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Aereo

Media


Aereo generated lots of attention from the media world in the run-up to its Supreme Court case this spring.

Consumers may have been less interested: Paperwork filed with the U.S. Copyright Office this month indicates that the startup, which let users watch broadcast TV on the Web and mobile devices, ended 2013 with fewer than 80,000 subscribers.

Aereo had 77,596 subscribers, spread out among 10 cities, at the end of 2013, according to documents the company has filed with the U.S. Copyright Office, as part of its bid to be classified as a cable company.

About 27,000 of those subscribers lived in the New York City area, which was Aereo’s first market, and launched in the spring of 2012. Boston, which launched in the spring of 2013, had 12,000 subscribers. The Atlanta area, which also launched in 2013, accounted for 10,000 subscribers.

For comparison: Netflix just announced that it has more than 50 million subscribers around the world for its streaming video service. Last spring, Hulu said it has 6 million subscribers for its premium service.

Seth Davidson, an attorney specializing in media and copyright cases, flagged the New York City numbers during a conference call hosted last week by media analysts MoffettNathanson; the research firm posted a recording of the call today.

And last week, a Copyright Office letter seemed to suggest Aereo had fewer than 100,000 subscribers at the end of last year.

But now we don’t have to guess about Aereo’s uptake with consumers for its offering, which sold digital access to broadcast TV programming for up to $12 a month. One thing we don’t know is what happened to Aereo this year, when it marketed some territories more aggressively.

In June, the service said it would “pause” operations in light of its defeat at the Supreme Court.

While Aereo never disclosed subscriber numbers, it always maintained that it was aiming for a large market — last fall, CEO Chet Kanojia told The Wall Street Journal his infrastructure could “easily” support 350,000 subscribers in New York City, and the Journal estimated he was serving up to 135,000 customers in New York at the time.

An Aereo PR rep declined to comment.

All of this could easily be moot at this point, since Aereo is waiting to hear what a federal judge decides to do with the company in response to the Supreme Court’s ruling. But it’s a good reminder that the legal issues were only one of the hurdles Aereo had to clear if it wanted to win — the company also had to convince customers to pay up.




5 comments
ftl
ftl

The business model of Aereo was always in question, given the bandwidth caps most ISPs have. Even at 250GB a month, most families would blow right by that given the average number of viewing hours per day watching different programs by various members of the family.

ala_ada
ala_ada

 I still don't see what broadcasters' problem was with Aereo.  They were expanding their broadcasters' audience, which made their advertising much more broad, and, presumably, worth much more to sell to advertisers.


Admittedly, the "local car dealership ads" in the NY area might not have benefited much from broader exposure, but regional advertisers may have.


There are some local shows from where I've moved which I may have wished to continue watching, which don't provide access outside their local markets.  As a broadcaster, I would have maybe started slow with Aereo: one $1 dollar for the first year for licensing fees.  At least it would have been engaging and started the discussion.

JMWJMW
JMWJMW

@ala_ada  many people unfamiliar with the law, history, and -- uh -- business have this same problem.  The reality is that few of those subscribers actually lived in the markets where they subscribed to Aereo.  This means that the common "exclusive contracts" that broadcasters have with content providers were violated, putting the broadcasters in peril if they did not fight.


Aereo thought they were clever enough (a common fallacy when engineers read law) to fit through an exception (actually an aberration) that only applied in the second federal circuit.


It is Aereo that had the problem.  They could have tried to negotiate with broadcasters, as SyncBack has done to enforce "geo-fencing" to make sure the content contracts aren't violated.


Also, almost all of Aereo's fees would have gone to broadcasters, who would have to remit some to networks.  Instead, Aereo's founder will probably lose his house.  Copyright infringement is a criminal matter as well.  Now you know why they shut down within days of the Supremes folding their "house of cards" and lies.

ftl
ftl

@JMWJMW @ala_ada No, you could not use Aereo outside of the broadcast area of the TV stations. This was checked when you signed up. Also, if you were on a business trip outside of the broadcast area and tried to connect to Aereo back in your home town, it was denied based on the IP address.


Aereo is a corporation. As such, the officers and founders have very little personal liability outside of whatever money they invested. While technically it is a crime to illegally distribute copyrighted material, the question of copyright violation in Aereo's case was moot until recently. It had to go all the way up to the Supreme Court for resolution. Nobody is going to be throwing the Aereo corporate officers into jail for copyright violation, given that they shut the service down within days of the decision. I don't think the Court even decided on whether or not Aereo subscribers were also guilty of copyright violation since that issue became moot once Aereo was found to be in violation and shut down.

JMWJMW
JMWJMW

@ftl Officers and directors are prevented from having liability from external lawsuits, but not in their capacity as employees and they can be sued in their personal capacities.  It is important to remember that corporations don't bear live children nor do they commit criminal acts: only people do both.


Nor was Aereo's liability moot: they obviously received legal advice that told them they were engaged in a folly.  Some investors will be interested in pursuing legal actions against that. 


You appear to know less about virtual private networks, IP spoofing and such than you do about copyright and vicarious copyright liability.


Aereo's business model, just like your view of them, was not factual; both are purely aspirational.  One wonders who their insurance carrier is.  Remember, insurance doesn't cover deliberate acts.


When I asked my attorney and my insurance agent about Aereo's risks, I got different answers than you provided.

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