it could not otherwise earn. In testimony before a Senate committee in April, Diller told Sen. Jim DeMint (R-S.C.) that it was not a network, just a technology rental company.
“We do not resell anything,” Diller told DeMint. “We charge consumers for the infrastructure that we put together, for the little antenna and for our DVR cloud service. We don’t charge for programming that is broadcast for free. The local broadcasters send a signal out and we provide an antenna to receive it and put it over the Internet and allow people to record it.”
I received a note from Lee Spieckerman, president of SpieckermanMedia of Dallas, that concisely and emphatically answers Diller: “Aereo has fabricated a fig leaf that is ridiculous on its face. So the scheme, regardless of how ‘individualized,’ is in no way analogous to an individual with his/her own antenna, picking up a TV station. It is, in almost every respect, equivalent to a cable system or DBS service capturing a local TV signal and sending it to a paying consumer’s television.”
For me, the giveaway — the thing that should tell everybody, including, I hope, the presiding judge in the networks’ suit, that Aereo is not on the up and up — is that its technology was not conceived to provide a cheaper or better service or product. It was ginned up simply to allow Aereo to slip through a crack in the copyright law. Such “innovation” should not be rewarded.
I am surprised that Diller would be associated with such a venture.
Harry A. Jessell is editor of TVNewsCheck. He can be contacted at 973-701-1067 or [email protected]. You can read earlier columns here.
Comments (10)
Juilee Clark says:
June 1, 2012 at 1:58 pm
Harry,
You have done an excellent job of undressing Diller’s thin arguments. He is in this to cause mischief, not to improve free over the air TV. He is now on the outside of something he once was part of, and appears too want to cause as much disruption as possible to an industry that launched his career. Between him and DISH’s ad zapping technology, the seeds are being planted to destroy free over the air TV. Forget all the arguments on both sides of these issues. The real issue is whether a public policy one of whether we want to continue to have a free over the air TV system in this country? If we do, these attacks on the system, albeit creative, cannot be allowed.
Angie McClimon says:
June 1, 2012 at 2:56 pm
I certainly would not pay Aereo for something I can get on my own with an antenna. Aereo should be working with the stations to provide something the stations can use and offer to the end user. Aereo still gets money (perhaps more than a direct subscriber base could provide) and if it is designed properly, the station could run additional ad revenue for spots shown ONLY via Aereo, much like how cable inserts local spots on national networks.
Along the financial lines, Aereo is being stupid for not offering some sort of compensation. If you are charging users for your service, even a small share should go to the program provider. In the case they are defending, nothing leaves the Aereo coffers. Not the best media business practice.
Tony Alexander says:
June 1, 2012 at 5:08 pm
Harry: I am pleased to see that you fully embrace innovation and challenging established systems. The Internet will not be stopped so whether it is this one or something else, change will come. By your standard, we should have DVRs outlawed when they first became available.
Linda Stewart says:
June 1, 2012 at 7:12 pm
I believe that the broadcast networks and their affiliates ought to be working together to put broadcast signals online. One thing is clear: there is plenty of demand for such a service.
Tanya Atkinson says:
June 3, 2012 at 8:30 pm
Well without innovative systems like Bit Torrent used to pirate music and movies the content business would remain stagnate and continue sticking it to us as they have been for years (review your cable bills for the last 2 decades).
Now thanks to the Bit Torrents and sites like The Pirate Bay we now have Netflix and free Hulu. The generation growing up with the Internet are forgoing buying over priced cable TV and using the net more for everything including watching content online.
Aereo is just like Bit Torrent … an impetus to force the content creators to give us all what we want! Live TV channels over the Internet at a fair cost. If they lose others will follow .. like Roku could and should start selling boxes with antennas and a DVR built in!
They lost me years ago to BIt Torrent, in which I no longer use because I pay for Netflix and enjoy content freely on Hulu.
Doug Halonen says:
June 1, 2012 at 8:50 pm
Harry, I don’t think that Barry Diller has turned against broadcasters. I think he is just needling Rupert Murdoch who would not give him an equity stake in News Corp. To Barry, $20 million is chump change. His broadcast effort was unlikely to succeed. He saw the writing on the wall and sold out to Gerrold Perenchio at the top of the market. So now he makes a little noise and we broadcasters get our knickers in a knot. Oh, please! The station groups knew about Aereo (which is the Italian word for airplane) for at least a year. They did nothing – evidently not even their homework — to ensure that it was not a threat to them if recent depositions are to be believed. Now Barry gets to smile like the Cheshire Cat. Good on ya, Barry! (Pardon my Australian).
I agree that the broadcasters should get together to put their stuff on the web. That way, the shows will stream on demand, and the commercials will not be edited out. Arbitron’s Portable People Meter should help them monetize that audience.
Bottom line: I think that Barry is only half-serious on this Aereo thing. He’s having too much fun sticking it to everyone else.
Melinda Santana-Carey says:
June 3, 2012 at 3:40 pm
Harry, I appreciate your insight; however, I have one big problem with it. This would have been a non-issue 5 years ago without retransmission fees. Now that the MSOs are in bed with the networks and stations, they all are crying over Diller’s attempt to bring TV delivery into the modern age. Somebody has got to lead the way. Why don’t the networks just get together and buy Diller’s new tech start up and own it, collectively? They could then offer this service in all markets. They essentially did that with Hulu, so why not this? Of course, the cable guys wouldn’t be happy. Then again, Comcast now owns NBC. Might as well let the cable guys in on it, too. The bottom line: TV needs to be delivered via all modern day pipelines if it is to survive. This is just one solution–and appears to be a good one from a “delivery” point of view. Diller sees promise in this. Of course, he has always been ahead of the curve.
Tony Alexander says:
June 4, 2012 at 12:28 pm
Harry,
You say that you want TV on the Internet and Gordon Smith says that TV should be ubiquitous and you agree with that, but when you say it should be ubiquitous you and Gordon don’t actually mean that persons residing in Los Angeles can watch WCVB from Boston. You want these artificial market designations (vestiges of the past) to control what you mean by ubiquity. There are many persons living all over this country and the world that want to watch a local TV station from Minneapolis, Seattle, Boston, New York or wherever, but they can’t. Why? Because of network/affiliate relationships, content owners and copyright, audience measurement methods, etc., etc. The Internet is not built like broadcasting was built. It is the World Wide Web.
I recall the first time that I heard broadcasters talk about ubiquity and that was just after CNN was shown on a TV set in an airport or at a checkout location at Walmart. Even today, I can see CNN in the public areas at O’Hare airport but I cannot see WMAQ, even if it is LOCAL; so much for ubiquity. Broadcasters want ubiquity to follow their definitions of the word.
This will change.
Linda Stewart says:
June 4, 2012 at 3:24 pm
Affiliates should get their signals online and the best and quickest way to do that is under the current regulatory scheme used by cable and satellite. That means keeping the signals within their DMAs. Perhaps at some later date the broadcasters could offer an out-of-market service. I’d be all for it. I could watch the news out of Pittsburgh and Washington.
Melinda Santana-Carey says:
June 5, 2012 at 8:35 pm
Harry, I’ve been in this business for a long time. The bottom line: other than for local programming, there is no reason for the affiliates to exist any longer. The entire network/affiliate relationship must be reinvented. Gone are the days that the networks pay the stations to carry the shows–now the reverse is true. Meanwhile, the networks are getting big bucks from the cable operators…and sharing a bit of it with the local guys. Soon everything will be owned by a couple of guys anyway. It sure isn’t like the the days of the 70s and 80s when all of TV was damn fun–not to mention that people actually watched! Now a show gets a 1 rating in syndication and is considered a “hit.” Far cry from my days at King World when WHEEL would get close to a 20 ratings, with Jeopardy close behind. The business needs a total reinvention. Once the lazy ad buyers wake up and admit that nobody is watching their commercials–it will have to be reinvented. TV will go the way of the newspapers…another industry that failed to ignore its own press.