Execs: Users Demand Free Online Content

On the heels of Apple's success offering pay-per-download videos of TV shows, Google recently launched its own highly publicized video store that offers a library of old and current TV episodes for sale on a pay-per-view basis.

But will the public embrace Google video the way it did video downloads from Apple's iTunes--purchasing more than 3 million videos within two months of launch?

Executives at a panel at the Software & Information Industry Association's 2006 summit in New York Tuesday suggested that the answer is no--Web users have become too accustomed to free content to start paying per view, at least when that view will take place on a stationary PC.

"On the Internet, it's going to be very, very tough to get people to pay for things that are already available free," said panelist Dennis Miller, a managing partner at Spark Capital, a venture capital firm focusing on media, entertainment, and technology.

Miller cited illegal file-sharing and the early, easy availability of free news and entertainment content as creating a culture where netizens have from the beginning expected content for free.

And the culture is unlikely to change, said panelist Mike Kelly, president of AOL's Media Networks--so content providers will have to find other ways to monetize. "Free is one of the concepts that's here to stay," he said. "Consumers like free, so you'd better find a way to monetize."

Kelly predicted that content--even video content on television--will increasingly be delivered on demand, so the monetization question becomes even more important. "Most video content will be on demand," he said. "It's just too good of a value proposition."

AOL's recent $50 million acquisition of Truveo, a video search engine company, is another step in its strategy to be a destination on the Web for on-demand video content, Kelly said.

In addition, he said that AOL will incorporate Time Warner's video content. Last November, AOL announced plans to make old Warner Bros. TV shows available online.

Currently, Kelly said, the company is less concerned about monetization than it is about acquiring a major share in the online video market. "We think if we are the place video's found, we can put any business model behind it," he said.

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