They were the Napster of television broadcasting, and like that earlier upstart, Aereo was trying to compete in a market dominated by traditional, slow-moving and entrenched competitors. More important, perhaps, Aereo has now crashed and burned just as Napster did when it faced off against the music industry, though in this case it took a US Supreme Court ruling to make it happen.
In a 6-3 ruling, the Court ruled that Aereo violated the US Copyright Act when it offered streaming access of television broadcasts to it subscribers. It did so by erecting thousands of miniature TV antennas in big US cities like Atlanta, Boston and New York and then streaming those freely available local signals to other parts of the country and charging a subscription fee.
Aereo's entire business was erected on a curiously low-tech workaround to a strange technical conundrum. While broadcasters make such signals available for free locally in accordance with US laws, and in stunning HD quality no less, there's no way to transmit such signals beyond the local area. So while it's possible to watch TV for free, say, in New York, one can't access those signals in other places in the country.
Aereo filled that gap. But it charged subscribers for the privilege, which is where it ultimately fell afoul of the law. Though Aereo collected $8 to $12 per month from subscribers, it never paid for the broadcast rights to the content it was streaming to subscribers.
Specious as it was, Aereo's argument was that it was simply enabling private screenings of publicly available TV signals, just as an individual would do if they lived in the broadcast area. But Aereo was first sued by broadcasters before the firm even erected its first antenna in 2012. And their argument was perhaps more persuasive: Aereo violated US copyright laws by enabling paid "public performances" of retransmissions of their broadcasts.
The parent companies of ABC, CBS, Fox, NBC and Univision formally engaged Aereo in court, and most other broadcasters supported their efforts.
For Aereo, the ruling signals a death-knell in the firm's ambitions: Its entire business was just ruled to be illegal. "It's over now," said ex-broadcaster Barry Diller, who personally financially backed Aereo to the tune of tens of millions of dollars. "This ruling is massive setback for the American consumer," said Aereo CEO Chet Kanojia. It's a bigger setback for Aereo.