Peter Kafka

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Why Would You Pay $12 a Month for Free TV? Aereo CEO Chet Kanojia Explains.

If you want to watch TV that comes from one of the broadcast channels, you’ve got options: You can get it for free, using an old-fashioned over-the-air antenna. Or you can pay for it as part of your cable TV package.

And now, if you live in New York City, you can pay Aereo to send it to your laptop or phone for $12 a month.

Aereo debuted today with a press conference, where reporters had lots of questions about the mechanics of the service (which are really interesting, and involve an array of thousands of dime-sized antennas, per the images below) and its legality (also interesting, and also dependent on the idea of each antenna “belonging” to an individual subscriber).

But the core question is why someone would use the service: Assuming it works as advertised, would you use it to supplement your existing TV service, or use it to replace some of the TV you’re already paying for?

The former, for now. And maybe, down the road, you could do the latter.

Today, Aereo makes the most sense as an add-on for TV super-consumers — the ones who have digital cable and HBO and Netflix and Apple TV and want to watch even more stuff on more screens.

Since it’s only delivering broadcast TV, Aereo won’t let you get lots of shows you like. But it will let you get a lot of shows you do like, and it will let you access them in new ways.

For instance: For various odd reasons, the broadcasters haven’t been able to figure out how to serve those people live TV on the go, to their iPads and iPhones, and Aereo will do that.

But Aereo’s ambition is much bigger. IAC CEO Barry Diller, who led a $20 million funding round, says Aereo will eventually be a “wedge” that will force the TV industry to give up the bundle: The idea is that eventually you’ll start by paying Aereo $12 a month for a bunch of TV, and add a series of channels and programs that you like on top of that. In theory, you’ll still end up paying much less than you do now.

CEO Chet Kanojia is slightly more diplomatic: “It’s going to start the process of putting the thought in people’s mind that says ‘I have other options.'”

Alternate scenario: If Aereo isn’t shut down by a legal challenge, it will act as a loud starting gun in the ear of cable TV providers and broadcast networks, prompting them to get their act together.

There’s no reason that, say, a Comcast cable subscriber shouldn’t be able to watch NBC or any other channel they get on their TV, live, on the go, on their iPad. And if Aereo finally convinces the cable and TV guys to make that happen, that will be good for consumers. But maybe not so good for Aereo.

But if you bet against the cable and TV guys getting their act together, you might get very good odds.

Kanojia sat down with me after his press conference to explain what he’s up to. He’s soft-spoken and the IAC lobby was loud, so you may have to turn this up a bit.

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There’s a lot of attention and PR around Marissa, but their product lineup just kind of blows.

— Om Malik on Bloomberg TV, talking about Yahoo, the September issue of Vogue Magazine, and our overdependence on Google