IMA 504 – Eirik Bjorno – Legal Issues

Online Streaming

The Internet does not only offer us new communication methods, it also has changed the entertainment world. If you miss your favorite TV show it is not a problem anymore, as you can just watch it online when you find the time. Movies, TV-shows and music are all accessible to you on all your portable devices at all times. Spotify, Netflix and YouTube are all companies who deliver entertainment conveniently through the cloud and help you catch up with your favorite shows, but the television is still where it is accessible first, or is it?

The last 5 years we have seen a growth in online video content. Netflix leads the way as they hold 32.3 percent of the market share. YouTube and Hulu follow with 17.1 and 2.4 percent respectively. When Netflix restructured their business and separated their DVD-by-mail service from the online service, they lost about 800.000 subscribers. But only two years later, the number of subscriptions had gone up by over 5 million. It shows that online content is the future. (Kerr)

In addition to these independent companies, most of the major networks have well developed online streaming services.  Here you can either by a subscription, or watch their content with ‘limited’ commercials for free. A move the TV-networks was forced to do, to keep up with the online development.

By having content available online there is a great risk of running in to copyright disputes. Who owns the content? For the TV-Networks this is a non-issue as they own their content and can do as they please with it. For the independent services, deals with major networks and proper compensations are necessary to deliver a solid service. One of the factors in Netflix dominance in this market is their significant deals with Walt Disney and DreamWorks Animation as well as partnerships with smaller networks all across the world. (Tejeda)

Netflix took it to the next level this year, as they launched their first original series: House of Cards. In August, Kevin Spacey, the star of “House of Cards,” gave an enthusiastic speech about the death of the cable television model, the future of content, and the role of Netflix in providing viewers a viewer-centric form of delivery. (Tejeda)

According to Internet research firm Sandvine; The future will see “real-time entertainment applications dominate fixed access networks, accounting for two-thirds of total data usage in 2018, driven largely by ubiquitous integration between devices (e.g. smart TVs, set-tops, game consoles) and streaming services,” (Kerr) These services are on their way into the market will full speed. While Netflix has been able to avoid serious copyright lawsuits, the development of offering real time streams of TV-shows brings in a lot of new and different issues. One of the companies offering these services is Aereo, and they have been under legal scrutiny since 2009.

Aereo is an up and coming broadcasting program that allows subscribers to stream live television on mobile devises or computers. Barry Diller, who founded Fox Broadcasting Company together with Rupert Murdoch, has invested in the company and it charges its users 8 dollars a month to use its services. Aereo is currently available in eight different market areas including New York, Boston, and Miami. Major television networks such as ABC, NBC, and 21st Century Fox feel this new telecommunication option is imposing on their copyrights. Aereo is streaming the video content and gaining revenue from the production of these major media companies without their permission. NBC, ABC and 21st Century Fox decided to take Aereo to court and request that the service was shut down because of copyright infringement.

Copyright can be defined as: “a form of protection provided by the Federal Copyright Act to authors of original works, which includes literary, musical, and dramatic works; pantomimes; choreographic works; pictorial, graphic, and sculptural works; motion picture and other audiovisual works; sound recordings; and architectural works”. The author of the work is always the owner of the copyright.

The definition of an infringement, according to Mann and Roberts, is as follows: “Infringement occurs whenever somebody exercises, without authorization, the rights exclusively reserved for the copyright owner. Infringement needs to be intentional. To prove infringement, the plaintiff must simply establish that he owns the copyright and that the defendant violated one or more of the plaintiff’s exclusive rights under the copyright”.

Aereo claims they are not breaking any copyright laws with their methods. Ramachandran explains in her article how Aereo works: “Aereo’s technology works by using racks of dime-sized antennas in its facilities to pick up over-the-air signals from TV broadcasters. Subscribers are assigned individual antennas when they choose to stream a channel. Aereo stores the programming on individual digital video recorders, converts the signal to a digital format and sends it over the web with a few seconds of delay”. In other words Aereo offers all their programming as ‘private performances’. The copyright law only covers public performance. It’s simply any individual’s legal right to receive over-the-air TV and record shows for their personal viewing.

Aereo claims that since each one of their subscribers receives the TV shows on a unique antenna (which is the subscribers account on Aereo) it is therefore not transmitted to the public. TV Networks, on the other hand, claim that it doesn’t matter that each user can only access a unique copy. They say that since the service is available for anyone to use, it transmits copyright material to the public, so-called ‘public performance’. What speaks for Aereo is a legal precedent surrounding a Cablevision case from 2008 involving a cloud-based digital video recorder.

The Cablevision case is probably the reason for why the lower courts have sided with Aereo. In this incident the central question was: does it matter where a hard drive lives? Instead of everyone having a DVR box in their homes, why can’t Cablevision Systems Corp. launch a service in which all of the digital video recorder’s hardware lived in the cable company’s central office? Cablevision Systems claimed that the recording system (or streaming system) only had shifted the location of the hardware into the cloud. The TV shows are not archived but simply picked up live, with a couple of seconds delay, and then transferred to people’s iPads, computers, or iPhones. It therefore follows the rules of private performance rights. The Second Circuit’s Court of Appeals ruled that the 1.2 seconds of buffer material was in fact an “embodiment” of the copyrighted work but that it was only of “transitory duration” and therefore not copyright infringement. In other words, there is no violation of public performance rights. (Anderson)

While the Cablevision case speaks in favor of Aereo NBC, ABC and 21st century Fox look towards another case to find the legal precedent they need to shut down Aereo’s service. FilmOn X is almost identical to Aereo, as their service also offers an array of small antennas that are assigned to a specific, individual user. “These antennas capture local television signals and deliver video and audio to FilmOn X’s users”, Eriq Gardner writes. This case was assigned to the U.S. District judge Rosemary Collyer and she eventually took guidance from the Supreme Court in the case. Regarding the public/private performance rights, she concluded that, “The Transmit Clause, which applies whether ‘members of the public capable of receiving the performance or display receive it in the same place or in separate places and at the same time or at different times,’ also plainly captures FilmOn X’s DVR-like capabilities.” According to Mann et al public performance includes all types of performable works, such as literary, musical, dramatic, and choreographic works. Sound recordings are not included. The copyright law covers public performance. On the contrary, the copyright law does not cover private performances. It’s simply any individual’s legal right to receive over-the-air TV and record shows for their personal viewing. As earlier mentioned, FilmOn X argues they don’t deliver content to the public because their service facilitates a one-to-one relationship between a single antenna and a viewer. However, the judge in this case finally rules the broadcasters to win the case. She says that even though users have an assigned antenna and hard-drive directory temporarily, all the unique antennas are networked together and provided by one video-streaming company, which allows anyone to become a member. FilmOn X has therefore violated the broadcasters’ rights of public performance. (Gardner)

Although Aereo wont the first rounds of their case; it is still alive and moving up the legal system chain and the networks request the case to be reviewed by the Supreme Court. Whether the case is taken in by the Supreme Court or not, it will have a direct effect on how television is broadcasted in the future. Are we moving in a direction where private online companies can use TV Networks work and sell it without consent?

Netflix and YouTube and other major streaming networks have worked out deals with the owner of the material, or they pay the copyright holder a fee every time the copyrighted material is streamed out through their channels. The entertainment industry realize they have to agree to these terms, as their content is available illegally online, and by pairing up with streaming websites like Netflix, they can benefit from their copyrighted work. This system works. Why, simply because the networks or the production companies still have the edge when they deliver the content first. When ABC airs the new episode of Scandal they will have numerous paying customers because consumers want to be the first to watch it. If Aereo and similar businesses are allowed to broadcast television live we will run into problems as the major production companies will not be willing to give away the last edge they have to online broadcasting. That we are moving towards an online world is a given, but as for now we still need television in the way we know it and we need the legal system to realize and deal with the threat we are facing. I am a big fan of cheap convenient online entertainment, and hold subscriptions with Netflix, Spotify and three Norwegian TV channels. Still I’m afraid that if we give third party networks access and legal support to show TV live we are moving in a direction where there is no turning back.

 

Bibliography

Anderson, Nate. Cablevision remote DVR stays legal: Supremes won’t hear case. 06 June 2009. Conde Nast. 06 11 2013.

 

Gardner, Eriq. Hollywood Reporter. 09 May 2013. Hollywood Reporter. 06 11 2013.

 

Kerr, Dara. Video streaming is on the rise with Netflix dominating. 14 05 2013. CBS Interactive. 04 11 2013.

 

Mann, Richard A. and Barry S. Roberts. Essentials of Business Law and the Legla Enviroment. 11th. South-Western College Pub, 2012.

 

Sharma, Amol and Shalini Ramachandran. “Broadcasters Ask Supreme Court to Intervene Over Aereo.” Wall Street Journal. Dow Jones & Company, 11 10 2013. B4.

 

Tejeda, Alejandra. Netflix and the Rise of Online Video Streaming. 24 September 2013. Compete Inc. 02 11 2013.

 

 

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