Fred Wilson is a pretty smart VC. He's got to be - he's been at it for a long time and he can still afford to eat! I was however interested to read that he believes the pre-roll is dead (or at least dying) and that content sites need to be compelling (even though their content may be ripped and set free on the Internet)
While I agree with Fred on the premise that pre-rolls are a distraction, they're annoying and can spoil a good UX I don't understand how they're just going to magically die because of that.
Essentially what the article says is that you've got to come up with a business model that works even if people rip off your content, post it on their blog/site and never link back to you or give you any traffic - because if the content is viral and re-postable and can be consumed where the consumers are it doesn't matter how shiny your site is... the vast majority of users want to stay where they're comfortable (Myspace, Spokeo or their live.com homepage for instance) not add another destination site to their busy day.
Sadly the only way that people are going to produce content like that is either for the love of it (but they still need to eat), underwritten by an old-skool business model that's actually making money or through product placement...
I hate pre-rolls, interstitial and pop-up advertising but I also worked with enough production companies and agencies to know that somehow somewhere someone has to pay for this stuff - and it's working in a fairly cost effective way (and don't get me started on why Spam won't die!) - how many of the mainstream news sites to you go to where they still have pop-up (or floating) ads that obscure the content that you've actually gone there to see?
In order for the pre-roll to die I think we're probably going to see a whole bunch of ugly intrusive alternatives first... the current crop of sidebar/split-screen and overlay advertising on TV is a good example of how annoying and invasive it can be (especially when the animate the darn promo over the opening scene of the show I actually want to watch).
Personally I think I'm in favor of relevant, targeted advertising in small un-intrusive chunks. A 5 second "brought to you by" before the 30 second clip is okay. A 10 second pre-roll probably isn't. And if I see if 10 times a day it's just going to annoy me so make sure there's a pool of creatives.
If the content was engaging I'll probably stay and watch a 10-15 second post-roll while I think about what I've just seen and what I want to do next. That however depends on whether the content has been soiled for me by mid-rolls and overlays (hint - if you do that I won't watch your post-roll)
Silent (at least while the content I want to watch is playing) and static (again at least until I'm done watching) sidebar advertising is something that's not going to bug me too much (as long as it's smart - scale properly if I stretch the viewport, disappear while I'm watching content full-screen etc).
Advertisers and the sites/producers who are supported by the advertising dollars have to walk a very fine line between respecting their audience and getting bankrolled. Go too far in either direction and you risk the whole edifice tumbling down.
Predicting the death of the pre-roll may be prescient but I still have my pop-up blocker set to stun and expect to be seeing pre-rolls for quite a while yet...
Update: Maybe Microsoft with this patent and the Media Center platform may be heading in the right direction (but I hate to think how it's going to decided between me and my wife what adverts to show!)
Update: Looks like some more of the advertising industry is starting to wake up. Hopefully they will smell the coffee and actually focus on making the message more entertaining rather than loud and/or irritating!