Free AOL Sends Go Daddy IPO Packing

AOL is also offering 5 gigabytes of free online storage through its Xdrive unit, more than several times the amount of free storage available at Yahoo! Briefcase, Apple iDisk and other sites that are usually limited to 1GB of free storage at most.

Alongside these changes, AOL also launched a vast video portal. Some programs, like "The Chappelle Show" and "SpongeBob SquarePants," cost $1.99 to download. Others, such as "The Jamie Foxx Show," are free.

While few other companies are actually charging to access video content, AOL, backed by the sizable and video library of its parent, could quickly become a formidable competitor to companies such as Yahoo!, Google and even upstart YouTube -- not to mention Apple's iTunes, which is hoping to become the clearinghouse of choice for selling video programming on the Web.

More interesting, perhaps, AOL's push toward free content and services may spark another round of companies offering even more content and services free. During the Web's short history, it has seen a few cycles in which periods of innovation sputter and give way to times when many of those innovations are offered at the cheapest price possible, if not free, where they can be supported through ad revenue.

So far, 2006 has been a year in which companies have focused more on copying and improving on each other's earlier innovations than on rolling out new, enticing products and services. At the same time, Internet advertising revenue has continued to grow at a robust rate -- up 38% in the 12 months through March -- setting up conditions for a free-for-all that could present problems to companies counting on premium online services.