Over the past few years, as the number of people cutting the cord from cable has increased, many groups have tried to fill the void for people looking for local TV channels. Some of the streaming services offer local (or more importantly broadcast) stations, but many are either too expensive (the same or more than cable) or only offer a portion of the major networks. As a supplement, some organizations have tried a few times to offer this service without working with the networks themselves. The most recent was Locast, a non-profit that made it possible to stream local channels, theoretically for free.
This week, the organization behind the service announced that it was suspending operations following a major loss in court. The ruling came in a case filed by all of the major networks (ABC, CBS, Fox, and NBC), claiming that the organization had violated copyright and redistribution laws with its service. Locast asked the court to dismiss the case on the grounds that it was a non-profit organization and that exempted it from the redistribution rules under Section lll(a) (5). The networks countered, asking for the challenge to be dismissed.
US District Judge Louis Stanton granted the networks' motion, dismissing the request for summary judgment. This ruling is not itself a summary judgment in favor of the networks but does deny a swift dismissal in favor of Locast. The judgment came about after Judge Stanton heard arguments surrounding the business model of Locast, which led him to question whether or not the organization did qualify for the exemption, meaning it was not a matter of pure facts.
The details of the business model that caused Locast to lose its motion is the Wikipedia model: occasionally asking viewers for donations to keep the organization afloat. Under normal circumstances, this wouldn't be an issue. Wikipedia has made it a popular method of fundraising, after all. But, it also leaves the organization open to issues where the funds raised from viewers could exceed the cost of operations, allowing the organization to use the funds for expansion as well. For most non-profits, this is not an issue. But, for those looking to take advantage of redistribution laws, it means they are not exempt.
As a result of this judgment against them, Locast has suspended operations. In a message on the organization's website, they said,
We are suspending operations, effective immediately
As a non-profit, Locast was designed from the very beginning to operate in accordance with the strict letter of the law, but in response to the court's recent rulings, with which we respectfully disagree, we are hereby suspending operations, effective immediately.
This wording leaves open the possibility for the return of the service is a court eventually rules in their favor. But, to protect themselves, they have decided to stop offering their service.
Of course, this is not the first time an online streaming service has been hit by a lawsuit that ended its operations. The most famous previous attempt was from a company called Aereo. This company also took a unique approach to avoiding copyright law, by installing an individual tuner and antenna for each user in a market. This meant that the statistics gathered by broadcast companies would still be accurate, even though the viewers were likely out of market. This service was extremely popular for sports fans wanting to watch teams that were not broadcast in their local market (Floridians watching New York games, for example).
As with Locast, Aereo was hit with a major lawsuit which led to a spectacular Supreme Court loss, which eventually led to the company's shutdown in 2015. When Locast first got up and running, we predicted that a lawsuit would be inevitable, and that a loss in court would cease their operations. With this week's hit, it seems even more likely that Locast will follow Aereo into the trashcan of copyright infringement.