In a follow up to a previous piece I did on this blog entitled “TV Wars”, the Supreme Court ruled today that the service known as Aveo should be required to pay licensing fees to broadcasters in order to display copyrighted programming. Aveo is a service that transmits broadcasts of TV programming over the Internet via their technology, which subscribers pay a fee to utilize.
The argument from Aveo’s side was that their service did not broadcast the programming to everyone over the Internet that the programming was provided only to their subscribers, who paid a fee to receive the service. Since it is not a public broadcast, then they should not be required to pay the licensing fee. The argument continued that they merely rented a small broadcast antenna to each of their subscribers to access the copyrighted programming, which should not require that they (Aveo) pay a licensing fee to the broadcasters.
The Supreme Court disagreed, they ruled that the Aveo service was just like a cable television service, which under the current system, are required to pay licensing fees to broadcasters in order to display copyrighted programming. Therefore, Aveo will be required to pay licensing fees to the broadcasters, which they cannot afford to do.
It is important to note that if the Court had ruled in favor of the current setup of Aveo, it would have completely altered the landscape of the television industry. A favorable ruling for Aveo would most definitely trigger the major cable television players to develop Internet based antenna rental services similar to Aveo in order to circumnavigate the payment of licensing fees.
A favorable ruling for Aveo also would have created a situation where the network television broadcasters would stand to lose huge amounts of licensing fee revenues. It would have created an environment where many people would continue to cancel their cable television plans, known as “cord cutting”, which would have created losses of revenue for the big cable television service providers such as Comcast and Time Warner Cable.
Instead, the ruling today effectively retains the current system and most likely marks the end of the Aveo service. Their CEO essentially stated that the ruling makes their business model unviable moving forward. The technology that Aveo developed does have an inherent value, which the ownership of Aveo will have to determine if they are going to sell off to an interested party in the future.
The ruling today by the highest court in the land also purposefully went out of the way to create a distinguishable difference between the Aveo service and other Internet based entertainment providing services and cloud based services. It is unclear at this point if they went far enough to make that differentiation and only future judiciary activity will determine that scenario.
This portion of the ruling opinion of the high court would deal with only certain new technologies and not others that I had mentioned in my original article on this topic. The larger internet based entertainment programming services providers such as Netflix and Amazon already pay huge licensing fees to the broadcasters and movie production companies to obtain the rights to stream copyrighted programming to their subscribers.
In fact, the recent agreement between Amazon and HBO which provides the Amazon Direct internet streaming service with the exclusive rights to a huge catalog of HBO produced series was a deal with significant impact for everyone involved. Those types of exclusive streaming rights deals will only continue in the future, as the popularity of services such as Netflix, Amazon, and now Google’s Fire TV will continue to increase their respective subscriber bases.
These types of exclusive rights deals with the big internet streaming services provide a huge injection of revenue dollars to the broadcasters and the networks involved such as HBO or CBS. In fact, CBS syndicates and produces so many different series across a variety of networks that their stock increased on the news of the favorable Supreme Court ruling today.
In my view, that is what I take away from the decision today by the Supreme Court that the consumer in some ways is the loser here too. The Aveo service, as the dissenting opinion of the Court explained, was not providing a public display of content rather the service was provided to subscribers. Therefore, the three dissenting and more conservative justices felt that the subscription fee negated the need for Aveo to pay licensing fees to the broadcasters.
I would tend to agree with the dissenting opinion, the Aveo service was providing the consumer with another option to view broadcast television programming. It was providing choice and fostering competition in the Internet subscription based entertainment space. This decision is going to dismantle Aveo, and in many ways destroys the very ingenuity and entrepreneurial spirit which America should espouse.
I think of all the time, money, and energy that the employees and developers at Aveo dedicated to designing and marketing their service, which is a unique technology, and I think the Court ruling sends the wrong message to the small business owner or the entrepreneur. This type of service should be promoted and not dismantled, other business owners could see this news today and decide not to move forward with a new product or an idea for a new service, and that can and will be detrimental to our collective best interest in American society.
However, it should also be noted that I am in no way in favor of a service that would infringe upon the copyright protections that these broadcasters and networks operate within. The networks and television broadcasting industry spends a significant amount of money on the production and the copyright legal protections for their programming. I am in no way promoting a service which would violate any copyrighted programming and broadcast these programs to a general public audience in violation of federal laws.
In relative terms, as a writer, if someone took my copyrighted written material and put it out into the general public in a way which misrepresented me and violated my rights that would be a huge issue. However, that was not the issue at hand here, because the subscription fee and the manner in which the programming was presented by Aveo with integrity made this case a difficult one for the judiciary system necessitating a ruling from the Supreme Court.
This decision effectively rewards the big broadcasting companies and eliminates a source of competition for the huge cable television operators. We should be fostering competition in the marketplace, yet between mergers and acquisitions and increased regulatory activity, the government is eliminating competition from our marketplace. This type of activity could prove ultimately detrimental, as we have seen in the course of history with monopolies in various industries in the past.
This ruling today is being reported by the media that it has moved the TV landscape into a state of clarity and removed some ambiguity. I disagree with that sentiment, I think the ruling today was only the beginning of another mountain of litigation driven by the broadcasters and networks and the groups which represent their collective interests with the goal of elimination of competition from the marketplace.
This ruling did not push our court system towards the end of the TV wars, in fact, I would argue, it is just the beginning.
(Some background information courtesy of Yahoo! News)