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February 24, 2010 at 4:34 PM

GSC: Barry Diller believes people will pay for online content

SAN FRANCISCO — Barry Diller, IAC chief executive, believes people will pay for online content. Not all of it, but people will pay for premium content, he said Wednesday at the Goldman Sachs technology conference.

“The whole shibboleth that people will not pay for things on the Internet is old myth-making twaddle by techies,” he said.

Dilller’s company IAC owns several Web sites such as Daily Beast, CollegeHumor, Citysearch, Ask.com search engine and Match.com.

“If you want premium content, then you’re going to — and I think willingly — pay for it,” he said, drawing a distinction between premium content and commoditized content. He says the music industry is a prime example.

“The music business stuck its head deeper in the sand than money and pushed away every initiative in the early period of the Internet and file sharing came long and essentially took their revenue away,” he said. “They thought you could get away with selling 8 cent,12 cent discs for $18 to $20. And the public said that’s a rip off so I’ll rip you off. Along came iTunes and it’s a multibillion business and will probably come to be a savior. I think the same is true for video.”

He said he believes the future pay model will include both micropayments and subscription.

Diller is also experimenting with premium advertising on news magazine site Daily Beast, which does not take low-priced online advertising. “We’ve been successful doing it on a very small scale,” he said. The iPad is another place that could sell more expensive advertising because of the premium experience on it, Diller said.

On the content side, Diller said he wants to create a new paradigm for content production and distribution, such as the comedy site CollegeHumor, which Diller called a “hothouse of ideas.”

The site produces 10 videos a week, and each employee writes, products, directs and acts. “We make them for 1/60th of what comparable video film costs in the mainstream world,” Diller said. That’s a lot like the very early days of the film industry when directors such as Cecil De Mille produced lots and lots of one-reel films on the cheap.

“The other day I was literally wandering through (the CollegeHumor office) and there was literally a nude person on the floor” getting filmed for a video, Diller said. “It’s so creatively energizing against this old fossilized business where to get anything done takes a crew of 60.”

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