FORTUNE -- Now that Aereo has a new lease on life for its bizarre business model thanks to a court ruling Monday, the question arises: What is the company's end game?
Aereo streams broadcast television programs -- including news and sports -- over the Internet. The company argues that by creating a discrete video file for each user, copyright restrictions on "public performances" don't apply. A federal appeals court agreed, allowing the company to continue operating -- and to commence a major expansion beyond the northeast corridor -- as the underlying case winds its way through the legal system. The company leases tiny antennas, each of which is designated for a particular stream, and thus a particular household. That, the company argues, comports with a 2008 ruling allowing Cablevision to offer "remote DVR" services. Major broadcasters disagree and filed a lawsuit against Aereo last year. They argue that Aereo's business is based on technological trickery designed to circumvent copyrights -- which of course it is, but that doesn't necessarily mean copyrights are being infringed. Does it matter whether someone has an antenna on their roof, as opposed to leasing one that's housed in Aereo's facilities?
The case could have implications that go beyond Aereo to affect all "cloud media" services, like Google Music (GOOG) and Amazon Cloud Player (AMZN). But what does it mean for Aereo itself? And for the TV business as a whole? The Wall Street Journal reported last week that the company has been in talks over possible "partnerships" with AT&T (T) and Dish Network (DISH). According to the Journal, the company's uncertain legal situation is a major sticking point with potential "partners" or acquirers, any of which could help the company expand into markets across the country at relatively little cost.
Monday's ruling was a major step toward solidifying Aereo's business, but it's far from the final one. The case could drag on for years. On the other hand, an acquisition or partnership -- somewhat likelier in the wake of the court ruling -- could encourage broadcasters to seek some sort of settlement. Meanwhile, Aereo will keep growing with or without a major telecom or pay-TV partner.
MORE: Inside BMW's future lab
With backing from the Barry-Diller-owned IAC/InterActiveCorp (IACI) and Highland Capital, the company plans to expand to 22 markets this year, and possibly up to 100 by next year. IAC and Highland recently closed on a Series B round worth $38 million, on top of a startup investment last year led by IAC, putting the company's total financing at more than $60 million. Diller sits on Aereo's board and has been vocal in his support of the company's efforts.
Aereo currently operates in the New York area and recently expanded into a few other markets in the northeast. Immediate plans call for expansion into Chicago and Atlanta, where it will be able to pick up "superstations" like WGN in Chicago and WTBS in Atlanta -- both of which are cable mainstays that still broadcast over the air in their home markets. That represents a direct assault on the cable industry as well as on broadcasters, which collect retransmission fees from pay-TV operators.
So-called "cord-cutting" has been slicing into cable-TV's business for a few years now, though it's not happening yet in wholesale fashion. Viewers are increasingly irritated by being forced to buy dozens or hundreds of channels at a time, most of which they don't watch. Rising subscription rates only add to the annoyance. And the trend is already spurred on by the growth of Internet-based video services like Netflix (NFLX) and Amazon. Adding broadcast TV streams to that mix of non-cable options only gives people that much more reason to cut the cord.
A new rumor today says Google is frantically putting together a deal which would grant the company license to sell music directly.
Google is said to be in "accelerated" talks with the Harry Fox Agency, which is the largest owner of mechanical music licenses in the Unites States, to build out its Music store. A mechanical license is described as:
Within the music industry, a mechanical licence gives the holder permission to create MORESeth Weintraub - Jul 26, 2010 9:50 AM ET
Google Music (along with Translate and Products) also appears in the links on Google's updated China site.
Today, Google announced that it has received a license renewal from the Chinese government.
We are very pleased that the government has renewed our ICP license and we look forward to continuing to provide web search and local products to our users in China.
Google's (GOOG) ability to do business in China was recently put in question by MORESeth Weintraub - Jul 9, 2010 8:24 AM ET
According to a report out of Israel, Google will launch its Google Music service alongside its Android 3.0 platform in either fall or winter this year.
Google's Cloud music service at Google I/O earlier this year wowed the audience. The presenters clicked a button on a web page and magically music appeared on their Android phones. A Israeli report now says that this service will go live toward the end of MORESeth Weintraub - Jul 2, 2010 2:37 PM ET
It is called YouTube and they sell thousands of songs and more than a few videos every day.
There was lots of talk yesterday about when or if Google will enter the online music sales business this week. I'm here to tell you they are already knee deep in the music sales game and have nowhere to go but deeper.
When you do a Google search for a song, one of MORESeth Weintraub - Jun 23, 2010 9:20 AM ET
While it isn't too flashy, the newly-discovered logo likely shows what Google will call its music service.
Recently discovered and posted to TechCrunch, a new 'Google Music' logo seems to indicate that Google's entry into digital music sales will have a pretty straight-forward name.
Google demonstrated its over-the-air music service at Google I/O last month by impressively having an engineer purchase a song through an Android Market web page and having it MORESeth Weintraub - Jun 4, 2010 10:41 AM ET
|Microsoft unveils new Xbox One game console|
|The Obamacare myth about small business|
|Make $30 an hour, no bachelor's degree required|
|Judge rules Airbnb illegal in New York City|
|JPMorgan's Dimon wins by a landslide|