Aereo and the Future of Content and Copyright

A case being petitioned for review by the Supreme Court will, if accepted, tell us a lot about the future of broadcasting. More importantly, it will tell us a lot about the future of all the content media, and of the nation’s copyright laws generally.

The case in question concerns the business practices of an outfit called Aereo, which streams for a fee over-the-air TV programming to the company’s subscribers.  Because this programming is delivered through the Internet, it is accessible when and where the subscriber wants it.  Sounds good, right?

Bu there’s a hitch.  Unlike cable and satellite systems, which pay the broadcasters for the right to retransmit their copyrighted programming, Aereo pays nothing. And how are they able to do this?  Well, that’s the heart of the Supreme Court petition filed last month by the four big broadcast networks, ABC, CBS, NBC, and Fox.

When cable and satellite operators distribute broadcast programming to their subscribers this is deemed a “public performance,” which is why those operators have to pay the broadcast copyright holders for the privilege.  When, however, an individual records a copyrighted program on his DVD this is deemed a “private performance,” and requires no compensation to the copyright holder.

Aereo’s business plan plainly exploits this public/private dichotomy by the simple device of installing tens of thousands of dime-sized antennas, each of which stream the over-the-air programming to Aereo’s subscribers individually, thereby qualifying, according to Aereo, as a private performance.

Lest you think for a minute that this is a triumph of engineering, rest assured it is not.  As noted by Rod Smolla, the lawyer who filed a brief for The Media Institute in support of the petition for review: “If a picture tells a thousand words, a thousand antennas tell the picture.”

Nor is Smolla the only person who sees through this scheme.  Denny Chin, an appeals court judge who was part of a panel that earlier ruled against an injunction against Aereo, wrote this in his stinging dissent:

The [Aereo] system employs thousands of individual dime-sized antennas rather than one central antenna; indeed, the system is a Rube Goldberg-like contrivance, over-engineered in an attempt to avoid the reach of the Copyright Act and to take advantage of a perceived loophole in the law. 

Because the Supreme Court agrees to review less than one percent of the cases brought before it, it’s no sure thing that Aereo will be reviewed, even though Aereo has declined to oppose the petition for review.  Much may depend on the decision in another appeals court, which is considering a case concerning a company with an Aereo-like setup.  If that court rules against the company, there will be a conflict between two appeals courts (the Second and Ninth circuits), something that would increase the chances that the Supreme Court would agree to review the case.

The importance of this case is not just whether broadcasters can derive revenue for their programs from third-party Internet distributors.  The importance is in what it will tell us about the future of all the content industries and of copyright itself.

To put it another way, you don’t have to be a fan of broadcasting (or Hollywood, or the recording industry, etc.) to have a high regard for copyright.  Like the First Amendment, copyright is enshrined in the U.S. Constitution, and in practice it is copyright that provides the incentive that leads to the creation of the content that the First Amendment protects!

Seen this way (and even acknowledging that there is always some tension between the First Amendment and copyright, usually over arguments about the reach of “fair use”), both of these concepts are not just important in their own right, they’re the opposite sides of the same coin.

Today, however, those industries that rely on copyright protection – the so-called content media like newspapers, magazines, motion pictures, recording companies, book publishers, and broadcasting – are being decimated by piracy and/or the copyright-skirting practices of Internet companies like Google.

Whether the Supreme Court reviews the case or not, Aereo won’t be the last word on the subject of copyright protection.  But if Aereo, or any company, can escape paying copyright fees simply by creating a service that turns on a technological sham like Aereo’s, it’s not just content producers that will suffer; it’s the content-consuming public and copyright law generally.


The opinions expressed above are those of the writer and not of The Media Institute, its Board, contributors, or advisory councils. A version of this article appeared in the online edition of USA Today on Dec.16, 2013.


A Unitary First Amendment – Redux

By guest blogger LAURENCE H. WINER, Professor of Law and Faculty Fellow, Center for Law, Science & Technology, Sandra Day O’Connor College of Law, Arizona State University, Tempe, Ariz.

“[W]e don’t put our First Amendment rights in the hands of [government] bureaucrats.”  What an extraordinary statement for the Chief Justice of the United States to make when one considers the Supreme Court’s long history of allowing Federal Communications Commission (FCC) content-based regulation of broadcasting and other electronic media!

Chief Justice Roberts made this statement in last week’s oral argument of Citizens United v. Federal Election Commission.  Citizens United, involving “Hillary: The Movie,” is the little case that could – could just restore a strong measure of freedom of speech in the most critical of all contexts, namely political speech.

As described in an earlier post occasioned by the first round of oral argument in this case last spring, the narrow issue is the provision of the McCain-Feingold “Bipartisan Campaign Reform Act of 2002” (BCRA) that bans the use of corporate funds for “electioneering communications” via broadcast, cable, or satellite close to an election.  In the earlier argument some members of the Court were astounded by the government’s contention that Congress also would have the constitutional power to similarly ban printed material, including books.
This apparently led those members of the Court who long have been troubled by limitations on political speech imposed in the guise of campaign finance reform to set re-briefing and rearguing for an unusual and extended one-day September session.  And, the Court broadened the issue for rehearing by asking the parties to discuss whether the Court should overrule not only that part of its 2003 opinion in McConnell v. F.E.C. upholding the specific BCRA provision, but also the Court’s 1990 opinion in Austin v. Michigan Chamber of Commerce.  In Austin, over strong dissents, the Court upheld a state’s restrictions on independent expenditures from general corporate funds for ads supporting or opposing a candidate for state elective office.

Not surprisingly, the Court’s actions with respect to Citizens United prompted more than 40 amicus briefs with what the New York Times called “an array of strange bedfellows and uneasy alliances” and set the stage for high drama.  How far will the Court go in affirming the political free speech rights of corporations?  

Arguing briefly for Senator Mitch McConnell as amicus, Floyd Abrams reminded the Court that in New York Times v. Sullivan the Court eschewed available narrow grounds to resolve the case and instead issued a broad ruling to fully vindicate the vital First Amendment interests at stake.  And he told Justice Sotomayor that, similarly here, this is the way the Court would do more good than harm.

Solicitor General Elena Kagan, making her debut appearance on behalf of the FEC, tried to reassure the Court that the government’s position on printed campaign speech had changed.  Don’t worry, she suggested, the FEC has never tried to ban a book, though when pressed she immediately stated a pamphlet might be different.  And this is when Chief Justice Roberts made his comment about not relying on FEC bureaucrats to protect the First Amendment.

But the Court has left countless First Amendment matters in the hands of the government bureaucrats at the FCC at least since Justice Frankfurter’s 1943 opinion in the seminal NBC v. U.S. case in which, in a single paragraph, he subordinated the First Amendment to the public interest standard of the Communications Act.  This later caused Professor Harry Kalven to comment that: “The passage catches a great judge at an unimpressive moment.”  

Over the years, the Court’s deference to the FCC has allowed all manner of infringements on free speech in the name of the amorphous public interest, from the now-defunct (but perhaps soon to be resurrected in some version) fairness doctrine, to the recent debacle over broadcast “indecency,” and maybe to a threatened similar campaign against violence in the media.

But members of the FCC, no less than of the FEC, have no expertise or competence in First Amendment matters.  This is not a comment on any present or former members as individuals; rather it is the basic recognition that the First Amendment disables any government bureaucrat from claiming or exercising any province over matters of free speech or free press.  “Congress shall make no law” is a straightforward “hands-off” policy for government bureaucrats.

During last week’s argument of Citizens United, Justice Breyer suggested to Ted Olson (representing Citizens United) that Congress had a compelling interest for the restrictions it enacted and thought it had narrowly tailored them.  So, the justice asked, should the Court really second-guess Congress?  Mr. Olson forthrightly replied, “You must always second-guess Congress when the First Amendment is in play.”  Exactly so, regardless of the medium of communication at issue, and a fortiori must courts stringently second-guess the FCC when it is infringing free speech, directly or indirectly, as it is wont to do all too frequently.

Whatever the ruling in Citizens United, we can only hope the chief justice’s words reverberate loudly the next time the FCC seeks to sustain an infringement on free speech or press in the name of the public interest.

The Big, Uneventful Day

A blog about media and communications policy would be remiss if it did not mark the fact that this is a watershed date in television history – even if nothing much seems out of the ordinary.

This, after all, is June 12, the date years in the making on which television broadcasters are converting their analog signals to digital.  For TV viewers with cable or satellite (i.e., most of us) there is no difference.  For those who still rely on antenna reception of over-the-air broadcast signals, there will be no more TV until they get a converter box (for which the federal government has been offering discount coupons for months).

The good news is that most people have already taken steps to become digital-ready.  Paul Karpowicz, chairman of the National Association of Broadcasters TV Board, said at a press conference yesterday that only 1.75 million over-the-air households have not prepared for the changeover.  

The National Telecommunications & Information Administration (NTIA) said it received almost 320,000 requests for converter-box coupons yesterday alone, up from the recent daily average of 114,272.  And for those who somehow haven’t gotten the word about the switch to digital, the FCC has 4,000 operators standing by 24/7.

FCC and industry leaders acknowledge that some stations might experience a few engineering bumps.  But for broadcasters and viewers alike, the changeover is said to be going relatively (and even surprisingly) well.  

The FCC, NTIA, NAB, NCTA, and countless station engineers deserve a “well done” for making this watershed day so uneventful.  

A Unitary First Amendment

By guest blogger LAURENCE H. WINER, Professor of Law and Faculty Fellow, Center for Law, Science & Technology, Sandra Day O’Connor College of Law, Arizona State University, Tempe, Ariz.
In last week’s Supreme Court oral argument of the “Hillary: the Movie” case, Citizens United v. F.E.C., the government attorney apparently perplexed several of the Justices by the breadth of his argument.  His argument, and the responses of some Justices, highlight a crucial aspect of the First Amendment.

Citizens United is a nonprofit corporation that made a 90-minute film sharply critical of Hillary Clinton.  During her presidential campaign it wanted to pay cable companies to make the film available to subscribers free via video on demand.

The McCain-Feingold “Bipartisan Campaign Reform Act of 2002” (BCRA), however, bans “electioneering communications.”  This ban prohibits a corporation or labor union from using its general treasury funds for any broadcast, cable, or satellite communication that constitutes express advocacy or its functional equivalent regarding a clearly identified federal candidate within a set time prior to an election.  Electioneering communications, however, do not include news or commentary by a media company, and the statutory ban does not apply to the print media or the Internet.

We are used to media exceptionalism, at least with regard to broadcasting.  That is, throughout its history broadcasting has struggled under a strange First Amendment jurisprudence affording it limited freedom of expression and subjecting it to a panoply of “public interest” obligations that would be constitutional anathemas for any other medium of mass communication.  

Political access rules and requirements for children’s educational programming, for example, fall in this public interest category for broadcasting.  BCRA strangely perpetuates this dichotomous approach by, on the one hand, in effect covering only “television” (broadcast, cable, and satellite), and at the same time exempting from its reach news and commentary in all media.

When pressed by the Justices, the government attorney took the position that the Constitution would allow Congress, if it wished, to extend the statutory ban to print media, a book for example.  To this, Justice Alito replied, “That’s pretty incredible,” going on to characterize the government’s position as allowing it to ban a book about politics, under an expanded BCRA statute, if published by a corporation close to an election.  

Justice Kennedy then demonstrated how bizarre the government’s position is by noting that a book, downloaded by satellite onto a Kindle reader, presumably both would come under the reach of the present statute and, in the government’s view, constitutionally be subject to censorship.  Before long Justice Scalia confessed to being “a little disoriented” because he thought the Court was dealing with the constitutional provision, known as the First Amendment, that he remembers as beginning with “Congress shall make no law.”

BCRA’s restriction on political speech in the guise of campaign finance reform is troubling in its own right.  What great evil of political propaganda justifies this sort of censorship?  But it is good to see members of the Court now “disoriented” by the hopelessly disjointed, media-based approach to First Amendment freedom of expression that the Court itself spawned in the middle of the 20th century and unfortunately maintains in our radically transformed digital era.  

These Justices were incredulous that the government would suggest it could extend a regulation of electronic media to print.  But the disconnect finally should go just as strongly in the other direction – what is prohibited in regulating print media is also prohibited for all media, including broadcasting.

In recent years, the Federal Communications Commission under former chairman Martin pursued a relentless and unwarranted campaign against so-called “indecency” on broadcast television.  The Supreme Court has pending before it a challenge to the Commission’s authority in this area to regulate what no government entity can restrict in any other media.  It would be gratifying if in its decision in the next few weeks the Court finally adopts and applies a unitary First Amendment.

Professor Winer is also the Faculty Editor of Jurimetrics.