FORTUNE -- Chet Kanojia's controversial startup Aereo has been described a number of ways: disruptive, innovative, and possibly illegal. But for Kanojia, CEO, what he and his New York City-based team are doing is perfectly legitimate.
"Consumers have already paid for this," Kanojia told Fortune onstage at this year's Brainstorm Tech conference. What Aereo's 2,000 users in New York, Boston, and Atlanta are paying $8-plus a month for is the technology to pick up, stream, and record network television programming over the Internet. What they're not paying for is the content itself. "People don't want channels anymore -- they want shows," argues Kanojia. And Aereo enables this new consumer behavior.
It's a model that appeals to Aereo's early users and backers that include IAC (IACI) CEO Barry Diller and SV Angel. But because the company relies on antennas and therefore doesn't have to pay the retransmission fees distributors must pay broadcasters like Fox and PBS, many of those same broadcasters argue the startup's actions amount to copyright infringement. So far, the Court of Appeals disagrees and as recently as last week, sided with Aereo.
For Kanojia, that means full-stream ahead. He wants to expand to 13-plus more cities in the coming weeks and a total of 22 within three months. Even longer-term, Kanojia predicted that one in four people could become subscribers within seven years. That's extremely ambitious for the nascent company, and even Kanojia admitted Aereo might not meet his short-term expansion plans. And with the law on his side -- at least so far -- Aereo remains confident. Said Kanojia: "Do consumers want the service? Absolutely."
Diller says his websites didn't miss the social media wave because not everyone has to ride it.
By Shelley DuBois, reporter
Barry Diller's sitting on some prime, if diverse, Internet real estate. His company, IAC/InterActiveCorp (IACI), owns Match.com, Ask.com, Citysearch, and about 50 other sites that seem like they could create the kind of digital sharefest communities that Facebook and Twitter have built.
But IAC didn't miss the boat, Diller said at Fortune's MOREJul 23, 2010 5:25 PM ET
From Pattie Sellers' Postcards column: Our 10 favorites from the mouths of media moguls, tech titans, Tweeters and more.Tom Ziegler, Senior Editor - Jul 28, 2009 12:51 PM ET
>Ben Baer, Senior Producer - Jul 24, 2009 4:19 PM ET
IAC welcomed a new member to the family today: a video venture that combines talent from the site CollegeHumor.com and an outfit called CityLights. IAC chairman and CEO Barry Diller announced the launch at Fortune's Brainstorm Tech conference in Pasadena during an interview with Fortune managing editor Andy Serwer.Jessica Shambora, Writer-Reporter - Jul 24, 2009 2:30 PM ET
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