Don't forget that while users want to watch video entertainment, quite a lot of users have no specific preference as to what they watch. Each consumer has no more than 24 hours in a day to devote their undivided attention to something.
Studios are in a competitive environment. Not only do they have to fight other current studios for monetizable customers, they have to compete with the entire corpus of existing works. Fringe has to compete with X-Files. Law and Order: New Episode has to compete with Law and Order: Rerun.
In order to make money from customers, there must be an intact distribution path between supplier and consumer. In the world of physical goods, you cannot sell a Chinese widget to Joe Merica without a cargo ship, a stacktrain, an intermodal truck, a big-box store, its parking lot, and the roads between it and Joe's house or business. All that has to be paid for. It is completely unreasonable for the overseas manufacturer to expect that he be paid by all those links in the supply chain for the privilege of carrying the goods.
The manufacturer has to pay them a portion of what he earns from Joe on the sale, because without them, he cannot get Joe's money at all. The transport network provides value to the manufacturer because it increases the potential size of his market. Likewise, the manufacturer provides value to the transport network by giving it something to move. Neither one can even try take the whole pie, or it ceases to exist.
The distributor has to pay the supplier. But the supplier also has to pay the distributor.
In the case of broadcast television, the problem of who pays whom is partially resolved by advertising. Advertisers pay the supplier for access to their customers' attention, and the supplier can therefore pay distributors in proportion to the number of customers they can provide.
This is why broadcasters pay so much for licenses. Over-the-air radio broadcasts can bring in a huge number of customers with relatively low infrastructure investment. As long as they are paid by advertisers on a per-viewer basis, there is no reason why they should be getting any additional money from anybody for rebroadcasting rights... except one.
If the rebroadcaster is not providing the same number of consumers for the advertisers as for the entertainment content, the supplier is not getting paid for them. Enter the commercial-skipping DVR. The advertising model breaks down. The advertisers have to assume that every person not watching a show live is skipping their ads, so they only pay for the live audience.
And so castles made of sand fall in the sea eventually.
If any necessary part of the supply chain is not paid for, the money dries up for everyone. And the advertisers are paid with statistics. Aereo probably could have made this go away simply by offering up timestamps and button presses, to identify the number of customers actually watching the ads.
Studios are in a competitive environment. Not only do they have to fight other current studios for monetizable customers, they have to compete with the entire corpus of existing works. Fringe has to compete with X-Files. Law and Order: New Episode has to compete with Law and Order: Rerun.
In order to make money from customers, there must be an intact distribution path between supplier and consumer. In the world of physical goods, you cannot sell a Chinese widget to Joe Merica without a cargo ship, a stacktrain, an intermodal truck, a big-box store, its parking lot, and the roads between it and Joe's house or business. All that has to be paid for. It is completely unreasonable for the overseas manufacturer to expect that he be paid by all those links in the supply chain for the privilege of carrying the goods.
The manufacturer has to pay them a portion of what he earns from Joe on the sale, because without them, he cannot get Joe's money at all. The transport network provides value to the manufacturer because it increases the potential size of his market. Likewise, the manufacturer provides value to the transport network by giving it something to move. Neither one can even try take the whole pie, or it ceases to exist.
The distributor has to pay the supplier. But the supplier also has to pay the distributor.
In the case of broadcast television, the problem of who pays whom is partially resolved by advertising. Advertisers pay the supplier for access to their customers' attention, and the supplier can therefore pay distributors in proportion to the number of customers they can provide.
This is why broadcasters pay so much for licenses. Over-the-air radio broadcasts can bring in a huge number of customers with relatively low infrastructure investment. As long as they are paid by advertisers on a per-viewer basis, there is no reason why they should be getting any additional money from anybody for rebroadcasting rights... except one.
If the rebroadcaster is not providing the same number of consumers for the advertisers as for the entertainment content, the supplier is not getting paid for them. Enter the commercial-skipping DVR. The advertising model breaks down. The advertisers have to assume that every person not watching a show live is skipping their ads, so they only pay for the live audience.
And so castles made of sand fall in the sea eventually.
If any necessary part of the supply chain is not paid for, the money dries up for everyone. And the advertisers are paid with statistics. Aereo probably could have made this go away simply by offering up timestamps and button presses, to identify the number of customers actually watching the ads.