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No More MTV for Nothing, Viacom Tells Internet Service Providers

December 03, 1996|From Bloomberg Business News

NEW YORK — Viacom Inc.'s MTV Networks told CompuServe Corp. and other large Internet service providers that if they want their MTV, they'll have to pay for it.

The music television channel plans to charge providers 2 cents to 5 cents a month per subscriber for access to its news and reviews. For CompuServe, with 5.3 million subscribers, the fee amounts to as much as $3.18 million a year.

"Why would we pay for a free site and why are they only going after national Internet service providers?" said CompuServe spokeswoman Gail Whitcomb.

America Online Inc. spokeswoman Robin Patton said the company already has a contract with MTV and didn't elaborate. Prodigy executives couldn't immediately be reached for comment.

If successful, Viacom's move could transform the way companies generate revenue from the Internet to make it more like the cable TV business, where providers generally pay programmers for channels. Internet companies typically offer free access and earn money by charging advertisers.

"MTV is one of the few brands powerful enough to make some progress there," said Kate Delhagen, a new-media analyst at Forrester Research Inc. in Cambridge, Mass.

MTV sent a letter last month regarding the fee to about 10 large Internet service providers, including CompuServe. AOL said it didn't receive the letter.

Whitcomb said CompuServe now balks at the proposal because it's short on details, but that the company is in talks with Viacom about the plans.

Analyst Delhagen said Viacom may have to provide an expanded Web site that isn't available on the free site to make the fee more palatable. MTV's Web site is at http://www.mtv.com

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