High tech and Hollywood: 'viral' videos catch eye of the industry and investors.

VIRAL video, the informal spreading of clips via e-mail and on the Web, is launching new careers in entertainment--but it's beginning to redraw the Hollywood landscape.

The short videos are tailor-made for being forwarded, shared, linked, swapped and downloaded.

Web sites are popping up almost weekly to host and index amateur videos. Investment is starting to pour in from venture capitalists and established Internet companies. Ad agencies are circling the fastest-moving videos, trying to grab onto their tails.

Just look at amateur animators Gregg and Evan Spiridellis, founders of Jib Jab Media Inc. of Santa Monica. Their Web spoof of the 2004 presidential race--a cartoon featuring the talking heads of the presidential candidates singing a version of, "This Land Is Your Land"--was viewed 80 million times and led to a distribution deal with Yahoo Inc. and a Budweiser commercial.

The duo's October Web launch of "Big Box Mart," a cartoon ridiculing Wal-Mart Stores Inc., involved TV's talk show circuit and received the full-court promotional press, courtesy of distribution partner Microsoft Inc.'s MSN Network.

Despite the opportunity to cross over into traditional media, the JibJab brothers say they're happy with their home on the Web.

"With a TV deal, you'll do a pilot, then maybe be in development for a year, and if you're lucky, you'll be on the air in 18 months," Gregg Spiridellis said. "We make something from start to finish in a few months, and it's out there. We're just more focused on the Web right now.

Digital channels are far more interesting to us than traditional media."

Digital channels are more interesting to the industry's creative and business community as well, bringing the "short" out of Hollywood's amateur leagues and into the limelight.

The short film "used to be just a calling card for people who want to do feature films, a stepping stone," said Ryan Ritchey, founder of TheFlux.tv, a video Web site dedicated to aspiring short-film makers. With devices such as the Video iPod and the PlayStation Portable, short films are developing an audience of their own.

"In the early stages of this new marketplace. people believe that the content that will be the most widely consumed will be short-form." said Brent Weinstein, agent with United Talent Agency Inc. who runs the new media division. "It's easily digestible onto cell phones. PDAs, and iPods," he said.The "short" has become a legitimate entertainment genre. Yahoo's video site aggregates interesting video into one place, "regardless of its source," according to Jeff Karnes, director of multimedia for Yahoo Video Search. "You're able to find content from major brands, studios and broadcasters all the way down to user-generated content." In other words, amateur videos get equal placement with movie clips and the days' top news and sports clips.

TheFlux is hosting an iPod film festival in March, accepting submissions of amateur short-videos that will be offered for download. "Five years from now, it will be possible to make a career just out of creating short-form content," Ritchey said.

Some people aren't waiting. Companies such as YouTube.com boast 6 million videos per day, Yahoo claims 15 million videos on its search engine, and video site Truveo.com was just purchased by America Online Inc. for an undisclosed sum.

"The art form of short filmmaking is going to all of a sudden become a treasured creative skill set," Spiridellis said.

"It's the democratization of video tools," said Steven Starr, founder and chief executive of Rewer Inc., an L.A.-based video Web site that offers a way for creators to track--and get paid--for their popular Web videos.

Making money

JibJab's "This Land" was viewed 80 million times, but its creators couldn't cash in. There was no cost to view it, no advertising attached and no DVD to sell.

"That's a Super Bowl-sized audience." Starr said. Big enough to make marketers cringe at the lost opportunity. But monetizing Web video is still a shaky proposition.

"The reason the Super Bowl costs so much for adverting is because it's a pretty safe bet that millions of people will be watching," said Todd Chanko, analyst with JupiterResearch. Chanko said the market in Web video is still too new for advertisers to be able to judge effectively.

There's no direct comparison to TV's Nielson ratings on a Web-video basis. Web ratings services such as Nielsen SoundScan and comScore Media Metrix can only measure how much traffic a Web site gets--not how many times a particular video is watched.

Until technology can catch these videos as they spread, it's a tough sell for advertisers. Despite the explosion of viewers, just $225 million was spent on Internet video advertising in 2005, according to research firm eMarketer.

New sites that aggregate popular video are too numerous to mention, as are the number of video search sites. Many will not survive.

"There will be a lot of guys jumping into it that won't be able to effectively monetize content," said Brad Greenspan, former chief executive of Intermix Media, which developed the social networking site MySpace.com (now owned by News Corp.), and founder of L.A.-based VidiLife.com Inc., a video social-networking site. "A lot of people are going to go out of business. There's not enough money from traditional media yet."

Greenspan has invested about $2 million in VidiLife, and is in talks to acquire another Web site in the video space. Most video sites depend on advertising revenue and--in the absence of a widely accepted business model--that's part of the problem.

L.A.-based Revver is one of the companies trying to assert a measurement standard into the void. Launched in November, Revver already has more than 10,000 videos on its site. It sells ads tagged onto the end of each video clip, which follow the clip as it travels through the Web. When a video is viewed to the end, the ad appears, and it "pings" a message back to Revver.

"Up until now that content was untrackable. Nobody knew how many people were seeing it," Starr said.

Once a clip gets "revver-ized" with an ad on its tail, advertisers and content creators have the ability to measure viewership because each viewing triggers a report.

Revver charges advertisers every time someone watches a video all the way through. Fees are about 85 cents per click, with half going to toward the creator of the video and half going to Revver. Once a video earns $20 through clicks, Revver starts paying its creator.

"This is Hollywood in 1908. These behaviors are just coming into practice," Starr said. The tracking and measuring allows amateur filmmakers to get paid, but it also offers advertisers a tangible measure of their campaigns.

"If you're a skateboard manufacturer, you can come into our system and ask for the top 50 skateboarding videos," Starr said. The company can then place ads on the tail of skateboarding videos only, ostensibly gaining control to reach its target audience. Ad inventory on Revvers' 10,000 video clips are sold out through March.

Talent search

A trio of L.A.-area college grads who call themselves the Lonely Island--Akiva Schaffer, Jorma Taccone and Andy Samberg--recently landed jobs on NBC's "Saturday Night Live" because of the dorm-room comedic shorts they posted on their Web site.

But they're the exception. Few Web videos will net their creators a television pilot, even fewer will lead to a major motion picture deal. Most of these videos will just circle the Web.

Hollywood's traditional heavyweights--the networks and studios, production companies and agencies--are tentatively poking at the online video world, trying to figure out a way to harness its power. Folks in the entertainment industry admit they're looking at video Web sites, especially at clips that achieve cult-status or "most-popular" status.

"If something is amazing, it becomes viral very quickly and I see it just like the rest of the marketplace," Weinstein said. But as an agent with UTA, he's in more of a position to do something with it.

UTA represents Lonely Island, for example, and Weinstein's new media department is trying to make forays into non-traditional entertainment channels.

"If someone can make a home video that can stand up next to a professional one, I think that's fantastic," Weinstein said. He was careful to point out that his first priority is finding new and exciting opportunities for his current clients to reach new audiences. "But as a secondary goal, we're always interested in discovering new talent," he said.

Web sites rank videos through community-based voting, so "the better stuff does generally get voted to the top," said David Kang, manager with talent management company the Firm.

But just because something is popular or funny doesn't mean it's brilliant.

"We're watching what's happening in Internet video with great interest, but there is still a lot of 'noise.' The quality is really uneven," Kang said. He said he hasn't had any serious discussions about trying to manage people from the Web--yet.

Video search engine officials are keeping their eyes peeled for talent, too. Yahoo's Santa Monica-based media division is actively pursuing content creators within the industry and outside of it.

"Any piece of content that has a viral component to it is going to be very sought after," said Dan Berger, spokesman for Yahoo Media, which cut JibJab's first distribution deal. "The more viral a piece of video content is, the better."

Yahoo's media types are aware of the competition--after all, the Yahoo Video Search engine (a separate division) links to content all over the Web, not just Yahoo-generated content. "But I don't want to give the impression that we have guys scouring the Internet looking for people to do deals with," Berger said.

Agents such as Weinstein also take pains to distance themselves from the frenzied search for "the Next Jib Jab."

"I don't think our current client roster will be replaced by people on the Internet," he said. "But ... if we can find some diamonds in the rough, that's great."