L.A. Internet Firms Upbeat About the AOL Merger.

DOES the proposed merger between America Online Inc. and Time Warner spell doom for L.A.'s fledgling Internet content providers?

Surprisingly, many say that the deal provides them with a new world of opportunities.

"There's a tremendous need for content and a tremendous need for content people," said David Thompson, partner in charge of e-business services at Deloitte & Touche LLP.

He notes that the merger defines three clear paths that companies like Launch.com, Intertainer Inc., Eruptor.com and Digital Entertainment Network could go: They might be bought by a huge conglomerate, find a unique niche and go it alone, or be forced out of business.

"Some companies are going to want to be bought up and become part of a mega-content company," Thompson said. "Then, there's always going to be a spin-off world from the corporate culture. Some will like the security blanket of the corporate environment, but there will always be independent people out there."

Right now, executives of local companies deny they are in the market to be bought up by the big boys. Most believe they have enough of a foothold in the industry to make a go of it on their own.

'A great opportunity'

It's hard to imagine that anyone was cheering louder over the news of the merger than David Goldberg, CEO of Santa Monica-based Launch.com, which specializes in downloadable music videos. Launch.com had existing business relationships with both AOL and time Warner before the merger was announced, and Goldberg expects those contracts to be strengthened.

"We view this as a great opportunity to continue to grow alongside these companies," he said. "It may lead us to have tighter relation-ships with both of them."

Right now, Launch.com, which Webcasts music videos by major bands, is designated as the "primary music partner" for AOL users, who are linked to their site via the AOL interface.

On of the pluses for AOL will be its access to Time Warner's extensive libraries of film and music, everything from the films shown on Turner Classic Movies to Madonna's record label, Maverick Records. In addition, AOL gets access to Warner Bros. production facilities.

With these assets, AOL's potential ability to Webcast original and classic content becomes almost endless. That could spell doom for the little guy, with independent players potentially being shut out of the conglomerate's distribution network.

Yet most executives write off this possibility, noting that the free-form nature of the Web will always give small content production houses a place to show off their wares. Unlike movies and television programs, there are few barriers to distribution on the Web.

New version of cable

"I think there is plenty of room for anybody with good idea, good execution and a good brand," said David Neuman, president of Santa Monica-based Digital Entertainment Network, which creates online shows directed at the Gen-Y demographic.

Many believe that content on the Internet will be viewed the same way as cable television. There won't be any sense of loyalty to a particular content provider - people will just watch whatever content appeals to them the most.

Some local content providers also support the merger because they believe it will speed the public's acceptance of broadband technology.

"I it allows people to feel more comfortable paying those few extra dollars to get the service," said Brad Foxhoven, CEO of Marina del Rey-based Eruptor.com, which provides episodic shows online. "It's a lot like people choosing DVD over VHS, or making the move to (high-definition television). There has to be something there to motivate them to pay $50 a month to get broadband instead of $20 a month for a normal ISP."

And the bells and whistles of content can't be fully experienced unless a user is hooked up to a Screaming-fast connection - something that will become more commonplace, the theory goes, as giant corporations like AOL-Time Warner build out their networks.

"What's happening in the media industry is so revolutionary that it's possible to make a rather highfalutin analogy about it," said Jan Brzeski, chairman and CEO of STV Communications, a Santa Monica-based company that digitizes content for the Internet. "Right now, it's like civilization before we built aqueducts. Just like people had to go to the river and bring water back, they used to have to go to Blockbuster and bring the movie back. In the future, because of these mergers like AOL and Time Warner, content will be delivered when and where we want it."