Saying it will become a paid system in 5 years is basically living in a delusional bubble. It has been a paid system from the start.
Everyone pays for the Internet already. We pay for the speed of the connection. Some pay email providers. Some pay for online storage. Some pay by buying products online. Some pay for rare and valuable information or to receive specific publications. We also pay with the attention we give to advertisements on our favorite sites. We pay with the time we waste sorting through all the spam we get from advertisers.
Why doesn't it surprise me that it's an old fart saying how people have always paid for content and will continue? People have always been able to listen to the radio and watch television for FREE, too. That swings both ways and means nothing.
That sort of ancient-mindset is why the recording industry is having so much trouble these days. It reeks of the mindset of control freaks from a 50's industry like the RIAA or MPAA. Start charging for or somehow limiting the content people already get for free and you will go bankrupt unless you can add enough value to justify the charges.
These days people want more from content. These days the REAL product you need to sell is improved quality of life. How will your content make my life better? How will it save me time? How will it smooth out my daily routine? Focus on that instead of how much you can squeeze out of somebody because of X bytes of your bandwidth they used.
What people might pay for is value-added and highly-targeted content available on their own schedule. If you want an example of the RIGHT way to get people to pay for a content service, look at what TIVO did for TV or NetFlix with instant Internet streaming. Even digital music purchased through iTunes is an example of how to sell content to a busy, overstressed public. Charging by the megabyte will only piss them off by giving them one more thing to count and worry about. Make it simple. Make it transparent. Make it worry free. Make our lives better. Then we'll talk.
The days of the free Internet will draw to a close over the next five years, according to the chairman and chief executive of IAC, the interactive services company which operates a collection of more than 30 Internet sites which produce $1.5 billion a year in revenue.
The only missing link, according to Barry Diller, who cut his teeth building up over-the-air and cable TV networks: a good billing system, akin to Amazon’s “one-click” button or the Apple iPhone’s slick downloading of paid applications.
“I absolutely believe the Internet is passing from its free days into a paid system. Inevitably, I promise you, it will be paid,” Diller said in a keynote discussion opening up the Advertising 2.0 conference held at his company’s futuristic glass building alongside the Hudson River in Manhattan. “Not every single thing, but anything of value. “
The fact that content and services on the Internet so far have been largely supplied for no charge is “an accident of historical moment that will be corrected,” he said, in an era of “creative chaos” that will span the next three to five years.
So far, news, content and service suppliers were “afraid of not being dinosaurs and slapped everything up on the Internet for free,’’ he said, in an interchange with BusinessWeek media columnist Jon Fine.
But, that will be change. The New York Times, for instance, likely will have to go beyond the “pay wall” in order to cover the cost of its worldwide reporting corps, even if it means having 1, 2 or 3 million paid subscribers, instead of 20 million unique visitors a month. And people will pay – if it is quality they’re buying.
“People have paid for content,’’ he said. “They always have.”
IAC’s Match.com, a dating service, already charges subscription fees. IAC also operates Ask.com, the search service, UrbanSpoon, one of those iPhone apps, Citysearch, a local information service, and The Daily Beast, a content site headed by former New Yorker editor Tina Brown.
Inevitably, Diller said, the “base model” of the Internet will be paid, at the end of the chaos. The forms will include not just subscriptions and individual one-time purchases, but rapid-fire micropayments and other mechanisms.
The early examples: Amazon’s “one-click” system, where a customer enters billing address and credit card information in advance. Then, a button on the screen for a shopping cart is pressed once and the purchase or purchases associated with that cart are confirmed, billed, paid for and delivered.
Similarly, with the App Store for Apple’s iPhone handheld computing and communication devices, “the real trick and key is the billing system and the way of doing it is absolutely a blink,’’ he said.
The right billing system, broadly applied, would remove “one of the greatest bars of buying anything” which “is the steps it takes” to complete a purchase.
The entire Internet, in effect, would become an app – or content – store.
“That little thing – that in fact that you scroll it, you do it, it comes, everything else is taken care of, is the answer to what’s going to happen on the Internet, when in fact, you get the applicability of that broadly across the Internet,” Diller said. “It’s absolutely going to happen.”
And given the movement of ad and subscription revenue to the Internet, “people who manufacture that content will have no alternative,” he said.
The biggest disruptor? When broadband pipes to the Internet are connected to large screens in living rooms around the world and users are interacting with its increasingly video-based content with a remote control.
At that point, television, radio and prior media founded on scarcity, like limited spectrum whose use is overseen by governments, “will be run over by this much more open, much much less controlled (medium) that is not based on scarcity, but based on unbelievable plenty,” Diller said
He has also created a new generation of money makers like Michael Eisner or others who have come to be known as "Diller's Killer's". So he gets a rise out of making provocative statements and predictions, that is fine by me. But I also think he floats such predictions because he wants to float revenue generation ideas which may tempt "the suits" who count to make for a self-fulfilling prophecy. WELL HE IS DEAD WRONG if he thinks we are foolish enough to pony up for non-essential content, esp. considering what we pay for broadband. Forgive the metaphor but you can only screw us so many ways, certainly not every which way. 
