AOL, Digital Courier forge deal

Pair to sell videos, DVDs on Internet

America Online’s surfers will soon be able to do their video and DVD shopping on the Net.

In a deal worth at least $12 million to the online service, AOL has signed up Internet content company Digital Courier Technologies to sell videos under its new Videos Now unit through AOL.

With Videos Now’s presence on AOL’s Digital City sites — which exist on both AOL’s proprietary service as well as the public section of the World Wide Web — AOL members and other Internet shoppers will be able to choose from more than 100,000 video selections in dozens of movie categories. Consumers will make their selections online, and the new videos will be delivered to their homes.

The arrangement is scheduled to launch in August. Videos Now will also offer titles in all available formats, including VHS, Beta, Laserdisc, DVD and Divx.

The deal is AOL’s first venture into online video sales, though the company is no stranger to online commerce, with existing pacts for various products and services. For example, AOL is in the bookselling business through such companies as Amazon.com, and music sales through N2K.

Under the three year agreement, AOL will receive guaranteed payments of $12 million plus warrants to purchase up to $2 million in Digital Courier stock. In addition, AOL has the option to receive a greater equity stake in Digital Courier in exchange for additional carriage. AOL did not indicate whether they receive a cut of grosses from the video sales.

“AOL is committed to helping make our members’ everyday lives more convenient through time saving and easy to use services like Videos Now,” said Bob Pittman, AOL’s president and chief operating officer. “Film and video buffs will have access to the best selection of videos anywhere, whenever they want them, and have them delivered right to their door.”

AOL has more than 12 million members.

“With AOL’s unmatched distribution and consumer reach, paired with our world class online commerce technology, Videos Now will revolutionize the video buying experience,” said R.J. Pittman, chief executive officer of Digital Courier Technologies. He is not related to AOL’s Bob Pittman.

AOL has not announced plans to offer a video rental service.

Videos Now will be prominently positioned throughout the AOL service, with anchor tenant placements in AOL’s popular Shopping, Entertainment and Families Channels and other areas.

Digital Courier Technologies Inc., supplies businesses and major Web portals with online content and commerce services, including WeatherLabs, an online weather information service, and bookselling service BooksNow.

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