30th anniversary of Betamax decision sees new fight for innovation

Gary Shapiro President and CEO, Consumer Technology Association
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Thirty years ago, the U.S. Supreme Court decided a landmark case that paved the way for an explosion in digital recording technology innovation. Products and features we take for granted today – MP3 players, iPods, DVRs and so much more – would not exist if the Court had ruled the other way in Sony Corp. of America v. Universal City Studios, more commonly known as the Betamax Case, in 1984. Now, as innovative new services offer consumers greater access to content and more control over how they get to it and where they store it, Sony’s precedent is being threatened.

For the last two years, television broadcasters have been threatening Aereo, a New York City-based startup. Aereo provides consumers access to tiny antennae that allow customers to make and stream their personal copies of local, over-the-air television content to their tablets, computers and other devices. Broadcasters insist that Aereo “steals” creative content, because the company does not pay a transmission fee. So far Aereo has managed to win its court cases, but both sides want the matter settled once and for all. Last week, the Supreme Court agreedto hear the case.

Under federal law, broadcasters are required to provide free, over-the-air TV to viewers in their local area, in return for using billions of dollars’ worth of spectrum gratis. Customers have the right to access this content for free using an antenna. Unfortunately, in many large cities like New York, the tall buildings block transmission, and customers aren’t able to access broadcast content using standard antennae. Aereo solves this problem by renting out thousands of tiny antennae, housed in local data centers, and a cloud-based digital recorder, allowing users to stream content over the Internet.

Aereo does not steal content. The content is available for free to anyone with an antenna; Aereo simply provides that antenna. Moreover, using recording devices for personal use constitutes fair use, as determined in the Betamax case 30 years ago. Consumers are allowed to record television shows for their own private use – also called “time shifting.” The same precedent should apply to the Aereo case.

Broadcasters claim that Aereo’s model will decimate broadcasting, especially if cable providers decide to follow Aereo’s example to avoid transmission fees. This makes no sense. Aereo’s service actually expands the viewing base for over-the-air programming, and could boost advertising revenue. And consumers don’t have to pay license fees to use an antenna. Still, broadcasters have aligned many representatives of content industries, hoping a show of power from massive, entrenched interest groups will persuade the Supreme Court to protect existing business models under a tortured interpretation of copyright law. If they lose, some networks have threatened to remove their programming from the airwaves.

Ultimately, this is the same power play against innovation that led to the Betamax decision 30 years ago. Broadcasters have always feared innovation, seeing a threat to the status quo in one new technology after another. But putting a stop to progress is not the solution. Broadcasters must either catch up and learn to compete in the 21st century, or step back and let innovative new companies take over to give consumers what they want: the freedom to watch over-the-air TV, to record it for personal use, and to enjoy content on their devices.

Fortunately, 30 years ago today the U.S. Supreme Court held the VCR was a legal product and expressly declared that recording free, over-the-air television does not violate copyright law. Let’s hope today’s Supreme Court will similarly recognize these rights and lay the groundwork for future innovation and progress by ruling in favor of Aereo.

Gary Shapiro is president and CEO of the Consumer Electronics Association (CEA)®, the U.S. trade association representing more than 2,000 consumer electronics companies, and author of the New York Times best-selling booksNinja Innovation: The Ten Killer Strategies of the World’s Most Successful Businesses and The Comeback: How Innovation Will Restore the American Dream.