Locast’s Broadcast Dream Ends with $32 Million Fine and Shutdown

Locast, the ambitious streaming service that aimed to provide free, legal broadcast television to underserved Americans, has reached a somber conclusion. A recent court filing reveals that the company has agreed to pay a substantial $32 million fine and permanently cease operations, marking the end of a venture that once held considerable promise.

Founded in 2018 by David Goodfriend, a lawyer with experience as an aide in the Clinton Administration and as a legal advisor at the U.S. Federal Communications Commission, Locast operated under the premise that it could circumvent copyright laws by maintaining a non-profit status. This strategy was rooted in the belief that as long as Locast remained a non-commercial entity, it could legally retransmit broadcast programming under a specific exception in copyright law.

This exception permits the secondary transmission of broadcast content by governmental bodies or non-profit organizations, provided it’s done without any direct or indirect commercial advantage. Locast’s model involved soliciting donations from viewers, arguing that these contributions were essential to cover operational costs and maintain the service. The company positioned itself as a public service, delivering over-the-air television to those who lacked access due to geographical limitations or economic constraints.

The demise of Aereo, a similar streaming startup that offered subscription-based access to broadcast content, had previously sent shockwaves through the industry. Aereo’s business model was challenged in court, and the Supreme Court ultimately ruled against the company, effectively ending its operations. Despite Aereo’s fate, Locast remained steadfast in its conviction that its donation-based, ostensibly free service met the requirements of the legal exception.

In a 2019 New York Times article aptly titled "Locast, a Free App Streaming Network TV, Would Love to Get Sued," David Goodfriend confidently asserted the soundness of Locast’s legal strategy. "We really did our homework," he stated. "We are operating under parameters that are designed to be compliant within the law." This seemingly audacious statement invited scrutiny, and the major broadcast networks soon obliged.

Just six months after the publication of that article, the Big Four networks—ABC, CBS, Fox, and NBC—filed a lawsuit against Locast. The networks argued that Locast was essentially "Aereo 2.0" and that it was, in fact, using the donations it received from viewers for its own commercial benefit, specifically to fund its expansion into new markets.

The networks’ complaint, filed in New York federal court in July of 2019, painted a contrasting picture of Locast’s motivations. "Locast is not a public service devoted to viewers whose reception is affected by tall buildings. Nor is Locast acting for the benefit of consumers who, according to Locast when promoting its purportedly free service, ‘pay too much,’" the complaint stated. "Locast is not the Robin Hood of television; instead, Locast’s founding, funding, and operations reveal its decidedly commercial purposes."

The legal battle intensified, culminating in a pivotal decision in August of 2021. A New York federal judge sided with the networks, delivering a significant blow to Locast’s primary defense. The judge ruled that Locast had exceeded the boundaries of the legal exception by using donations to expand its reach into 36 markets, ultimately serving 55% of the U.S. population. This expansion, the court determined, constituted a commercial advantage that disqualified Locast from the protection of the exception.

Following that unfavorable ruling, Locast initially suspended its operations in September. This suspension, which was initially framed as a temporary measure, has now become permanent due to the recent settlement.

The Locast saga highlights the complexities of copyright law in the digital age and the challenges of navigating the evolving landscape of broadcast television. While Locast aimed to provide a valuable service to underserved communities, its legal strategy ultimately proved unsuccessful. The $32 million fine and permanent shutdown serve as a cautionary tale for other streaming services that seek to push the boundaries of copyright law.

The case also underscores the power and influence of the major broadcast networks in protecting their content and revenue streams. The networks’ willingness to pursue legal action against Locast demonstrates their commitment to maintaining control over the distribution of their programming and preventing unauthorized retransmission.

The closure of Locast leaves a void in the market for free, legal broadcast streaming options. While other services exist, few offer the same combination of accessibility and comprehensive local channel coverage that Locast provided. The company’s demise raises questions about the future of over-the-air television access and the potential for innovation in the streaming space. It is undeniable that individuals in certain areas with poor signal and those unable to afford other services have lost a valuable resource.

As the streaming landscape continues to evolve, it remains to be seen whether another service will emerge to fill the void left by Locast and offer a viable solution for providing free, legal broadcast television to underserved Americans. The Locast story provides a reminder of the tensions between innovation, access, and the protection of intellectual property rights in the digital age.