A Supreme Court Smackdown for Aereo’s Magic TV Machine

Jukebox Spins

Photographer: Cooper Photo/Corbis

Jukebox makers once argued that they, too, were just spinning records and didn’t need to pay royalties. That changed in 1978.

In Pittsburgh years ago, there was a system in which you would pick up a phone at a bar, ask for a song from the operator, have her put it on a record player across town, and hear it piped in through a sound system at the bar. The woman who played the songs was named Helen.

In New York, there’s now a similar system, Aereo. Call up Aereo on your computer, and it pipes in a television signal from an antenna ideally placed to pick up all the free over-the-air broadcasts. The signal does not go over wires like those in the Pittsburgh bars. Instead it goes over the Internet (actually a lot of wires, too, but you get the idea). Aereo is backed by a man named Barry.

In some ways, what Helen did back then was similar to what Barry is doing now. The difference is that Aereo has raised about $97 million in funding (according to Crunchbase), and Barry is Barry Diller, who is a former head of several TV networks, and the billionaire chairman of IAC Interactive Corp. Also, Barry doesn’t spin any records or move any antennas himself.

Aereo was at the Supreme Court today, arguing that what it’s doing is wholly legal, and it can keep doing it without paying any money to the folks whose programming it captures and sends over the Internet. Aereo’s argument is that since each viewer is watching the signal from a single antenna, this is really just like putting a very well-placed antenna on your roof. This argument has struck a lot of folks as a little crazy. Aereo, says Kevin Roose at New York Magazine, made

“a bet predicated on an odd notion: that judges would be so impressed by Aereo’s copyright-avoidance gimmick that they would overlook that the entire company was, as a Second Circuit dissenting judge wrote, ‘a Rube Goldberg–like contrivance’ built to violate the spirit of the law.”

The strangest part of this may be that so far judges have been pretty impressed with Aereo’s copyright avoidance. That’s how Aereo, which has won two lower-court rulings, got to the Supreme Court in the first place. The Supreme Court doesn’t seem as impressed, judging by the questions at today’s testimony, as Bloomberg’s Greg Stohr and Alex Barinka report:

“There’s no technological reason for you to have 10,000 dime-sized antennas other than to get around the copyright laws?” Chief Justice John Roberts asked.

That sounds like a fairly loaded question.

The second strangest part of this story may be that either Aereo or the TV networks that are suing it let things get to the Supreme Court. Diller of all people seems to be a guy who might be able to get what he wants from networks at the negotiating table — he pretty much built the Fox Network for Rupert Murdoch (back when Helen was spinning records in Pittsburgh).

It seems reasonable to surmise that Aereo may have contemplated, or even attempted — though they have never seem to have said so publicly — using their antenna gimmick to push networks into negotiations. That would solve both the copyright question and be less awkward than forcing the networks into an involuntary, unpaid partnership through the courts.

That the networks and Aereo have wound up in court instead of negotiating a mutually beneficial resolution hints at the degree to which most of mass media fears a future of services that could replace the $100 cable bill with an $8 a month Aereo bill and an assortment of unbundled channels. On this, the incumbent networks just don’t see any arrangement as beneficial to them. Judging by the reception at the Supreme Court old media may be winning the day. Just remember that Silicon Valley (or even Diller himself) can fund a lot more disruptive startups, even at $97 million a pop. And one of them is likely to force the networks into a deal.

Follow @markgimein on Twitter.

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