Aereo Presses Pause, Adopts New Strategy - AVS Forum
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post #1 of 57 Old 07-11-2014, 10:50 AM - Thread Starter
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Aereo Presses Pause, Adopts New Strategy


The Supreme Court decided against Aereo; now the company is trying to cash in on the publicity. Can it win in the court of public opinion?

------

It's not easy being on the losing side of a Supreme Court decision. Unfortunately, that's where Aereo finds itself. As a direct result of the Supreme Court's ruling in ABC v. Aereo, the company suspended its service on June 28, 2014—without a clear path forward. Nevertheless, Aereo says that its shutdown is temporary and that it is exploring options for the future.

At the time it shut down, Aereo served approximately 500,000 subscribers in a handful of cities. That's a rather small subscriber base, roughly equivalent to the population of Tulsa, Oklahoma. But thanks to the court case, the company has received an oversized portion of publicity. Had the court decided in Aereo's favor, the company would undoubtedly be riding a tidal wave of publicity on its way to a huge IPO. However, the Supreme Court is not a PR agency.

Aereo is the sort of technology upstart that typically doesn't have a Plan B, because Plan A is to disrupt the entrenched players. Uber did it for taxicabs, so why couldn't Aereo do it for broadcast TV? The answer lies in the way the court interprets copyright laws. Moreover, in Aereo's case, the court did not buy the company's argument that it was not re-transmitting content, but rather acting as a mere conduit for a free over-the-air TV signal.

The crux of Aereo's argument was that each customer merely rents an antenna used to receive local OTA broadcasts, which are streamed via the Internet. If there was a true weakness to Aereo's case, it was the dubious notion that one tiny antenna could discreetly to receive broadcasts for any one subscriber. The reality is that the little Aereo antennas were set up in large arrays, which ultimately acted as one device. That crucial technical detail meant that Aereo was selling access to copyrighted content without paying retransmission fees, as opposed to just renting a small antenna to each one of its subscribers.

Aereo is trying to prove the maxim that there is no such thing as bad publicity. With a rebranded website, the company is imploring its supporters to "protect my antenna." In a statement issued a couple of weeks ago, Aereo CEO Chet Kanojia asked his supporters to reach out to their elected representatives in protest of the Supreme Court's decision. The company maintained that each individual antenna belongs to a subscriber, that it only acts as a conduit to deliver free over-the-air broadcasts to its customers, and that the Supreme Court made the wrong decision. The problem is that Supreme Court ruling are permanent, and they firmly establish legal precedent.

So now, Aereo is looking at another path to legitimacy. Instead of fighting the ruling, the company is examining the possibility of embracing the Supreme Court's decision. In fact, Aereo is making the case that it is now essentially a cable company, thanks to the court's ruling. If Aereo's claim holds up under further legal scrutiny, the newfound status would entitle the company to what's known as a statutory license. According to CNET:

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"If Aereo is a 'cable system' as that term is defined in the Copyright Act, it is eligible for a statutory license, and its transmissions may not be enjoined," the company wrote in its letter to the Second Circuit. It added that it has begun to file the necessary paperwork and royalty fees under the statutory license. - read more at CNET.com

It's hard to tell if Aereo is merely surfing on the wave of publicity it generated with its Supreme Court case, or if it genuinely has a workable strategy to emerge victorious. No matter what happens next, it's clear that the next iteration of Aereo won’t resemble the last one. What's your take, does Aereo deserve another shot at disrupting the market for delivering OTA (over the air) content to people's homes?

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post #2 of 57 Old 07-11-2014, 12:48 PM
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If they had paid the broadcast networks a agreed upon fee, similar that what cable and satellite TV pays to broadcast networks to air there content, they would still be in business. But, instead they wanted to pocket a profit by "selling" access and or storage to free content. They even ticked off PBS, that there is very sad indeed. Barry Diller, should have known this was not going to work from the start.

About the Supreme Court here is a good read, http://money.howstuffworks.com/10-ov...ses.htm#page=0
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post #3 of 57 Old 07-12-2014, 10:51 AM
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With decisions like this and the Hobby Lobby case it's clear the Supreme Court doesn't give a rat's ass about anything but the almighty dollar...
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post #4 of 57 Old 07-12-2014, 07:51 PM
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Greed has gotten in the way of the consumer again. I remember when the "airwaves were free" and the broadcasters were using our airwaves. Now they want money for viable companies to retransmit their signals. Is the cable company making money on the broadcaster? It takes those fess and passes them on to us. If the airwaves are ours and we have the right to those signals then the cables companies should be allowed to retransmit them without paying a fee and the cables companies because they are granted right of way privileges should be able to provide the broadcast channels without charging anything other than and basic access fee to maintain the access.
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post #5 of 57 Old 07-12-2014, 08:43 PM
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What is the current situation in terms of cable companies and retransmission rights? When a cable company gets the rights to retransmit a local station on its system, does it automatically get the right to also stream that station on the internet? Or does the cable company have to negotiate separately for streaming rights and pay extra for those rights?

Aereo may be "like a cable company", but it's not doing its retransmissions through an ordinary cable TV delivery infrastructure. Aereo did not put any money into laying cable, the way the cable companies did.

Aereo may find that if it gets into the retransmission rights game, the station owners may just raise the price for those rights. After all, if there is a greater demand for retransmission rights, shouldn't the price rise? And what might happen is that the big cable companies may be willing to go along with those higher prices, knowing that they can avoid passing those price increases along to their customers for a while, but Aereo cannot afford to pay high retransmission fees for long.

So, the big cablers would wait until Aereo has been pushed out of business by the capitalist system. Then, after Aereo is gone, the big cablers would raise prices for subscribers, as usual.

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post #6 of 57 Old 07-12-2014, 08:57 PM
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Originally Posted by kluken View Post
. I remember when the "airwaves were free" and the broadcasters were using our airwaves. ... the cables companies should be allowed to retransmit them without paying a fee and the cables companies because they are granted right of way privileges should be able to provide the broadcast channels without charging anything other than and basic access fee to maintain the access.
Those days were long ago. Back then people accepted the idea that they cannot get everything they want, and they accepted the idea that some kinds of programming should not be allowed. The FCC even had power to regulate content. (The courts have eliminated most of that power.)

Now people are apparently willing to pay a lot for the freedom to receive lousy programming on cable TV, programming that is exempt from any meaningful regulation by the government.

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post #7 of 57 Old 07-13-2014, 06:00 AM
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The problem is the broadcasters have used retransmission fees to make up for declining advertising revenue and thus have become greedy and holding the cables companies hostage to pay higher fees.
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post #8 of 57 Old 07-13-2014, 11:31 AM
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Originally Posted by kluken View Post
The problem is the broadcasters have used retransmission fees to make up for declining advertising revenue and thus have become greedy and holding the cables companies hostage to pay higher fees.
That's one way of looking at it, but it's hard for me to feel sorry for the cable companies when I consider how they have allowed the content of the programming that they carry to degenerate over time. Some people may be willing to pay for what A&E, TLC, MTV, and VH1 have degenerated into, but I'm not. If the cable companies want to save money on program acquisition costs, they should consider giving some of those channels the boot.
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post #9 of 57 Old 07-13-2014, 04:31 PM
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That is why to me, any cable, satellite and even aero should be allowed to carry the broadcast channels at no charge and in turn should be forced to provide them to consumers at no charge thus if all a consumer wants is broadcast channels only they should ken able to get them without paying anything except maybe for a minimal access fee.
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post #10 of 57 Old 07-13-2014, 04:43 PM
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Quote:
Originally Posted by kluken View Post
That is why to me, any cable, satellite and even aero should be allowed to carry the broadcast channels at no charge and in turn should be forced to provide them to consumers at no charge thus if all a consumer wants is broadcast channels only they should ken able to get them without paying anything except maybe for a minimal access fee.

And what is a "minimal access fee"? Cable companies are already required by federal law to sell a very basic package that typically just includes the locals that have given consent for retransmission or have chosen to have must-carry status. But that package often costs $20 per month or more.

And if a local station is going to be on cable, where it competes directly against cable channels for a particular cable subscriber's attention, why shouldn't the local station get a per subscriber cut of the money, just like abominable channels such as A&E get? That way local stations can plow that money into building and maintaining transmitters for the benefit of people who watch OTA and refuse to give money to cable companies who corrupt the youth.

I'd love to see cable bills skyrocket so that more people will be forced to drop the service and the cable companies will be punished for what they have done to the quality of TV programming by agreeing to buy dreck that caters to the worst impulses of the viewing public.

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post #11 of 57 Old 07-13-2014, 06:07 PM
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Originally Posted by kluken View Post
Greed has gotten in the way of the consumer again. I remember when the "airwaves were free" and the broadcasters were using our airwaves. Now they want money for viable companies to retransmit their signals. Is the cable company making money on the broadcaster? It takes those fess and passes them on to us. If the airwaves are ours and we have the right to those signals then the cables companies should be allowed to retransmit them without paying a fee and the cables companies because they are granted right of way privileges should be able to provide the broadcast channels without charging anything other than and basic access fee to maintain the access.
The airwaves are free, if you are using a CB radio. Even a HAM radio operator buys a license to transmit. Broadcast networks pay to use the frequencies they transmit over. They and the local stations also pay for the placement and upkeep on there antenna. Why should Aereo get to siphon off them and sell it for a fee, while not paying distribution or FCC costs?
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post #12 of 57 Old 07-13-2014, 07:34 PM
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Originally Posted by CinemaAndy View Post
The airwaves are free, if you are using a CB radio. Even a HAM radio operator buys a license to transmit. Broadcast networks pay to use the frequencies they transmit over. They and the local stations also pay for the placement and upkeep on there antenna. Why should Aereo get to siphon off them and sell it for a fee, while not paying distribution or FCC costs?
Exactly. The heritage of broadcast OTA television needs to be respected, even if that means the government stepping in in some way to reduce the power of the cable companies. Retransmission consent at least gives OTA some chance of surviving.
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post #13 of 57 Old 07-14-2014, 06:03 AM
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will Aereo's new strategy involve new fictional physics?

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Originally Posted by olyteddy View Post
With decisions like this and the Hobby Lobby case it's clear the Supreme Court doesn't give a rat's ass about anything but the almighty dollar...
Conflate much?

Got any evidence/analysis to back up such a trite statement about the dollar? Maybe describe the "money trail"?

Do you think Aereo's new strategy will involve fictional physics like their original strategy did?
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post #14 of 57 Old 07-14-2014, 08:48 AM
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Quote:
Originally Posted by kluken View Post
Greed has gotten in the way of the consumer again. I remember when the "airwaves were free" and the broadcasters were using our airwaves. Now they want money for viable companies to retransmit their signals. Is the cable company making money on the broadcaster? It takes those fess and passes them on to us. If the airwaves are ours and we have the right to those signals then the cables companies should be allowed to retransmit them without paying a fee and the cables companies because they are granted right of way privileges should be able to provide the broadcast channels without charging anything other than and basic access fee to maintain the access.
1) The airwaves have never been free. Not only do the broadcasters pay hefty fees to use them, they pay a lot to transmit over them, as well. The broadcasts themselves were free to view by the viewer, in return for sitting through ads during the shows Further, when there was less competition, the majority of media advertising dollars were going toward broadcast TV where the majority of the eyeballs were. Now, with as fragmented the marketplaces has become, those dollars don't go as far anymore and TV production isn't getting any cheaper.
2) They aren't your airwaves. Just because the government oversees them, doesn't mean they are yours. Try broadcasting your own content on them and see what happens. The broadcasters lease those frequencies, just like someone leases an apartment. As a result, they have to obey certain rules, but as long as they do, they essentially have ownership of those frequencies during their lease period.
3) The cable companies most definitely make money off carrying the broadcast channels. Many people won't pay for a pay TV service that doesn't have them. Two cases in point: A) satellite TV subscriptions really took off when they began offering local into local service that allowed them to carry local stations in more markets. People didn't want network TV - they wanted their local channels. B) Remember the last time when TWC had a big spat with ABC and took them off their system? People switched to other options in droves. DirecTV gained a lot of subs from that.
4) If the cable companies charge anything at all to the customer for providing those channels, the channels have the right to get some of that. If you charge people for content you don't own, the owner of said content has the right to get paid along with granting permission to retransmit it in the first place.

The thing is, when you get the broadcast channels any way other than via an antenna on your roof, the fees you pay are for the ease in use, the reliability of the signal compared to OTA and for all those extra things like channel guides. When you get those directly over the air, it's on you to tune the channels in and you have to provide your own equipment to not only do that, but to record them as well. Cable companies make that easier for most people and that's what they're paying for. For those who can't easily get an OTA signal, that's the price for getting it there when you can't get it yourself.

If you don't want to pay, that's fine. However, that leaves you with 2 options: 1) figure out how to get an antenna signal on your own or 2) go without. Just because you don't like the price, doesn't mean it's OK for a service to make money off providing content they don't own and don't have permission to provide. The fact you can get OTA TV for free doesn't mean it's free for any use. The broadcast networks own that content and have the right to control how it's distributed. Free doesn't mean it doesn't have limitations. The price of the product does not dictate copyright.

As far as the current state of Aereo, this is starting to sound more an more like the path Napster went down. After being found to be violating copyright, they decided to pursue becoming a legit MP3 service. Unfortunately, it was too late and they simply never took off under that model. The customers simply weren't there for them and they couldn't make the deals for music they needed to.

I would suspect Aereo will suffer the same fate.

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post #15 of 57 Old 07-14-2014, 09:01 AM
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Quote:
Originally Posted by CinemaAndy View Post
The airwaves are free, if you are using a CB radio. Even a HAM radio operator buys a license to transmit. Broadcast networks pay to use the frequencies they transmit over. They and the local stations also pay for the placement and upkeep on there antenna. Why should Aereo get to siphon off them and sell it for a fee, while not paying distribution or FCC costs?
And the traditional business model that paid for these costs was ad revenue. OTA never provided revenue to the local broadcasters in the past; Aereo wasn't stealing anything that existed before. Aereo carefully controlled the geographic location where you could pick up your broadcast stream. I'm in the NYC market, and I could only watch my stream while I was at home or logged in through an ISP in the broadcast radius. When I tried to log in from my laptop while away on vacation, it wouldn't work. So they did a good job defending the playing field as it has been intended since the FCC started licensing bandwidth.

Yes, the airwaves are supposed to be free to RECIPIENTS, because the broadcasters are buying those licenses from the public. Anything owned by the government is supposed to be owned by the public, by the way.

The history of cable companies reveals a bit of irony when looking at what has currently happened with Aereo. In its infancy, cable simply retransmitted OTA broadcasts directly into homes, allowing homeowners to remove rabbit ears or the rooftop antenna, paying the cable company for privilege of tidying up their roofline. Broadcasters sued the cable companies and SCOTUS ruled against the broadcasters. So the networks did the only other thing you can do to trump a SCOTUS ruling: they lobbied congress to pass new laws that required cable companies to pay retransmission royalties. That ruling set new revenue rules for retransmission of OTA. Aereo was well aware of that and tried to carefully comply by creating a 1-to-1 antenna-to-user ratio. Even the DVR feature created a discrete recording for each user. If 1,000 people recorded the same show, there were 1,000 recordings on Aereo's servers, thus keeping Aereo clearly away from the retransmission classification.

Obviously, though, that fastidious attention to the letter of the law didn't save them in the end.
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post #16 of 57 Old 07-14-2014, 11:47 AM
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The reality is that the little Aereo antennas were set up in large arrays, which ultimately acted as one device. That crucial technical detail meant that Aereo was selling access to copyrighted content without paying retransmission fees, as opposed to just renting a small antenna to each one of its subscribers.
Personally I believe that issue is the biggest hole in Aereos argument. It is interesting that the physics of the antenna didn't make it into the courts ruling. It is possible it was never discussed.

If Aereo is found to be a "cable company" and eligible for a statutory license that the broadcasters cannot block, they could be back in business. Of course those licensing fees will be passed on to their subscribers. Even if it doubles their subscription fee, it would still be a good deal for the consumer that cannot get good OTA reception. A $16 Aereo fee would be a lot better then the $25 to $30 that most cable companies charge for their basic service.
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post #17 of 57 Old 07-14-2014, 02:23 PM
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Originally Posted by olyteddy View Post
With decisions like this and the Hobby Lobby case it's clear the Supreme Court doesn't give a rat's ass about anything but the almighty dollar...
You are cherry picking. Just last month the court upheld EPA authority to regulate greenhouse gases from power plants, which is quite the opposite of caring only for the almighty dollar. Besides, this is way, way off topic.

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The problem is the broadcasters have used retransmission fees to make up for declining advertising revenue and thus have become greedy and holding the cables companies hostage to pay higher fees.
I agree with you, but Aereo has since tried to switch to a model where they will pay the retransmission fees, and the broadcasters are still saying no. I really don't understand this move to continue to block Aereo, because allowing Aereo to retransmit means direct revenue from the retransmission fees and more eyeballs for their advertisers.
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post #18 of 57 Old 07-14-2014, 03:27 PM
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I agree with you, but Aereo has since tried to switch to a model where they will pay the retransmission fees, and the broadcasters are still saying no. I really don't understand this move to continue to block Aereo, because allowing Aereo to retransmit means direct revenue from the retransmission fees and more eyeballs for their advertisers.
Sour grapes, perhaps?
Or, someone like ABC/Disney won't be able to demand that Aereo carry all their programming just to get the OTA stations? That's the leverage the conglomerates use on "Real" cable companies to enhance their bottom lines.

And, I believe, the rates are somewhat restricted by law, so they can't jack up the OTA rate to cover the loss of "bundling" revenues.

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post #19 of 57 Old 07-14-2014, 06:03 PM
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OK, so what's the conclusion? Will Aereo be able to compete against the big guys, or will Comcast and DirecTV squash Aereo like a bug? I predict Aereo gets squashed.
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post #20 of 57 Old 07-14-2014, 06:29 PM - Thread Starter
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OK, so what's the conclusion? Will Aereo be able to compete against the big guys, or will Comcast and DirecTV squash Aereo like a bug? I predict Aereo gets squashed.
Like a bug.

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post #21 of 57 Old 07-14-2014, 06:29 PM
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OK, so what's the conclusion? Will Aereo be able to compete against the big guys, or will Comcast and DirecTV squash Aereo like a bug?
I don't think it would be Comcast or DirectTV at this time, but rather the networks, just like last time, since this is crossing the gray area from cable/satellite distribution (with their controls, such as encryption) to Internet distribution.

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post #22 of 57 Old 07-14-2014, 06:34 PM - Thread Starter
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I don't think it would be Comcast or DirectTV at this time, but rather the networks, just like last time, since this is crossing the gray area from cable/satellite distribution (with their controls, such as encryption) to Internet distribution.
Whatever the angle, some branch of Comcast is going to do some squashing. Don't forget Comcast owns NBC, in addition to being the number one ISP and cable company in the USA.

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post #23 of 57 Old 07-14-2014, 06:50 PM
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Poor Aereo. Not even as successful as DuMont. The big guys always win.
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post #24 of 57 Old 07-14-2014, 07:35 PM
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Renting a antenna only works if it's connected to your tv. Court of public opinion? please... if that were the case napster would still be transferring songs for free.
This was a simple case of selling access to content you don't own. Aereo will have to compensate broadcasters if it wishes to provide access to their content, pure and simple.
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post #25 of 57 Old 07-14-2014, 08:25 PM
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Perhaps Congress should pass some laws to make OTA a more attractive option again. Tax credits for community antenna installations in apartment complexes, for instance. Or credits for businesses that choose to go OTA. Maybe some laws against the high energy consumption of cable TV set-top boxes.
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post #26 of 57 Old 07-15-2014, 10:44 AM
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Aereo will have to compensate broadcasters if it wishes to provide access to their content, pure and simple.
Aereo is already trying to get the ball rolling on that, and the broadcasters are trying to block this too. I understood why they didn't like Aereo when they weren't getting rebroadcasting fees, but this I do not understand.
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post #27 of 57 Old 07-15-2014, 04:48 PM
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Aereo is already trying to get the ball rolling on that, and the broadcasters are trying to block this too. I understood why they didn't like Aereo when they weren't getting rebroadcasting fees, but this I do not understand.
It's because the internet is a very new way of distributing "television" content to viewers, and the economics and regulatory environment have not yet been fully figured out.

In the very old days, when there was only OTA broadcasting, the rules were simple. There were only a few channels, and the programming was designed to appeal to wide audiences. Back then, advertisers would shy away from anything that was deemed too violent, risque, or politically controversial. There was no way of knowing exactly which viewers were watching at any given moment. In the early days, a single sponsor would sponsor a television series (such as Texaco with Milton Berle).

Then, as cable TV grew, advertising became aimed at niches.

Now with the internet, who knows how much people will be willing to pay to watch a program? Should they pay on a per-program basis or for access to a programmed "channel" on the internet? How much will advertisers be willing to pay for internet ads? Probably not much unless dynamic insertion can be used to tailor the ads to the viewer.

Who would get the ad revenue? Local stations? The networks? The producers of the programs?

But what is lost with all of this? Privacy is one loss, another is a sense of community among viewers. In the future, will there be any shows discussed around the water cooler, or will everyone be watching something different from the next fellow?
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post #28 of 57 Old 07-16-2014, 07:57 AM
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Originally Posted by veedon View Post
It's because the internet is a very new way of distributing "television" content to viewers, and the economics and regulatory environment have not yet been fully figured out.

In the very old days, when there was only OTA broadcasting, the rules were simple. There were only a few channels, and the programming was designed to appeal to wide audiences. Back then, advertisers would shy away from anything that was deemed too violent, risque, or politically controversial. There was no way of knowing exactly which viewers were watching at any given moment. In the early days, a single sponsor would sponsor a television series (such as Texaco with Milton Berle).

Then, as cable TV grew, advertising became aimed at niches.

Now with the internet, who knows how much people will be willing to pay to watch a program? Should they pay on a per-program basis or for access to a programmed "channel" on the internet? How much will advertisers be willing to pay for internet ads? Probably not much unless dynamic insertion can be used to tailor the ads to the viewer.

Who would get the ad revenue? Local stations? The networks? The producers of the programs?

But what is lost with all of this? Privacy is one loss, another is a sense of community among viewers. In the future, will there be any shows discussed around the water cooler, or will everyone be watching something different from the next fellow?
Not that I disagree with much of anything you said but what does it have to do with what Aereo wants to do? They want to provide their subscribers with live access to OTA broadcasts and a DVR to record those same channels if there subscribers wish too, exactly the same as a cable company does when they sell you a cable subscription and a rent you a DVR.
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post #29 of 57 Old 07-16-2014, 08:13 AM
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Originally Posted by Actionable Mango View Post
Aereo is already trying to get the ball rolling on that, and the broadcasters are trying to block this too. I understood why they didn't like Aereo when they weren't getting rebroadcasting fees, but this I do not understand.
I disagree.

Aereo is making a big show of trying to be the crusader against "Big Media" in order to garner support in their favor. They're appealing purely to public sympathy in order to provoke some sort of appeasement from the networks.

Further, I suspect this was their goal all along: to sneak in the back door as a new cable company and become just another Comcast or Time Warner.

There was no way they were ever going to survive selling OTA access at $8 a month. They wanted subscribers to multi-channel content beyond that where the real money is. They knew the networks would sue and they new that it was going to be over retransmission fees. Win or lose, they needed a decision that validated a pay model. What they needed was a court decision that gave them permission to be a cable provider, bypassing the blocks that other MSOs would try to put up in their territories.
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post #30 of 57 Old 07-16-2014, 04:33 PM
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Not that I disagree with much of anything you said but what does it have to do with what Aereo wants to do? They want to provide their subscribers with live access to OTA broadcasts and a DVR to record those same channels if there subscribers wish too, exactly the same as a cable company does when they sell you a cable subscription and a rent you a DVR.
Aren't negotiations for internet streaming rights often separate from negotiations for cable TV retransmission rights? Does a local station even have the legal right to put the syndicated programs that it airs out onto the internet?

I think cable TV and the internet are completely different. If Aereo truly had a cable TV distribution set-up, then it would be a cable company. But it's not. It's an internet streaming company.
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