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Expensive lessons

'Quantum Project' was a groundbreaking event to many and a waste of money to others

With all the crowing by online media pundits lately about the impending broadband Internet revolution, you’d think everyone is now hooked up to the fat data pipe, enjoying all sorts of mutimedia content at lightning speed.

Hardly.

While ‘Net monitor Jupiter Communications predicts that over 15 million U.S. homes will have broadband access by 2003, that’s still only a small fraction of all homes wired to the Web. And currently, so few users (only a couple of million) enjoy a fast connection that major media companies are still sorting out how to make broadband content commercially viable.

But don’t tell that to the throngs of online entertainment sites that have sprung up over the past year. Much of their content demands levels of bandwidth that most Web surfers won’t have for nearly a decade. But the desire to be a mover in what will eventually be a giant market is so strong, they’re diving in anyway.

Offering up everything, including short films, animation on demand, interactive multimedia and live radio Webcasts, these sites have inundated surfers with new content, but have spawned only a few breakout hits.

Among them are MediaTrip.com‘s “George Lucas In Love,” a spoof that, when released on VHS, topped Amazon.com‘s bestseller list for several weeks. IFilm.com‘s “405,” about a commercial jet landing on that famous Los Angeles freeway, has also garnered substantial buzz and recently won its creators, Bruce Branit and Jeremy Hunt, a deal with Creative Artists Agency.

Stepping up

Songs and shorts are one thing, but one online entertainment firm, Pennsylvania-based Sightsound.com, has decided to take it to the next level, even as some critics wonder whether there is a next level.

Sightsound’s 32-minute “Quantum Project,” starring Stephen Dorff and John Cleese, cost $3 million, and is available solely via the Web. Customers shell out $3.95 per copy, or slightly more than the average rental fee at a video store.

For their money, users get the file, which weighs in at 165 megabytes for the high-resolution version, as well as a decryption key needed to make the file viewable.

Pic was produced by indie house Metafilmics, best known for the expansive (and expensive) 1998 Robin Williams film “What Dreams May Come.” Barnet Bain, who co-produced “Quantum” along with Stephen Simon, says he jumped at the chance to leapfrog the Hollywood establishment and pioneer features on the Web.

“We realized that there was a very brief window of opportunity in which a small independent could be a leader,” Bain says. “We have a chance to do the equivalent of making ‘The Jazz Singer.’ ”

To many Hollywood veterans, it may smack of heresy to put the release of “Quantum Project” on par with the first talkie, but “Quantum’s” creators and backers believe the effects on the industry could be equally dramatic.

Scott Sander, Sightsound’s CEO, says the film’s biggest impact could be on the realm of traditional movie distribution, especially in light of recent concerns over online piracy via file-sharing utilities like Gnutella and Freenet.

In fact, the company’s model of distributing the “Quantum” download for free and then selling a digital key to unlock the file is well suited for thwarting piracy on those networks, he contends.

” ‘Quantum’ acts just like a vaccine” in file sharing networks, Sander says. “We are able to take it and (safely) pump it into Gnutella’s file sharing network.”

Since people who swap and download the file still need the key to open it, the piracy element is effectively defused, he said. That means Sightsound has already solved a problem to which the film industry is only beginning to awaken, he added.

“I’m not saying they need to change their business practices overnight, but one thing the Internet has taught us is that there are brutal repercussions for waiting,” Sander says. “Just ask the music industry.”

Cash stash

One thing the film business does keep a keen eye on — the gross — is still a well-kept secret for “Quantum Project.” Sander, again citing the IPO quiet period, would only reveal that it has been downloaded in 60 different countries. (A source close to the company put the number of downloads in the neighborhood of 30,000, implying revenues of just $120,000.)

But Sander insists that his focus is on a different number. “The traditional Hollywood way to look at “Quantum” is to say ‘what did you do on opening weekend?'” he said. “Here’s the key number: everybody bought it; nobody stole it.”

Adds Metafilmics’ Stephen Simon, “Quantum’s” co-creator: “I really don’t think that this $3 million was extended by Sightsound with the idea that they’ll get 750,000 people and break even,” he said. “This was (more) an effort to be a pioneer in a new realm.”

But that’s a pretty substantial price to pay for the privilege of being first in a very unproved market — especially when longer-format entertainment isn’t necessarily the best thing to watch online, according to Matt Hulett, chief marketing and online officer at AtomFilms.

“The short is going to be the preferred medium in an online environment, even after broadband access is widespread,” he says. “Watching movies on a PC, you’re pretty much set up to be distracted.”

“We like to use the ‘sitting forward versus sitting back’ analogy,” says Gene Klein, content VP for Gotham-based indie film site Reelshort.com. “If you’re watching a half-hour movie on a PC at your desk, that’s a long time to be sitting forward.”

David Beal, CEO of Gotham-based entertainment portal Sputnik7.com, is impressed by the initiative taken by SightSound in producing “Quantum,” especially since it takes steps toward upending the traditional Hollywood model for distribution.

“The film business’s distribution channels haven’t really evolved,” he said. “They’ve been pretty much controlled exclusively by Hollywood.” “Quantum” could have a hand in changing that, he added, but the real test will be whether it becomes popular enough to warrant release on several different distribution channels — the Web included.

Even as “Quantum Project” is being debated in ‘Net circles, another filmmaker is laboring to break into the longer-form Web film market on a markedly different path. Los Angeles-based former gaming designer Helmut Kobler is fashioning a 23-minute science-fiction film in the California desert on a shooting budget of $80,000.

Production of the pic, called “Radius,” is being painstakingly documented on Kobler’s Web site, www.makingofmovie.com, for both marketing and interactive education purposes. “We thought of it as a way to create awareness even before a frame is shot, a la ‘Blair Witch,’ ” he said.

Kobler, like Metafilmics’ Simon, is not banking on the possibility that his film will be profitable. Compared to “Quantum,” however, “Radius” is a relatively minuscule financial risk, and the upside in terms of exposure and experience is considerable, he said.

The director has not yet gotten a distribution partner for “Radius,” but he said he has talked to several netcasters, including MediaTrip, about a possible deal. The film would be distributed free, perhaps in multiple episodes, with an eye toward a DVD release and potentially a licensing deal thereafter. “I want to be seen in as many places as possible,” he said.

Despite the divergence between his strategy and that of Sightsound, Kobler gives credit to “Quantum Project” for its ambition and pioneering spirit. But he maintains that pay-per-download still needs time for fine tuning and market acceptance before it can become a viable commercial model.

The original concept of “Quantum” “was definitely interesting to me, and it still is,” he said. “But whenever there’s new territory being explored, there are always going to some mistakes.”

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