Barry Diller supports Internet content fees

IAC exec says John Malone relationship "mended"

NEW YORK -- IAC chairman and CEO Barry Diller is the latest industry executive to predict a near-term move away from the free Internet world towards more paid-for online content.

In a keynote address at the Advertising 2.0 New York conference Wednesday, Diller also said that Internet advertising spending may have been down in the first quarter, but likely won't get worse. Plus, he called his relationship with Liberty Media chairman John Malone "repaired" and spoke out against the concept of a conglomerate, including in the media and entertainment sector.

"Anything of any value...is going to get paid for" online, Diller said during the event, which was co-hosted by Internet juggernaut IAC and Digital Hollywood.

Diller said the switch to more paid offers is "absolutely inevitable" in order for content producers to survive and the change is already underway. News Corp. and other media biggies have recently signaled they are gearing up efforts to charge for more digital content.

Diller said he expects micro payments to be one pay model on the Web once billing systems become simpler, and he described the success of iPhone applications as a clear sign where things are headed.

"People will pay for content," he said. "They always have."

The ad recession was also in focus Wednesday. "It's not going to be great" this year, Diller said about Web advertising. "(But) it's probably not going to get much worse."

Recent economic data suggests the worst of the recession may be over, and CEOs of big media companies have recently also talked about a stabilization in the ad market.

The Internet Advertising Bureau recently said first-quarter Web ad spending was down 5% from the year-ago period to $5.5 billion.

Diller Wednesday also argued that "nothing ever goes up forever" and pointed out that the Web ad market has "not been that bad" compared with traditional media advertising.

Asked about his relationship with Malone, following last year's showdown between the two moguls over Diller's plan to split apart IAC, in which Malone's Liberty has held a stake, Diller said: "John Malone and I have a good relationship. We had a difficult period...This (relationship) was completely repaired."

What about the relationship of various assets grouped into a conglomerate?

"I don't believe in size or mass," Diller told the gathering. "It's a bad way to organize something."

He argued that the conglomerate structure only makes sense if a company is over 100 years old or its founder is still involved. "Once that original founder has gone for whatever reason, they should all be taken apart, because they don't make any sense," Diller said.

Asked specifically about Rupert Murdoch's media empire, he said: "News Corp. makes sense."

He also once again said that more focused attention on individual businesses was the key reason behind the split of IAC into several companies.

Asked whether Twitter could be turned into a real business, Diller said: "I'm kind of skeptical about it."
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