COVER STORY : Hollywood On-Line...

Jeff Gold, senior vice president of creative services for Warner Bros. Records, was sitting at home behind his computer late one night last October. He was off duty, but he wanted to check up on a new project. His department had just launched a computer on-line forum to distribute consumer information about Warner Bros. labels and artists, and to interact directly with the fans who discuss their favorite music every day on computer “bulletin boards” across the nation.

There were no staff members to monitor the new forum on a service called America Online, so Gold and several co-workers were doing it in their spare time. He was troubled to find 140 or so messages about Neil Young, most of them attacking Reprise, a Warner Bros. label, for not putting six of Young’s albums out on CD.

“What’s the hold up?” complained one user signed on as Pluto. “Get those unreleased CDs out! Have you got all the money you need already, or aren’t you interested in all of these people just waiting to pour their hard-earned dollars into your vaults? I’m glad Neil isn’t as stingy with his music as Warner/Reprise is with the merchandise.”

“Ironically, I was having a meeting the next day with Neil Young’s manager,” Gold recalled. So he posted a message on the bulletin board under his nickname, Bottle Man, telling everyone that he would present the issue to Young’s manager, Elliot Roberts.

Gold printed out all the complaints on his home computer and showed them to Roberts the next day. “He said, ‘Great, let’s put them out. We’ll remaster them,’ ” Gold said. “I went home and posted messages to everybody on-line saying, ‘I just got done meeting with Neil’s manager, and he agrees these should be out on CD. I hope you are digging the fact that you helped make this happen.’ ”

The bulletin board was soon flooded with messages. “All Hail the Bottle Man!” “Bottle Man is king!” A user nicknamed Shakey Jack wrote: “That may be the best news I’ve heard all year! And yes, I am digging the fact that we all helped make this happen.”

Young’s unreleased material--”Time Fades Away,” “On the Beach,” “American Stars ‘N Bars,” “Hawks and Doves,” “Re*ac*tor” and “Journey Through the Past”--will soon be available in stores on CD, probably in June, as a direct result of what Gold learned on-line.

“I felt incredibly good to be able to say, ‘OK, you want it, you got it,’ ” Gold said. “It was very exciting for me to be able to grant the wish of all these people who were clamoring for something they really wanted.”

Welcome to the wonderful two-way world of computer on-line services, where you can access the entertainment industry from the privacy of your own home, through a back door most of America has not yet discovered. All you need is a personal computer with a modem and some easy-to-install software from your local computer store.

Entertainment executives have recently discovered the growing number of people who subscribe to computer on-line services. All you have to do is sit down, switch on your computer, click your mouse on the appropriate window and the software you installed will dial up the on-line service you subscribe to. Enter your personal access and you’re on-line.

From there, depending upon which service you receive, you can fire off complaints or compliments to CBS about last week’s episode of “Murphy Brown,” and a network representative will get back to you. Last month, you could have probed “Home Improvement” star Tim Allen, who was taking questions on-line, or you could have queried sports commentator Dick Vitale, who was sitting behind a terminal each night conversing with sports fans about the NCAA basketball tournament for ESPN.

Do you like computer art? Cable television’s Sci-Fi Channel has digitized pictures of Godzilla that you can download into your personal computer and print out at home. Did you miss Court TV last week? The cable channel will soon offer electronic transcripts of juicy testimony and verdicts from the day.

If you’re a movie buff, you can access “multimedia” information kits for feature films from Paramount Pictures, Columbia Pictures, TriStar Pictures and Metro-Goldwyn-Mayer. The kits from Hollywood Online include original animation, film clips with sound, digital photos, production notes and star biographies. If you prefer art-house films, executives at Fine Line Features are personally fielding computer questions on such upcoming releases as director Gus Van Sant’s “Even Cowgirls Get the Blues,” from the Tom Robbins novel. If there’s no movie house playing a Fine Line film near you, the film company has been known to expand its distribution to areas where home-computer users have complained.

Or perhaps you like music, and you’re looking for gossip on the upcoming album “A Date With the Smithereens.” You can plug into an RCA Records bulletin board full of tidbits from avid fans. RCA will supply you with digital album cover art, group photos and press information on the Smithereens. You can hear sound samples from two unreleased tracks--”Miles From Nowhere” and “Sick of Seattle”--or call up the band’s concert schedule. And RCA hopes to gather the Smithereens around a computer terminal for questions soon in a live computer conference.

“Right now, the potential is endless,” said Lourdes Vitor, administrator of artist development for RCA Records, which has been on CompuServe since November. She’s developing a video file, so users can eventually download music videos and play them on their computers. “We reach almost 2 million subscribers with this marketing tool. That’s an amazing reach. With new members getting on board all the time, it gives us more incentive to share information about our artists.”

One day an electronic superhighway will carry an endless stream of instant entertainment and information into America’s living rooms with the touch of a button, but the signposts leading the way are still hard to read. The convergence of cable TV and the Baby Bells--which will most likely build the highway together--seems further off than ever following the recent collapse of two proposed mega-mergers worth $37 billion.

So Hollywood has been hopping onto the next best thing. TV networks, production companies, movie studios and record labels have been rushing to form alliances with the leading computer on-line services--Prodigy, CompuServe and America Online--as well as a host of others springing up. There are currently 4 million households in the United States subscribing to these services--usually for a monthly usage fee plus time logged on--and their numbers are growing dramatically.

Each on-line service provides a vast electronic database of information. Because the information is carried slowly over ordinary copper phone lines--and not the lightning-fast, fiber-optic lines that will become the backbone of the superhighway--entertainment companies are limited in what they can provide on the services. People cannot yet play back movies or TV shows or entire music albums at home.

Computer on-line services, instead, offer the industry an innovative, inexpensive way to promote, market and distribute consumer information to an audience of hungry computer users who can provide direct feedback. One of the most popular aspects of these services are the bulletin boards, where a national network of computer users can post and receive messages from one another and members of the entertainment community. Movie studios tend to use the services more for promotion, because they release films intermittently, but this communications loop is vital for TV networks trying to recruit regular viewers for their shows and record labels building a loyal fan base for their artists.

“For me, the computer on-line systems are the prototype of the cable superhighway, in that you can get any kind of information, any time you want it, 24 hours a day, and it’s a two-way road,” said Gold, who also has a Warner Bros. bulletin board on CompuServe. “Computer on-line services are a great learning lab for us, in addition to being a way to get feedback on records and artists. They provide an instant focus group. We’re learning from people out there, and at the same time we’re publicizing our artists.”

“Prodigy allows members of the entertainment industry to stake out a leadership position in the entertainment world as companies that are experimenting and experiencing live interactive television now,” said Barbara Bellafiore Sanden, general manager of news, sports and information for Prodigy, the biggest on-line service with 2.5 million users. “That’s of strategic importance to them, and to us as well. We see our future very closely aligned with TV and movie studios. Right now, we’re delivered by telephone wire, but we eventually hope to be delivered by cable television wire, and there are 65 million cable subscribers out there.”

The executives pioneering the on-line industry speak like visionaries with one eye on the future and the other on the past. “One of the mistakes some of the traditional media companies made in the past is missing these new mediums, these shifts in the industry,” observed Steve Case, president and CEO of America Online.

“For example, in the cable television world, most of the dominant cable networks today really came out of nowhere, driven by creative people who were trying to create new kinds of offerings for a new medium. In retrospect, it would have been smart for Rolling Stone to create a Rolling Stone music channel and preempt MTV, or for Time Magazine to create a Time channel to preempt CNN. But they didn’t. This time around, the established entertainment companies recognize there’s something going on here.”

A few weeks ago, Les Lipps was at home in Los Angeles watching television when he saw a local news report that CBS News correspondent Charles Kuralt was leaving CBS. As a faithful fan of the seasoned Sunday morning news personality, Lipps, 26, was furious that CBS would get rid of Kuralt.

So he bolted to his home computer and fired off an angry message on Prodigy to CBS executives: “What’s the deal CBS! Why let Charles go! This really is one of the most sickening moves (CBS) has ever attempted! I challenge everybody who gets up early on Sundays to watch (Kuralt) to contact CBS now! . . . This really sucks!”

Lipps explained later: “I wanted the creative geniuses at CBS programming to put their crayons down long enough to stop this from happening. This was one way to talk back to CBS. I mean, what else can a measly few million viewers do these days?”

Four hours later, Lipps received a computer message back from a CBS representative who reported that Kuralt’s resignation came as a complete surprise to the network. The message quoted Kuralt directly: “I have done every satisfying thing under the sun in television news, and would like to explore some side roads in life while I am still in good health and good spirits.”

Lipps realized that he had misunderstood the news report. He was grateful for the personal response from CBS. “I would rate that up in the 90% range of satisfaction,” said Lipps, a frequent user who spends $50 a month to send roughly eight electronic--or E-mail--messages a day. “Certainly that is what it’s there for.”

From the perspective of most industry executives, the key to computer on-line services is: “Connection, connection, connection,” said George Schweitzer, senior vice president of marketing and communication for CBS/Broadcast Group. Ultimately, Schweitzer would like to sell CBS merchandise on-line: home videos, “Rescue 911” safety kits, CBS News hats, “Dr. Quinn, Medicine Woman” jackets.

But right now, he just wants to reach out in a new way to the CBS audience and find out what they think. “I read a lot of the bulletin-board traffic on television. The messages are extremely literate,” said Schweitzer. Before he officially linked CBS with Prodigy, he spent personal time on the bulletin boards, at one point engaging computer users in on-line arguments over the merits of hiring David Letterman away from NBC. “People are passionate about what they see, what they like and what they don’t. That’s an important audience, and this is a way to tap into them, a way to create a circle.”

CBS was the first broadcast TV network to announce a major consumer on-line deal in February with Prodigy. To launch the program, CBS set up a computer terminal at the network’s press headquarters in Lillehammer, Norway, where executives and sportscasters fielded questions about the Winter Olympics. Each night on his wrap-up show, CBS Sports commentator Pat O’Brien addressed on-line messages on air.

Overall, 12,433 electronic messages from Prodigy members poured in--commenting on the network’s coverage of the event, asking behind-the-scenes questions and participating in viewer polls and surveys.

“The key is bringing people together from all over the world, literally, into a digital world where everyone is equal,” Schweitzer said. “Because you don’t have to sit in someone’s office or meet them at a cocktail party in order to communicate. Everyone is equal in this digital world, and there’s no inhibitions. You don’t have to have a jacket and tie on to talk to the company president. The star or sportscaster or executive is happy to connect with you. It’s a very leveling experience.”

One of the mysteries of being on-line is that you never really know who reads your messages, or who you’re communicating with. Although most companies designate a representative to officially answer questions, the bulletin boards are frequently stalked by network and studio heads, producers and writers, artists and managers, actors and agents, all looking to get a feel for the buzz about their work.

“I find it invaluable,” said Chris Carter, creator and executive producer of “The X-Files,” a dramatic TV series on Fox about two FBI agents who investigate strange and supernatural cases. Public bulletin-board activity on his popular Friday night series is heavy, and every Monday morning Carter or his writers check in to see what people are saying, rather than wait for the regular mail or phone calls to come in.

“It’s immediate audience feedback, which I find very helpful, enlightening and occasionally dismaying,” Carter said. “But mostly, I use it constructively. It’s interesting to find out who people respond to in the stories and what they see in the episodes.”

Ira Deutchman, president of Fine Line Features, regularly reads the bulletin boards devoted to his studio on Prodigy and America Online. “I know there is a lot of Hollywood talent lurking on the board at this point,” he said. “Among our E-mail, we do get notes from people who we know in the creative community. The down side--we end up answering a lot of E-mail pitching us projects, which is exactly what you fear. We’re not going to take unsolicited projects on-line.”

“I go on the music bulletin boards all the time to see what people are saying about me,” said pop music star Meat Loaf, a self-described computer fanatic who carries his laptop to every country to which he travels. He estimates that he has spent $15,000 in on-line charges over the past three years, much of the time devoted to playing in Prodigy’s fantasy baseball league.

Meat Loaf learned on a bulletin board that tickets to his concert at the Tower Theater outside Philadelphia were being scalped for $150 apiece, because scalpers had bought out entire rows of the theater. So Meat Loaf and his manager limited sales for the remainder of the tour to four tickets per individual.

“Sometimes I write them back,” Meat Loaf said. “One guy loved the album (“Bat Out of Hell II: Back Into Hell”), but he didn’t like the song ‘Life Is a Lemon.’ I wrote him and said, ‘Maybe you should listen again. The song will grow on you.’ He messaged me and said, ‘Yeah, Meat Loaf, right.’ People ask me to prove it when I message them. How do you prove it?

“I ended up inviting he and four friends to a concert in Newark, Del. They took a limousine from Philadelphia. His friends were telling him the whole time, ‘You didn’t really get these tickets from Meat Loaf.’ But I greeted him backstage right away.”

Despite the sudden Hollywood interest, computer on-line services are nothing new. They are perhaps the oldest of the so-called “new technologies,” and since the early 1980s they have enabled people to use their home computers to search through a variety of databases, purchase products, play games, check stocks, catch up on the latest news, make travel reservations or converse electronically and exchange computer information with a vast network of users.

Why did the entertainment industry wait so long to get involved in a major way?

“There is a lot of buzz about this whole industry right now,” explained Alan Cohen, senior vice president of marketing for NBC. Last month, Cohen unveiled NBC Online to get NBC up on three services by next month--Prodigy, America Online and GEnie--reaching a total of 3 million users. His main goal is to bring NBC to new audiences.

“We were waiting for the industry to get to a place where there is enough of a reach to make it worth our while,” Cohen said. “This is the superhighway that’s here today.”

Up until this point, computer on-line services have appealed mostly to the “techno-weenie”--a term coined by the trade newsletter Interactive Update to describe the people who could navigate the complicated on-line menus and programs. But there has been an explosion of personal computers in the home in the last two years. Computer prices have come down, and many of them are sold with built-in modems and pre-installed software, including programs for America Online or Prodigy.

At the same time, the leading on-line services have been pushing hard to become more user-friendly, and as a result they are experiencing phenomenal growth, fueled by word of mouth and positive media coverage. “When it was a small group of esoteric people, it really wasn’t big enough for the giant media companies to get involved. Now hooking up to a service is as easy as getting a magazine subscription,” said Sanden at Prodigy. “It’s infiltrated the public, so it’s infiltrating the media.”

CompuServe has 1.7 million users and is swelling by 75,000 subscribers a month. It took seven years for America Online to reach 300,000 subscribers; in the past seven months, the company has doubled that number. Last month, thousands of frustrated users reached a busy signal when they tried to access America Online during the evening hours.

“The growth was just far greater than we anticipated,” acknowledged Case at America Online. “We became like a restaurant overbooked at peak hours. We’re taking care of those problems.”

Meanwhile, Australian media magnate Rupert Murdoch purchased Delphi Internet Services for a reported $12 million last September, even though the on-line service has only 100,000 users. He plans to create interactive services on Delphi to promote other Murdoch properties--Fox Broadcasting, the new cable channel F/X and TV Guide. In the age of synergy, a computer on-line service can act as a sweeping arm to band together and market a vast entertainment conglomerate.

“I was asked by Mr. Murdoch to take on the transforming of Delphi from an engineering platform for propeller heads, meaning people who are technically literate, to the No. 1 on-line service in the United States, if not the world,” proclaimed Jaan Torv, vice president of programming and development for Delphi.

Cost appears to be a prime factor in the willingness of entertainment companies to get involved with computer on-line services. Entertainment companies with an on-line presence are not paying the services to be there. “We see them as partners,” said Case at America Online. “We can partner and create new services neither of us could do independently.”

In some cases, the task of getting on-line requires little more than the transfer of data, with companies using on-line services to distribute existing press and promotion material.

“If it exists digitally, if it’s been typed into a computer, it can be interfaced,” said Schweitzer at CBS, which distributes everything from CBS program highlights to news releases on Prodigy. All the work is being done within the network’s press and publicity department. “It’s taking that digital stream and making a little off ramp for these on-line services. Yes, we will hype it and add some graphics, but the information has been converted digitally already and it can go anywhere.”

Perhaps the most advanced on-line creations are coming out of Hollywood Online, available on America Online. Beginning last year with “In the Line of Fire,” Steven Katinsky and his partner, Stuart Halperin, began transforming promotional materials from studio films and even a home-video company into marketing magic. “Studios just give us their marketing materials, a box of their standard stuff--movie trailers, TV spots, press kits, slides, production notes--and we turn them into creative productions,” Halperin said.

When you call up the interactive media kit Hollywood Online devised for “Naked Gun 33 1/3: The Final Insult,” a small animated police car screeches onto the screen with its siren wailing and the “Naked Gun” theme pulsing. By placing a cursor on Leslie Nielsen’s face, the users can drag it across the screen to open different windows for everything from filmmaker biographies to production notes. Each area has new animation and clips from the movie. There’s even a game of Concentration you can play, trying to match a patchwork of hidden faces from the film that are briefly revealed when you click your mouse on them.

“We view this as an industry we have to support,” said Arthur Cohen, president of worldwide marketing for Paramount Pictures, “because it’s part of keeping in touch with the way younger, more intelligent people are looking for information.

“At this stage, it’s not going to open a movie. But we said at the start to the people at Hollywood Online, ‘We’re going to be your friend when you’re small. Just remember when you’re big and rich and living in a mansion driving Porsches how you got there, OK?’ because I’m very convinced this sort of information transfer is the way it’s going to be in the future, the way real communication and motivation will occur for a significant segment of the population.”

Most agree, however, that on-line services must become more than a dumping ground for rehashed material, no matter how creatively put together, if they are going to move to the next level. “People really want to communicate,” said Matt Jacobson, Delphi’s West Coast vice president of entertainment services. “They don’t want to download a lot of information from you. They want to have a dialogue.”

Michael Bolanos, an entertainment consultant for CompuServe, offered one fresh use of consumer on-line services by sitting in the press room during the Academy Awards last month with his laptop. He fed questions from on-line users directly to Oscar winners as they stepped off the stage and then typed in their answers live to an audience of users sitting eagerly behind their computers.

“We don’t think the success here will be driven by taking old stuff and distributing it in a slightly new way,” said Case at America Online. “Any time something new comes along, a natural evolution takes place, and you just have to wait for it to happen. Initially, television was just radio with pictures.

“We’re sort of in that phase now, in terms of blending the skills of Hollywood and the interactive medium. It’s a necessary first step, but over time as more people use these services, and they become more ubiquitous, people will be creating new kinds of programming with interactive components that are part of the design rather than an afterthought. We’re not there yet, but we’re headed there.”