The (Wannabe) Industry

Louis Rodriguez and his friends at KidShows.Com hope to be part of the next big thing on the Internet’s World Wide Web.

They’re developing “shows” for kids who might prefer an interactive story that can be delivered over the Web to a passive afternoon of watching cartoons on television. “The Adventures of Moo Moo the Cow,” the Santa Monica company’s first offering, features a 7-year-old bovine who tries to rescue her father from kidnappers while teaching children about oceans, caves and other things.

But like their growing number of counterparts in the fledgling Web entertainment business, the folks at KidShows.Com must not only develop shows worth tuning into, but also figure out how to finance, market and distribute their offerings.

For even though it’s relatively easy to put something onto the Web, getting a significant number of people to look at it is difficult indeed. Without a big audience, there’s little chance of attracting advertising, and without advertising there’s no profit.

And thus a whole new cyber-infrastructure, replete with Hollywood labels such as “studio” and “network,” is springing into being with the aim of supporting these new shows. The most recent addition is Culver City-based CyberStudios, launched two weeks ago with the goal of bringing the diffuse community of Web site creators together with commercial online networks, Internet service providers, corporations and others with cash and an appetite for programming.

“We see ourselves as the intellectual glue for this community,” says CyberStudios founder Steven Koltai, who spent eight years as a senior executive at Warner Bros., most recently as head of Warner Bros. Interactive.

Even mighty Microsoft Corp. has jumped into the fray with Microsoft Multimedia Productions--a.k.a. M3P--whose executives make regular visits to Los Angeles and New York to hear pitches from Web production companies that want to create shows and sell them to the revamped Microsoft Network.

“We’ve set up a stage, we’ve got a box office, we’ve got season ticket holders, but we need shows to fill the stage,” said Madeline Kirback, M3P’s business development manager.

It is not at all clear that the Web is ready to morph into a general entertainment medium. It will eventually be able to handle full-motion video and thus will be able to offer a plethora of TV-like shows and action-packed games. For now, though, the technology is mostly limited to text, sound and still pictures, and few have figured out what to do with interactivity. And the potential audience remains small compared with TV or film.

Still, there have been a few early successes, notably the episodic soap opera called “The Spot,” in which Web surfers follow the lives (and read the diaries) of five twentysomethings sharing a house in Los Angeles. Some practically oriented interest forums that have an entertainment component--such as the Motley Fool investors service on America Online--have also been hits.

Certainly, there’s no shortage of ambitious entrants, and Internet studios could unlock cash for further development, said Emily Green, an analyst with Forrester Research in Cambridge, Mass.

“This approach is the right way to go,” Green said. “It’s the most viable model for managing the development of this stuff that I know of. I’m surprised they haven’t moved to that much sooner.”

It’s an attractive model for many developers, who are seeing the cost of creating and marketing a state-of-the-art Web entertainment site reach into six and seven figures.

“There’s quite a lot of production studios out there that have great creative skills but are not well-funded, and most of them are struggling to stay in business at this point,” said Mark Mooradian, a senior analyst with Jupiter Communications in New York. “The whole idea for a studio is to be a bank for a creative industry. That’s the main reason why I see this as a positive development for this industry.”

Says KidShows.Com’s Rodriguez, who signed his company up with CyberStudios to try to speed the process of finding corporate partners: “Without CyberStudios, this would be an annual show instead of a weekly show.”

Of course, these Internet studios are a far cry from their Hollywood counterparts in several important respects. A traditional studio typically finances production for movies and arranges sources of revenue such as home video and merchandising deals. The financial relationship between a Web developer and an Internet studio is far more tenuous.

And in the world of movies, the studios handle distribution--making sure that a blockbuster film opens on 1,000 screens over Labor Day weekend, negotiating rights for overseas markets and inking deals with cable channels such as Home Box Office.

On the World Wide Web, distribution is a relatively simple matter--once the digital data is put onto a server and coded in hypertext markup language, it can be accessed by anyone. But whether many Web surfers will find it is largely a matter of marketing, which also depends on money, Mooradian said.

“If you want to reach a giant critical mass of people in this medium, you have to spend a lot of money,” he said. “You can buy traffic to your site--if you buy an ad on Yahoo or InfoSeek or Excite, your traffic quintuples.”

The alternative is to hook up with a commercial online service, he said: “People like to ally with America Online because they know AOL can point 6.5 million users at them.”

Indeed, America Online is often credited with planting the seeds of today’s emerging studios when it launched its Greenhouse project nearly two years ago. AOL provides seed money, production support and online promotion for new forums, or interest areas, suggested by subscribers. AOL gets a steady stream of new programming, and Greenhouse “infopreneurs” receive a percentage of the revenue their forums generate.

In many respects, Microsoft’s M3P is merely a more sophisticated version of Greenhouse. M3P has stationed employees in Los Angeles and New York to wade through hundreds of proposals for “shows” and package them for monthly pitch days, when executives descend from Redmond, Wash., and give projects the thumbs up or thumbs down.

If a show is approved by M3P, the developer receives funding--ranging from a few thousand to tens of thousands of dollars--to produce the show for a 13-week season, along with a negotiated “producer’s fee,” Kirback said. If the show is successful, it will be renewed for another season and the producer’s fee will probably rise, she said.

“It really sets up a complete production loop, from development to pre-production to production to distribution. My inspiration really is to run this network like a studio in that regard,” said Bob Bejan, another Warner Bros. veteran and now the executive producer for the Microsoft Network.

Over at American Cybercast, creator of “The Spot,” the Hollywood metaphor of choice is the television network. At the company’s Web site (https://www.amcy.com), visitors can link up to one of three shows--”The Spot” (the original Web soap opera), “EON-4” or “The Pyramid”--or to a fourth “channel” that consists of a rotating short feature.

In calling itself a network, the Marina del Rey company is acknowledging the importance of marketing in drawing viewers to a site. Rather than try to sell each show separately, President Sheri Herman would rather build the Amcy brand and sell one product rather than many--just as ABC, CBS and NBC use their well-known brands to attract viewers to their programs.

All but one of American Cybercast’s shows are produced in-house, but as the site grows, so will the amount of outside content, Herman said. The company could acquire, license or co-develop new shows with independent producers, she said.

Despite all the impassioned talk from would-be cyber-moguls, though, some analysts don’t see much difference between the “studio” and “network” models.

“Aren’t they just playing with labels?” said David Belson, a project manager at IBM’s telecommunications and media group in Santa Monica who helped develop the Entertainment Technology Center at USC.

And in the end, what will really matter is whether the programs are interesting--and there’s a lot of work to be done on that front.

Nadia Conners, creator of a prospective show called “Zero Sum,” hopes Web surfers will tune in weekly to help a professor, who has a vision of his death at the turn of the century, in his race against time to change the course of events.

Kirback of M3P is excited about a game in which Web surfers share funny stories about a particular topic each week. Then all the participants vote on the best story, and a professional comedian offers commentary via audio.

Amusing for some, perhaps, but not an obvious challenger to Hollywood as we know it.

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Show and Sell

Creating an entertainment site on the World Wide Web is, technically, a pretty straightforward affair--but getting a significant number of people to visit it is another matter. Would-be Web moguls are thus developing new financing, marketing and distribution models to create interesting programs and attract an audience. They’re labeling their fledgling entities “studios” or “networks,” even though analogies to traditional entertainment industries are often a stretch. Here’s one look at how the Web entertainment arena is evolving.

1. Santa Monica-based KidShows.Com (https://www.kidshows.com) has become an affiliated developer with CyberStudios. It is creating weekly “edutainment” series for kids, such as “The Adventures of Moo Moo the Cow.” CyberStudios will help KidShows find clients who are looking for content to put on their Web sites.

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2. CyberStudios (https://www.cyberstudios.com) likens itself to a movie studio. But while a studio typically finances production and marketing and has well-established distribution, CyberStudios will act as a matchmaker between program creators and clients such as commercial online services or corporate Web sites, which are expected to provide the bulk of the funding and marketing muscle.

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3. The redesigned MSN (https://www.msn.com) will feature six separate “channels”--a science and history channel and a kids channel are two--with more than 20 shows in all.Most of the shows are produced by Microsoft, but in the future many will be created by independent production companies. Microsoft Multimedia Productions, a.k.a. M3P, (https://m3p.msn.com), solicits pitches from companies with ideas for shows. Those approved receive production funding and will be featured on MSN. KidShows.Com might choose to pitch M3P directly rather than go through CyberStudios.

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4. Another potential CyberStudios client is American Cybercast (https://www.amcy.com), creator of The Spot and other Web soap operas. It fancies itself a TV network for the Web, though it’s now just a Web site with three serials and a rotating feature. Most of the programming is produced in-house, but over time the Marina del Rey company will rely more on independent producers such as KidShows.Com.