Analysis As widely expected, the US Supreme Court has ruled that TV show creators should be paid by video streaming biz Aereo for the distribution of their work.
The TV rebroadcaster, backed by media mogul Barry Diller, was found to have exploited a loophole in American law's definition of "performance" by six of nine justices in an opinion [PDF], upholding the lower court ruling that found Aereo to be in violation of US copyright law.
The winners in the tellyco's case are ethical technology companies, creators, and democracy itself – surely three things everyone wants to see flourish.
US TV networks, producers, distributors and other copyright owners had been fighting Aereo for years over its failure to pay licensing fees to the broadcasters that produce the television programmes.
Aereo's legal defence was an attempt to exploit the loophole that it did not, as the law requires, "retransmit" or rebroadcast the "performances to the public", which would necessitate a payment. Instead, it argued, the job was done by "thousands" of antennas used by its customers. It argued that it "merely suppl[ied] equipment that allow[ed] others to do so".
Aereo's submissions spoke of "thousands of small antennas and other equipment housed in a centralized warehouse", with at least one at any time acting as the "personal antenna" of the subscriber. Many people doubted whether more than a handful of such antennas (pictured here) ever existed. But it seems their function was symbolic. They merely provided rhetorical ammunition in Aereo's real quest, which was to avoid having to pay creators.
Aereo even found three Supreme Court Justices who agreed with it. Six Justices, however, didn't, sticking broadly to the common sense and widely accepted principles of property and compensation.
"Regardless of the device or process used to communicate a work to the public, the authors of that work deserve to be compensated," explained Sandra Aistars, CEO of the Copyright Alliance Team to Bloomberg.
It was rarely reported, if at all, that the underlying issue was about using creative material - such as news and drama - without having to pay for it. Creators found themselves squeezed between two unlovely groups: Big Tech and Big Broadcasters, but any other verdict would have screwed them the hardest.
Spoilt children complain of a chill
Not surprisingly, the child-like foot stamping and mewling from groups funded by Silicon Valley started almost immediately. The clichéd term "chilling effect" quickly surfaced. Former Silicon Valley lawyer agitator Eric Goldman blogged about his fears that companies couldn't now be founded to exploit loopholes "rely on legislative text" for "workarounds". He wrote on Forbes, rather guilelessly:
"An even worse dystopian possibility is that this opinion will chill innovators who want to rely on legislative text to develop innovative technological workarounds."
Yes, Eric. That's exactly the point of the ruling. It's the job of Congress to make the law, and define terms like "broadcast" and "performance" and this is part of a democratic process. Congress could abolish copyright if enough people wanted it to. They clearly don't.
As for the other spoilt child's cliché, "permissionless innovation", this doesn't make for lasting businesses. Take the example of Apple's iTunes store or Spotify - both of which filled a gap in the market for music lovers that music companies were too slow or incompetent (or both) to fill themselves.
iTunes and Spotify have built lasting businesses not on loopholes, but on strong contracts with the property owners. Then they rolled up their sleeves and got to work. They're all the stronger for respecting the principles of the law.
As we've seen recently with the behaviour of Amazon and Google, power has swung enormously to the digital distributors, monopolies that are now the dominant players in each market. They are now in a position to screw the legal suppliers and even, in Google's case, rely on the "safe harbour" provisions designed to protect fledgling startups from more powerful, vexatious litigants. YouTube relies on safe harbour provisions written for another era, one in which media companies were dominant and internet companies were tiny. Oh, the irony.
It's strange how we're apparently in an age of "the ethical consumer", but ethical standards are never applied to Silicon Valley companies - particularly loophole leeches like Aereo. Anything "disruptive" or "permissionless" is assumed to be A Good Thing.
We'll all be better off if "permissionless innovation" - like that other buzzword "disruption" - was quietly taken round the back and shot. Aereo's decision is a signal for Silicon Valley to start to grow up. I doubt it's listening. ®