1) News Co transmits their content unencrypted over the air with kW+ senders
2) News Co finds that doing so enables people to watch that content
3) News Co does not want people to do that
4) News Co threatens to stop broadcasting their content on the publics valuable frequency spectrum
So why exactly have they not followed through? It seems like a proper conclusion and solution to their perceived problem.
Aereo and its users themselves don't matter - they're totally insignificant. But the court ruling does matter, because if the cable companies stop paying the retransmission fees, the broadcast networks are fucked.
The entire premise behind affiliate television is that local station owners can license the rights to national programming, and then exercise a quasi-monopoly over distribution of that content to local markets. (If I'm the FOX affiliate in NYC, for instance, I pay FOX for the rights to its shows, and I have exclusive rights to air those shows in NYC).
This business model was threatened the minute the internet took hold, really, because the very idea of local exclusivity is anachronistic now. It's one of the two horse-and-buggy concepts of the 21st century content distribution business (the other being time-bound content viewership). It is threatened much more extensively by Netflix, by YouTube, by Hulu, by Microsoft, by iTunes, etc., than by any one startup. It is threatened by virtue of its irrelevancy in the modern, globally connected era.
The idea of moving television networks to paid subscription models has been bandied about for at least a decade now. IIRC, it was NBC who first proposed this idea in the early 2000s. Indeed, this may come to pass at some point: not because of the likes of Aereo, but because broadcast television starts to make less and less business sense as time goes on (whereas content ownership and distributorship is still viable). Eventually, we'll probably have nothing but content shops, who distribute their wares across all channels -- perhaps offering different tiers of the products at different prices in different channels, and/or extracting licensing fees to different distributors.
As a consumer, expect a generally upward trend in content pricing in the long run (i.e., free to paid). It'll just depend on whom you're paying. Advertising-subsizided, free content will still exist to the extent that distribution channels like YouTube continue to thrive.
In major markets, historically it has been the networks who pay the stations an affiliation fee, not vice versa. The stations have something valuable (a broadcast license) and the networks want access to it so they can air their national ads.
Yes, of course the station also gets something valuable out of the affiliation. On balance, however, the money has tended to flow from network to station, not vice versa. For example, here in Boston, NBC pays Channel 7 an affiliation fee of $15 million a year (or did in 2000 and years afterward; I haven't kept up with it more recently).
See http://ocw.mit.edu/courses/electrical-engineering-and-comput..., section 2.2 (page 4).
I don't see how local affiliate fees themselves are directly at risk for the broadcast networks. The local OTA broadcasts of the public channels are generated by the local affiliates, who contribute local programming to the broadcast, such as news. The cable companies therefore have to pay the local affiliates, who in turn pay the national broadcast networks.
The local/affiliate fees are only the proximal revenue source for the broadcast networks - the original source is the cable fees.
I'm not sure what the point would be of a large number of independents... in 20 years there may only be PBS affiliates out there and empty spectrum. Where I live there's only enough independent viewers (mostly syndicated) to keep two quasi independents alive, so tossing another 4+ onto the fire might well result in all of them going out of business.
1) The broadcast networks distribute content freely over the airwaves. 2) The broadcast networks also sell that content to cable networks who then retransmit it.
Forget the law. Is it reasonable for the cable networks to just capture the over-the-air stream and retransmit? I think you can argue both sides. On one hand, there is a public benefit to free over the air TV, but that specific benefit is not served when a for-profit cable provider retransmits that content to paying cable customers. On the other hand, how do you distinguish in a principled way the spectrum between an individual receiving the content with his antenna and what Time Warner Cable might do, with services like Aereo in the middle?
I know we're all about advertising these days, but it's not an unreasonable business model to produce content, then sell that content to distributors who in turn distribute it to paying customers.
It might, however, be unreasonable to be able to expect to do this while also cashing in on advertising revenue by freely broadcasting that same content over the air.
It's hard to argue against the business model as it's been stunningly successful, I'm just surprised it's taken this long to be disrupted.
Isn't this a bit like asking why I can read something from a particular website online for free but someone can't take that free content and have me read it in it's entirety on another website? (Or am I misunderstanding the point you are making?)
One point though regardless that matters is that is that if I have a service that I charge money for and I use your product to provide value to my customers (even for free) shouldn't you be compensated for that even if those customers could have gotten the same content another way?
It is kind of the same thing -- but it has the same issue. Suppose I set up a public proxy server, or a Tor exit node, or a service like AWS that anyone can route traffic through. Now all the content on "your" website is available through "my" server. Do you suppose that to be unreasonable? That's pretty much what Aereo is doing with broadcasts, isn't it?
It's a lot like that, except with the angle of: what does that mean for a company like Aereo, which ostensibly just offers you a "really big antenna" to watch the broadcasters' content?
The problem seems to be that you (some people) want to give some leeway to companies like Aereo to do space shifting of broadcast content, without having to say "okay cable providers, you don't have to pay for anything you can capture on the air."
Isn't this what every ISP is doing with the content of every website in the world?
What about TV antenna installers - their product is virtually useless without all that broadcast content that they don't compensate the producers for?
Broadcasters have the right to negotiate with cable companies for carriage. http://www.fcc.gov/guides/cable-carriage-broadcast-stations
They either have the right to demand that they be carried (in which case it is for free) or to demand that they be compensated (in which case the cable company does not have to carry them).
Every three years they get to re-decide. Without either the must-carry notification or the negotiated contract, cable companies can't carry them.
What are the limits on this? Can an individual set up a low powered broadcast station and force the cable company to carry it?
This isn't correct. Aereo only rebroadcasts local market channels to local market subscribers. I in SF can't get NY based content, this would get shutdown quick (See Ivi TV [1])
This also only affects the local "Over The Air" affiliates usually Fox/NBC/ABC/CBS and a few other small niche channels. This is why in the article Fox is threatening to move content from the main Fox "OTA" channel to its cable only offerings.
Which is also why its never going to happen, this would effectively kill all the local market channels which are extremely powerful.
Long story short, Aereo really isn't that great a threat to that many people, and really unless you start getting folks like Netflix to start buying up local market TV Channels to distribute content there's not a lot here. And this really only affects a very small subset of available channels.
[1] http://www.businessweek.com/news/2012-08-27/ivi-tv-loses-bid...
You're missing the point. Cable companies also only rebroadcast local market channels to local market subscribers. The difference is that they pay the broadcast networks for that right. But if Aereo can get away with not paying, so can they.
I had assumed the locals were paying to get content from the networks, but that doesn't seem to be the case (also indicated in another comment.)
That's what "updating your business model" means in 2013.
In my opinion by Aereo taking this to court and having a legal precedence created they will be ineffect (finally) changing the way the free broadcast networks work in America.
I've been trying to find a source for this, and it's mighty hard. Especially because many sources mix up the national networks with the local networks, or mix up profits with revenue.
Do you have a citation? I'm asking to learn, not to challenge.