New research suggests that consumers, almost three to one, would rather see commercials than pay $1.99 for a download... The study comes from research companies, Points North Group and Horowitz Associates, who did a telephone survey of 800 people last November.

The question asked of respondents: If you missed your favorite TV show and wanted to watch it afterwards, would you pay $1.99 or have it free with commercials?" Overall, 62 percent said they would rather have commercials than pay $1.99. Seventeen percent said they would pay the download fee, and 21 percent were undecided.

Opposition to paying a fee is even stronger with younger adults, says the survey. Consumers 18-34 prefer free, ad-supported content 68 percent of the time--as compared to 26 percent, who prefer to pay a fee. Five percent of those consumers were undecided.

This research is good news for advertisers--as they could be more involved with VOD content, said Leddy. Still, he adds that VOD deals will need to be careful. "Unless the advertising is short and sweet, it won't work in the VOD environment."

It is interesting to note that in all the Internet television and iPod VOD deals that have been announced by major media companies, only one deal has been structured in which consumers watch Free content with commercials -- Time Warner and AOL.