Bob Fernandez of the Philadelphia Inquirer wrote about Chet Knojia, whose company makes TV antennas that copy, save, and then stream broadcast signals to wireless devices:

Chet Kanojia, founder and CEO of Aereo Inc., the new Internet-based TV service, says the potential market for the company could be 30 million to 50 million people who watch ABC, CBS, NBC, and Fox who don’t want to pay for cable- or satellite-TV packages with hundreds of channels and ESPN. Aereo, now available in New York and launching in 22 markets this year, including Philadelphia, faces a big legal hurdle over whether its service violates federal copyright law by retransmitting network TV signals without paying a fee.

Cable companies, obviously, don’t like this. And neither do networks, which get a fee from cable companies to use their programming:

Aereo, industry experts agree, could be disruptive to the $150 billion pay-TV industry by peeling away millions of subscribers and to the broadcast TV networks, which could lose billions of dollars in fees if Aereo’s technology is ultimately deemed legal and copied. TV networks are paid per-subscriber fees by cable TV companies that retransmit TV signals to users. Those fees are considered an important source of new TV revenue for local news and entertainment. The fees will grow from almost nothing in 2005 to several billion dollars by 2015, according to research firm SNL Kagan. But if Aereo’s technology is found to be legal, many believe, cable TV companies could replicate it and avoid paying the TV networks the fees.

As they should. Broadcast networks didn’t get a fee from people with antennas, it’s only relatively recently that they’ve gotten greedy with demanding fees from cable companies, a practice whose legality has been upheld by courts. But, if courts find Aereo to be legal, then there’s no doubt that those broadcast fees will disappear and it will be on the networks to make up the difference with ad revenue, or some kind of revenue.

The problem is that, for too long, everyone has been overpaying, for everything:

A 2004 report from the Federal Communications Commission that looked at the feasibility of selling TV channels “a la carte” noted that the typical cable TV household watched 17 channels, including the broadcast networks. “Clearly, there is a price imbalance,” Kanojia said of pay TV bills when compared with viewing patterns.

People have been overpaying for cable. Cable companies have been overpaying for broadcast rights. And advertisers have been overpaying for advertising. Only in the past 10 years have advertisers truly been able to directly-measure their ROI (thank you, the Internet), and as such, rates have gone down, forcing content producers (newspapers, radio stations, TV networks) to come up with new revenue streams, with the end result being that the consumer pays more– either literally, or figuratively, with worse content. Here’s the problem: consumers don’t want to pay for something they used to get for free, and since advertisers are paying less, content producers don’t have the budgets they once had to produce – wait for it – quality content. The bubble burst. Doubly worse is that middlemen – like cable companies – used to be able to counterbalance shrinking ad revenue, but now they are losing their leverage. Content producers, who are earning less from advertisers, can go directly to the consumer, but the consumer doesn’t want to pay the astronomical rates that advertisers once paid. And that’s perhaps the biggest concern overall: advertising is worth less than what it cost for nearly a century, and no one – not the consumer, not cable companies – want to make up the difference. This is the crux of the cord-cutting phenomenon. It’s a delicate ecosystem (of greed) that is being shattered by technology.