Aereo: a clever technical workaround that lost at the US Supreme Court

What Aereo was

Chet Kanojia's Aereo launched in New York in 2012 with backing from Barry Diller's IAC. For a monthly fee, subscribers could stream local broadcast channels to phones and computers and record shows to the cloud.

Its one-antenna-per-user design was built around existing copyright precedent. Broadcasters argued it was simply retransmitting their signals without paying. In June 2014 the Supreme Court sided with them, 6–3. Aereo suspended service within days and filed for bankruptcy in November.

Why it failed

1. 1

   The product was a legal theory

   Much of Aereo's costly engineering existed to fit a particular reading of copyright law. Its advantage over cable — not paying retransmission fees — depended entirely on courts accepting that reading.

2. 2

   Concentrated, well-funded opponents

   Broadcast networks earn billions from retransmission fees and had every incentive to fight. A startup threatening a large incumbent revenue stream should treat litigation as a certainty, not a risk.

3. 3

   No fallback if the case was lost

   There was no licensed version of the business ready to switch to. When the ruling came, the company had to stop serving customers almost immediately.