Entrepreneurial Firms Go Hollywood, Thanks to Cheap Computers

David Spetner and his partner launch movie advertising campaigns, design cover art for home videos and supervise two employees--from their home offices.

“An operation that would have cost us $100,000 to set up a few years ago can now be handled by two guys with personal computers,” said the 38-year-old entrepreneur, who said his Los Angeles firm’s revenue has increased 10 times since 1992. “What it means is that we can grow the business without capital investment.”

Spetner and his partner Kevin Eaton are among thousands of entrepreneurs who have capitalized on the entertainment industry’s explosive growth and plummeting computer prices to create their own small businesses.

Southern California’s entertainment industry employment has grown to about 228,000 people, an 11% rise from last year, according to Jack Kyser, an economist at the Economic Development Corp. in Los Angeles.

“Most people think it’s the big studios that drive the entertainment economy here, but it isn’t,” Kyser said. “Small- and medium-sized businesses, often relying on high-tech equipment, are the real engine.”

Small, entrepreneurial firms have always played a role in Hollywood movie-making and television production. But growing competition, mergers and rising production costs are forcing studios to find low-cost service providers.

A “virtual” entrepreneur like Spetner--his employees don’t work in offices--can compete because of low-cost gadgetry.

“Four years ago, launching an advertising campaign would have required a lot of people, including production artists, camera operators and typesetters,” Spetner said. “Now I can create all the graphics entirely on my computer, send layouts and images over the Internet and deliver the entire campaign to the client on a high-capacity disk.”

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Such capabilities allowed him to design home-video packages and print advertising campaigns for MCA Inc.’s Spike Lee film “Clockers,” Sony Pictures’ “The Shawshank Redemption” and New Line Cinema’s documentary “Hoop Dreams.”

Spetner has considered scrapping his spare bedroom for a more formal address, but concluded he can run his high-tech campaigns just fine from home.

“I have a 25-foot commute, a view of the ocean and eat lunch with my kids every day,” he said. “I’ll forego the corner office in Century City.”

Former Universal Pictures marketing executive Stuart Halperin also thought he could use computers to promote films and make money. Halperin and his partner Steve Katinsky decided in 1992 that piping film clips, sound bites, promotional material and chats with celebrities through online services was the way to go.

“People love watching films and television, and this was the ultimate in interactivity: the ability to access [programming] instantly from a computer,” Halperin said. “I felt intuitively it was a business that was ready to take off.”

Starting with less than $3,000, they built Hollywood Online Inc. into an 18-employee firm that generates 400,000 “hits,” or visits, a day to its site on the World Wide Web portion of the Internet (https://www.hollywood.com) and other major commercial online services.

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The company makes its money from royalties paid by online services, online advertisers, two online retail outlets and fees for digitizing other companies’ entertainment products. Last month Times Mirror Co. bought the Santa Monica concern for an undisclosed price.

The public’s hunger for entertainment gossip gives any entrepreneur with the ear of someone famous yet another way to set up a small business.

Consider Joey Cavella’s Timothy Leary Web site (https://www.leary.com), devoted to the doings of the drug advocate and counterculture guru and his Hollywood friends such as Susan Sarandon and Tim Robbins.

With financing from a Japanese investor, film school graduate Cavella and his brother created a Web site that allows users to walk through a re-creation of Leary’s house, access updates about his health (he’s suffering from cancer) and chat online with Leary and his friends. The venture is based in Leary’s Los Angeles garage.

And how will it make money?

“We hope to have advertisers by summer,” Cavella said. “Absolut [vodka] would be fine. Computer companies would be great.”