AOL Uses Amazon for Video Sales

AOL on Friday scrapped its year-old pay-for-download service in favor of Web retailer Amazon.com Inc.'s technology for selling movies and TV shows online.

Financial terms of the deal were not available, but Amazon said it will share revenue with AOL.

"It's really about focus," said Fred McIntyre, senior vice president of AOL Video, which is owned by Time Warner Inc. "AOL, as a company, is in the process of shifting our focus for our primary business and everything we do towards an advertising business."

McIntyre would not say whether the pay-to-download video business met or missed the company's expectations.

AOL started selling video online last October, but on Friday, its site displayed a large banner promoting Amazon's Unbox service.

For Amazon, which launched the Unbox video downloading service in September 2006, the AOL deal is its second high-profile win in recent months. NBC Universal decided in September to sell episodes of its newest TV shows through Unbox, after failing to reach an agreement with Apple Inc. to offer them on iTunes.

Amazon launched Unbox in September 2006. It offers thousands of television shows, movies and other videos from more than 30 studios and networks. TV shows cost $1.99 per episode, and most movies cost $7.99 to $14.99.

AOL isn't the only Web player to cut the pay-for-download video model and focus instead on ad-supported video. In August, Google Inc. stopped selling and renting movies and TV shows, in favor of promoting YouTube, the viral video sharing site it bought last year.