Business model remains a work in progress

When Joss Whedon launched made-for-Internet tuner “Dr. Horrible’s Sing-Along Blog” last July, it repped a landmark in the development of the online economy.

“It was the first significant example of a creator bypassing traditional network outlets and bringing high production values to the Web,” says Arash Amel, head of broadband media at Screen Digest.

Users flocked in the hundreds of thousands to watch the three-parter and paid $1.99 an episode for the privilege. Demand was so great — some 200,000 hits per hour — that the website crashed a few hours after the launch.

It had been generally assumed that consumers wouldn’t pay for made-for-online content; the success of the show made it clear that they would.

But sadly, most creators of online content don’t have the pulling power of Whedon, and for them, other rules apply.

Peter Cowley, head of original digital programming at Endemol, stresses the importance of flexibility and agility when piecing together funding. He likens it to pulling together the cash for an indie movie.

“You have got to go anywhere you can to find the funding. You might have to give away rights, windows or exclusivity to achieve your goal,” he says.

Endemol thriller “The Cell,” for example, started life as a made-for-mobile show, commissioned by O2. Then website Crackle took U.S. rights, Fox Intl. Channels picked up global rights, and Sony acquired DVD rights.

Product integration and other forms of sponsorship provide another option to help producers get their projects off the ground. An early example was “The Gap Year,” distributed on social-networking site Bebo. Endemol raised $1.4 million from 14 different sponsors to fund the project.

Creators of online content have often relied on the social-networking sites to deliver the audiences the advertisers crave.

“It’s about partnership,” says Andy Taylor, All3Media’s digital media director. “You need to partner with a platform that can give you the eyeballs.”

One factor holding back the development of the market is the mindset of advertisers.

“One issue is getting the advertising community to realize that there is more to life than TV sponsorship and banner ads and embrace the new, creative and innovative ways for brands to be involved with content,” says Taylor.

Sharon Tal, VP of content development at Fox Intl. Channels, agrees it’s the advertisers who will dictate the speed of growth.

“We are already seeing growth, but relative to TV, the market is still minor. Everyone is hoping that it will jump to the next level, but nobody knows. It’s very speculative,” she says.

One potential source of revenue is the adaptation of online content for the TV market. But on the few occasions when online series have been picked up by TV, the results have been disappointing. Last year, NBC pulled “Quarterlife,” a Web serial shepherded by “thirtysomething” creators Marshall Herskovitz and Ed Zwick, midway through its run after it recorded the worst ratings for a Tuesday night in years.

But some active in the online sector believe that if Web series are properly adapted for TV, they stand a good chance of surviving the journey.

FIC is bullish in its desire to use online as a way to develop brands that may be able shift to TV. It has six shortform online shows at various stages of development, all targeted at the 15-25 age group. The first likely to start a new life as a smallscreen series is comedy “Single Dads.”

“The process is to first incubate the project on a digital level and then, if we create buzz, attract eyeballs and get enough advertisers behind us, we’ll move forward into TV development,” Tal says.

But the amount of money available to content creators remains very small, says Justin Judd, managing director of i-Rights, a division of Digital Rights Group.

“There is a rule of thumb that if you can’t do it for about $1,400 a minute, then you aren’t where you need to be,” he says.

I-Rights recently helped fund “Chelsea OMG,” a drama about an American girl’s adventures in London. The series attracted more than 1 million views over 10 weeks on Bebo, and — building on those initial numbers — i-Rights was then able to book a number of preroll ad campaigns for the series.

Mark Benmore, chief operating officer of MoMedia Intl., stresses the importance of developing content brands, such as Kamikaze Videos and Stupid Videos, which have attracted sizable auds across a range of platforms.

“In this fragmented media market, you need to have as many touch points with the customer as possible,” says Benmore.

DIGITAL EMMY NOMS

Nonfiction

“Al Jazeera English News U.S. Election Special” (Qatar)

“Britain From Above” (U.K.)

“Gaza-Sderot “(Israel)

“Huella Latente” (Argentina)

Fiction

“Director’s Cut — The Revenge”

(Argentina)

“Kirill” (U.K.)

“Pietshow” (Germany)

“Scorched” (Australia)

Children & Young People

“Battlefront” (U.K.)

“First Class Interactive” (Singapore)

“Fun Tzu” (Finland)

“Whack the Mole — The M.I. High Alternative Reality Game” (Canada)

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