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AOL Discontinuing Paid Video Download Service, Selling Videos on Amazon.com Instead

It was revealed today that AOL will discontinue their pay-for-download video service, and instead move their content over to Amazon’s Unbox service. Terms of the deal were not disclosed, but Amazon did indicate that they will share revenue with AOL.

AOL’s original pay-for-download service was launched in October 2006, and Amazon Unbox was launched just one month prior in September 2006. Clearly AOL sees more potential for earnings and growth in partnering with Amazon, than they did in their own short-lived venture.

AOL Video reportedly had just a 6% market share, which was obviously not enough to compete with the likes of Apple iTunes or Amazon Unbox. Instead of folding the operation completely, as Google did with their paid video download service in August, AOL did the smart thing and outsourced the videos. They’ll no longer have to worry about the day-to-day operations, but will still collect a check.

With the increased availability of internet accessibility through the likes of phone companies, cable providers, satellites, and mobile internet, AOL’s time as an ISP has long been over with. This has forced them to reinvent themselves as an online media powerhouse. While some ventures, such as their purchase of Weblogs Inc., have panned out for them, others like AOL Video have not.

For Amazon, the AOL deal is a second big win in the past few months. Back in September, NBC Universal jumped shipped from Apple’s iTunes, and brought their content over to Unbox. Unbox sells movies, television shows, and other videos from more than 30 studios and networks. Movies cost from $7.99 to $14.99 for newer releases, while TV shows run just $1.99 per episode.

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