The last five decades have seen a tremendous rise and fall of several of players in the media industry due to their inability to understand the market and the dynamics of supply and demand. Many media entities have remained largely unchanged from the traditional practices adopted in the 1960s, a factor that has significantly led to their failure. Some of the common factors that have been highlighted to explain the greatest failures in the industry include the inability to capitalize on their brands, poor marketing skills, and ineffective business models. One of the media entities that failed significantly due to a similar mistake was Aereo. It established itself as a technology company which allowed subscribers to sign up and acquire antennas to watch television. However, in their actions, Aereo had infringed the Copyright Act, thereby entering into a war not only with the federal government but also other big media players such as ABC, NBC, and CBS.
With new technology, McDowell (2006) asserted that companies are always tempted to take in new risks. Aereo created its brand around, enabling people to watch television online. It first established its market in New York, where it had up to 10,000 antennas, which would allow for the capturing of over-the-air broadcasts for the paying customers (Abbruzzese, 2014). The company’s official statement read, "When you sign up for Aereo, we assign you an antenna so you can watch T.V. on your mobile devices" (Root, 2014). Subscribers could also enjoy live programming and further record their favorite shows. However, through its branding strategy, Aereo failed to notice that it had braced itself for a legal battle. The company was accused of infringing federal copyright laws. The government was not only the enemy in this endeavor. Some of the biggest media players, including ABA, CBS, NBC, Disney, and Fox, filed suit against Aereo (Price, 2013). The companies felt that Aereo had violated the Copyright Act on two accounts. The first one was their failure to pay the royalties for all the copyrighted materials they transmitted to their clients and secondly, their failure to seek permission from their sources (Goldberg, 2014).
Delegate your assignment to our experts and they will do the rest.
In giving their rebuttal, Aereo argued that they only acted as equipment providers. The equipment involved included the antennas and the digital video recorders. According to the company, these devices were already legally used at home. The case of Aereo demonstrates the risk involved in bringing new technology to the market. The television industry can be lucrative, giving the business a wide array of opportunities to develop new services and attract new customers (Bolger, 2014). Other broadcasters fought Aereo as they demanded the retransmission fees for the services granted to the company's customers. It meant that if more customers continued to use Aereo, giants like NBC, ABC, CBS, and Fox would continue to make losses. Part of the reason why Aereo expanded was that it had initially won a case in the federal court of appeal in 2013. Barry Diller, one of the executives, said, "We always thought Aereo platform was permissible and I'm glad the court has denied the injunction. Now we'll build out the rest of the U.S." (Stelter, 2013).
Other than the risk of bringing in new technology, Aereo suffered because it was unable to predict the future. Legal factors make up a crucial aspect of the external business environment. The inability of the company to foresee this turned out to be detrimental to its well-being in the long run. According to Butts, (2013), Aereo's continued infringement undermined other broadcaster's ability to do business with the providers such as cable, Telco T.V., and satellite providers. The broadcasters, through their operation with the providers, received hefty amounts of retransmission fees. Therefore, the entry of Aereo into the equation jeopardized business in this regard. Had Aereo considered itself as a cable company, it would not have gone through all the legal problems (Luckerson, 2014). It would only need to pay the much-needed retransmission fees and essentially stay in business. Aereo failed to disclose the number of subscribers it had at the time of the ruling (Brown, 2014). However, it is important to note that the emergence of similar companies that use the internet and antennae to broadcast television programs would serve as a major threat to the traditional broadcast entities in the country.
Aereo played a significant role in their bid to differentiate themselves from the cable companies. It cut its own market niche and sought to establish a paradigm shift that would emancipate the people from the traditional media which they were already losing interest in. Although it could be commended for this important venture, it continued to engage in mistakes that media technologies have performed in the last half a century. The lack of awareness to its external business environment coupled with an air of uncertainty played a role in their downfall. Failure to assess the pertinent issues regarding copyright laws also significantly affected them.
In conclusion, in their actions, Aereo had infringed the Copyright Act, thereby entering into a war not only with the federal government but also other big media players such as ABC, NBC, and CBS. By distinguishing themselves from the cable business, they failed to pay retransmission fees to the traditional broadcasters hence amounting to copyright infringement. On their part, Aereo maintained that they only leased antennas and DVRs, which could enable the customers to access media content at a reduced price. However, the Supreme Court ruled otherwise hence forging their path towards oblivion.
References
Abbruzzese, J., (2014, February 20). Court Halts Aereo Service in Utah. Mashable. Retrieved from http://mashable.com/2014/02/20/fox-incjuction-stopaereo-utah/
Bolgar, C., (2014, November 11). The evolution of risk in the face of technology. Retrieved June 4, 2015, from http://knowledge.zurich.com/riskinterconnectivity/the-evolution-of-risk-in-the-face-of-technology/
Brown, K. (2014, January 31). Aereo: The business and the battle | The dotted line reporter. Retrieved July 6, 2015, http://dlreporter.com/2014/01/31/aereothe-business-and-the-battle/
Butts, T. (2013, October 10). T.V. Technology: Federal Court in Boston rules in favor of Aereo. Retrieved May 19, 2015, from http://www.tvtechnology.com/article/federal-court-in-boston-rules-infavor-of-aereo/221823
Goldberg, K. (2014, June 27). The Supreme Court's Aereo decision: What it says, what it means. CommLawBlog. Retrieved from http://www.commlawblog.com/2014/06/articles/broadcast/the-supremecourts-aereo-decision-what-it-says-what-it-means/
Luckerson, V. (2014, June 25). Aereo backer Barry Diller: 'It's over now' Retrieved June 4, 2015, from http://time.com/2921376/aereo-barry-diller/
McDowell, W., (2006). Broadcast television: a complete guide to the industry. New York: P. Lang.
Price, E. (2013, October 11). CBS, ABC, NBC, Fox file Supreme Court petition to shut down Aereo. Mashable. Retrieved from http://mashable.com/2013/10/11/nbc-supreme-court-aereo/
Root, D., (2014). The Rise and Fall of Aereo: The Supreme Court squashes one possible future of television. Reason https://reason.com/2014/10/01/the-rise-and-fall-of-aereo/
Stelter, B. (2013, May 2). Ownership of T.V. sets falls in U.S. The New York Times. Retrieved from http://www.nytimes.com/2011/05/03/business/media/03television.html?_ r=0
