SAN FRANCISCO – Google Inc. (GOOG) is shutting down a service that sold and rented online video, ending a 19-month experiment doomed by the proliferation of free clips on other Web sites like the Internet search leader's YouTube subsidiary.
The decision, confirmed late Friday, underscores Google's intention to concentrate its financial muscle and brainpower on developing an advertising format to capitalize on the immense popularity of online video.
YouTube, which Google bought last year for $1.76 billion, is expected to be the focal point of the company's expansion into video advertising. Google executives hope to settle on an effective advertising system for video ads by the end of this year.
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Google already makes most of its money from ads, but most of those are static, text-based messages posted alongside search results and other written content on the Web.
The video section on Google's Web site will remain open, but will stop showing paid programming Aug. 15.
Google has been selling the right to watch a wide range of video, including sports, music and news, since January 2006. Most of the video sold for anywhere from a couple dollars to $20.
Customers could pay less to "rent" the right to watch a selected video for a day or buy the show so it would be available to watch indefinitely.
All paid programming had to be watched through a viewer on Google's site.
To compensate customers who will no longer be able to see the videos that they purchased, Google is providing refunds in the form of credits that can be used on its online payment service, Checkout. Hundreds of merchants accept Checkout.
Google spokesman Gabriel Strickler said the refunds won't materially affect the company, which has $12.5 billion in cash. Strickler declined to reveal how many people bought video through Google.
"The current change is a reaffirmation of our commitment to building out our ad-supported ... models for video," Strickler said.
The move provides the latest indication that Google has become more willing to pull the plug on services that aren't gaining traction, something that its management rarely did until the past year.
Last November, Google abandoned a service that hired researchers to find answers to specific questions posed by users.