Don't Root for Aereo, the World's Most Ridiculous Start-up

By Farhad Manjoo , written on July 14, 2012

From The News Desk

Aereo, the controversial television streaming company backed by Barry Diller, may be the stupidest high-profile tech start-up ever launched.

In my years of covering the tech business, I certainly can’t remember coming across many other ideas that were as ridiculous on so many levels. Webvan squandered $1.2 billion, but at least it was trying to create something useful. lacked all business sense, but it did give us that sock puppet. You can’t say anything nearly as kind about Aereo: Even in dot-com years, not many firms ever came close to wasting so much money and so many brain cells trying to solve a problem that so clearly didn’t need solving, in a manner so spectacularly inefficient, ending up building a product that most people don’t need, at a price that sane people shouldn’t pay.

Aereo is such an idiotic idea it almost sounds like Banksy-level performance art, like a prank that a few tech-savvy dudes came up with late one night as a way to illustrate the supreme idiocy of our copyright laws—and, in the process, to get an aging media bigwig to part with his cash.

I’m being harsh. But someone has to be. In the past few months, after Aereo was hit by insane lawsuits from the television industry, it has become something of a cause célèbre for people fighting for more progressive copyright laws. No doubt it was good to see Aereo win its first legal test this week, when a federal judge denied TV companies’ request to have the firm immediately shut down.

But don’t mistake Aereo’s win as a sign of progress in copyright law or as a victory for consumers. If Aereo is successful, it will be only because it found a strange loophole in the legal thicket surrounding how we treat content. But as BuzzFeed’s John Herrman smartly points out, “loopholes aren’t a technology”—just because a company has found a legal loophole does not make it a sound business idea, a sound technical idea, or a good deal for consumers.

Here’s what Aereo does: It streams live and recorded TV over the Internet. The company claims to have devised the world’s smallest television antenna (it’s allegedly as small as a dime), and then squished thousands of such antennas into large data centers in New York. When you use the service, Aereo assigns one of these antennas to you. That antenna will capture networks that are broadcast over the air for free—ABC, CBS, NBC, PBS, etc.—and then will stream your show (or record it for later streaming) to your computer or mobile device. In other words, Aereo is a streaming DVR for over-the-air channels. For now, the service is available only in New York, at a cost of $12 per month.

To understand just how ridiculous this plan is, let’s point out, first, that recording and streaming television is not a difficult technical problem to solve. Indeed, it has already been solved—many times, in many ways. Some of those ways include ReplayTV, one of the first commercial DVR systems, which, about a decade ago, offered a feature that would let you send recorded shows over the Internet to other Replay devices. A few years later, Slingbox solved the problem a different way. It hooked into your TV and Internet line, then fed the content it got from the former into the latter—allowing you to watch your shows from afar. Then there are various systems created by cable providers—like Cablevision’s cloud DVR and Time Warner’s TWC TV—that offer streaming as part of your subscription. And that doesn’t even get to the world’s most efficient method of capturing and distributing television over the Internet—the hordes of people who have turned BitTorrent into the planet’s best cable system.

But BitTorrent is legally dubious, you say. Even though it is the most straightforward way to distribute TV online, recording a show one time and then sending that copy to lots of viewers is a violation of copyright law.

So how to get around that limitation?

The obvious answer is to change the law. If Modern Family is broadcast to everyone in the country for free, then why shouldn’t I be able to snatch a copy that you put online? After all, bits are fungible; if I had recorded the show, then “my” copy would be exactly the same as “your” copy. Indeed, since all digital copies are the same, there’s no such thing as my copy and your copy. They’re all equal. It makes no sense whatsoever, then, that I am allowed to capture Modern Family when it flies over the air from ABC, but I’m not allowed to do so when it flies over BitTorrent. It’s a legal inconsistency that’s screaming out for a fix.

But changing the law to make a practice that is ethical into one that’s legal is too difficult. Instead, Aereo devised a circuitous plan that satisfies our strange law. If capturing a TV channel once and streaming it to lots of people is illegal, then why not capture the show independently for each and every viewer? That’s what Aereo does. It perpetuates the legal fiction that digital copies are somehow distinct. Aereo depends on the bizarre idea that two antennas sitting in the same data center recording the same episode of Modern Family will create two different versions of the show, one that's legal for me and another that's legal for you.

That’s progress? No, it’s ridiculously inefficient and monstrously unscalable, a fact that you can discern from Aereo’s high price. $12 a month for access to free shows? That’s nuts. Compare Aereo’s price to Netflix, which charges you $8 a month for access to hundreds of thousands of premium shows—that is, stuff that wasn’t originally broadcast free. Compare it to Hulu, which allows you to watch dozens of shows for free (other than having to sit through some ads). Or compare it to the BitTorrent, whose only price tag is frustration (and the small chance of legal liability).

It’s true that Aereo has created a nice interface and some slick marketing, but it’s difficult to think of anyone who’ll see its service as a worth the cost. What about cord cutters? Wouldn’t it be a good way to get live television, a way to supplement Netflix and iTunes and such? Eh, I doubt it—are there that many people who need live streaming over-the-air television? You really need Modern Family on the go? You won’t be satisfied with watching it at home, for free, with a $20 HDTV antenna?

And even if Aereo does take off, it will be easy for all of its competitors to undercut it. If Aereo really becomes a threat, the networks could simply offer their own streaming versions of their shows (if not for free, then for less than what Aereo charges). Some even suggest they could do something more drastic: Stop offering their content over the air. Sure, they’ll lose some of their audience, but most people don’t get TV through antennas.

Whatever happens, it’s hard to see the scenario where Aereo survives. At best, its legal battle will create a new regime in TV, one in which networks lose some of the money that cable providers offer them for “retransmission.” Such fees are a racket; your cable bill keeps creeping up in part because over-the-air networks keep demanding more money to send their purportedly free shows over your line. If Aereo’s legal case ends up slashing those fees, that would be a good outcome.

But as a standalone service, Aereo makes no sense. Indeed, anyone who truly wishes for more common sense in the media business should root for Aereo’s failure, not its victory. Let’s never forget that this is a firm that will charge people a sky-high price for shows that we can all get for free. By perpetuating the idea that free television should be a service that we pay for—that merely rebroadcasting free television should incur some kind of convenience fee for customers—Aereo is cementing an indefensible policy.

Free TV should be free, wherever you get it. By suggesting otherwise, Aereo isn’t merely profoundly stupid; it’s dangerous, too.