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Internet entertainment popular but not profitable yet

AFTER more than a decade of hype about the Internet being the next great stage for mass entertainment, it remains dominated by amateurs with most Hollywood stars watching from the wings.

Even as talent agencies like William Morris and television networks such as NBC push for more celebrities on Websites and better-quality programs, many actors and producers balk at Internet projects, saying they have meager revenue potential compared with television and movies.

The future of Web entertainment is front and center in fractious labor contract talks between the Screen Actors Guild and Hollywood's major studios that, after a nearly eight-month stalemate, began again on Tuesday.

Among major sticking points is a demand by SAG, the largest US actors union representing some 120,000 actors, for payments when members' work goes online.

But the studios argue they are making too little money on the Web now, and its future as an entertainment medium is uncertain.

Still, they are pushing ahead because they see an audience of teens and young adults - consumers of the future - who are more often online than in front of the TV.

"Digital media is really one of the great avenues of the future," actor and producer Ashton Kutcher said to Reuters. Still, he noted that because of the uncertainty surrounding financial models, "I don't know that anybody, truly from an entertainment standpoint, is firing all guns at that arena."

Show them the money

Kutcher is one of the few trying. This month he unveiled a Web series called "KatalystHQ" on the Website

In under three minutes, the reality-style vignettes take viewers behind the scenes at his production company. The 31-year-old former star of TV comedy "That 1970s Show," said he asked workers at his Katalyst Films if they would rather lose the Web or their TV, and they picked the latter. "I felt like that was a great indicator," he said.

But actors like Kutcher and Will Ferrell with his comedy site,, are the exception in Hollywood where the Web continues to be regarded as a venue for amateur programs with low production values and little money behind them.

"Web shows blur the line between what would be considered professional content and what would be considered amateur content, because anyone who has a camcorder and a bright idea can produce a show," said Dina Kaplan, co-founder and chief operating officer of video hosting site

The Web remains mostly a springboard for performers to launch a career. One recent example is YouTube sensation Iman Crosson, whose impersonation of President Barack Obama landed him on celebrity news program "Entertainment Tonight."

He is one of a lucky few. The best advice for fledgling Web performers and producers, many people say, is to continue chasing TV and movie deals because the money being made by the most popular of the Web producers falls far short of salaries earned by even unknown actors.

YouTube officials say they have hundreds of video posters making thousands of dollars a month in ad revenue-sharing.

But at a minimum, a SAG actor makes US$759 for one day of work on a TV show, and if that program is rerun on the network once, the actor gets another US$759.

For one week of work, the rate is US$2,634 plus another US$2,634 for the first rerun. Later reruns also generate payments.

TV vs Web

Pay for reruns online is important to many hardline SAG members who want similar earnings from Web work that they get from TV reruns.

"They feel that if a bad deal gets embedded in the contract that they'll never be able to change it. The concern is not without justification," said Jonathan Handel, an entertainment attorney who is monitoring the contract talks.

The studios say the Internet as a distribution outlet remains unproven, so they cannot offer equivalent pay for work on the Web.

In a survey of online video viewers by research firm Magid Advisors, 70 percent of respondents said they were unfamiliar with made-for-the-Web shows from TV and movie producers.

In December, YouTube, with its mix of amateur and professional videos, attracted more than 40 percent of views in the United States.

Its competitors each attracted less than 5 percent., which distributes reruns of TV shows and movies and is a joint venture of News Corp and NBC Universal, received 1.7 percent of video viewership.

Still, the popularity of Web videos continues to grow. Earlier this month, Web tracking firm comScore reported that Internet users viewed a record 14.3 billion videos in December, an increase of 13 percent over the previous month.

Howard Suber, a professor at UCLA and the author of "The Power of Film," said the Web's most profitable days are ahead.

"So far, nobody has the imagination to figure out what new thing you can provide on the Internet that you can't get in any other medium," Suber said.


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