Supreme Court Aereo Decision Also A Blow To Boston's Tech Sector

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Aereo founder and CEO Chet Kanojia. (Bebeto Matthews/AP)
Aereo founder and CEO Chet Kanojia. (Bebeto Matthews/AP)

The U.S. Supreme Court has dealt a blow to a Boston-run startup, while handing a victory to the Boston television stations that sued the company.

The high court ruled Wednesday that Aereo Inc. is violating federal copyright law by offering a broadcast television streaming service to their customers. Aereo’s CEO, Chet Kanojia, calls the decision a “massive setback for the American consumer.” But it could also be a setback for Boston’s technology sector.

Aereo founder and CEO Chet Kanojia. (Bebeto Matthews/AP)
Aereo founder and CEO Chet Kanojia. (Bebeto Matthews/AP)

Aereo runs an online service that lets customers take shows that are broadcast over the airwaves where they live, record them and store them online and then stream those shows over the Internet whenever they want. But six of the high court’s nine justices say that counts as a public performance, violating copyright law.

The media company Hearst Corporation, which owns WCVB-TV in Boston, says it is pleased with the ruling for protecting its right to be compensated. The Competitive Enterprise Institute in Washington agrees.

"Aereo paid nothing to the television stations, the networks, or the producers," said Ryan Radia, associate director of technology studies at the Competitive Enterprise Institute. "But under this decision, future companies that use this business model will now have to pay."

Aereo’s CEO says in a statement that his company worked all along to create a technology that complies with the law. Aereo uses tiny antennas to record over-the-air television broadcasts that are already free. Still, the Supreme Court compared Aereo to a cable company, not an online DVR. Kanojia says the judges are sending, “a chilling message to the technology industry.” Many in Boston’s technology industry agree.

Joe Shartzer, who works for a different startup that used to have its offices in South Boston, just a few blocks from where most of Aereo’s employees work, says entrepreneurs and investors will think twice about developing new technologies for online media.

"I think it could be a little bit discouraging. Will the Innovation District be fine? Yes, certainly long-term. But I think short-term it is kind of discouraging," Shartzer said. "I think a lot of these startups, especially in the Innovation District, definitely toe the line of legality and try to shake up the spirit of the law and intent, because I think that’s where you get innovation from. Especially in such a closed arena like cable companies."

But Radia says the ruling won’t stifle innovation, but instead encourage it by protecting cable companies and TV stations.

"With this protection, they can rest assured that if they continue to migrate their content online, the creators won’t have to worry about illegal, unauthorized services like Aereo," Radia said.

At least in Boston’s tech sector, the sentiment seems to be the opposite. Alex McHale, a former TV producer who made the switch to online media, says the Supreme Court decision is a downer.

"I think at the end of the day, it seems like big corporations win," McHale said.

Although Aereo lost in the Supreme Court, leaving its future and that of its roughly 75 Boston-based jobs uncertain, Kanojia says the company will fight on. But how is still up in the air.

This article was originally published on June 25, 2014.

This segment aired on June 25, 2014.

Curt Nickisch Business & Technology Reporter
Curt Nickisch was formerly WBUR's business and technology reporter.



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