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Three-Minute Moguls


Can a converted barbershop off a main drag in Santa Monica, Calif., really be the new epicenter of entertainment? Evan Spiridellis, 31, a director, takes his spot in front of a computer on this December afternoon as his team of twentysomething computer animators puts the finishing touches on his latest creation, 2-0-5. The two-minute film is a none-too-subtle lampoon of President George W. Bush's 2005 lowlights. Set to a banjo rendition of Auld Lang Syne, the short features a marionette-like Dubya bouncing from one calamity to another singing "there's a special investigator after my friend Karl." Along with his 34-year-old brother, Gregg, Spiridellis runs JibJab Media Inc., a onetime commercial animation house that first became an Internet hitmaker with the 2004 election spoof This Land. Now, feverishly working his computer's mouse as the President tiptoes sheepishly through Iraq, Evan is rushing to make a deadline: Jay Leno wants to see a finished version for The Tonight Show.

By the time 2-0-5 aired on NBC on Dec. 15, the film was already on its way to becoming an Internet smash. "We were seeing a huge spike in traffic," says Rob Bennett, product manager for video, TV, and movies at MSN, which licensed JibJab's short to be shown on the online service. Within two weeks, about 2 million additional folks watched it directly on JibJab's Web site, says Gregg Spiridellis.

Those may not be the blockbuster numbers of, say, a Spider-Man or Lord of the Rings, but six years after the Internet bust dashed hopes that original movies and shows would fly in cyberspace, online production is back. And it's not being fueled by Hollywood suits and high-priced directors like Ron Howard and Tim Burton who crowded the Net in 1999. Today a small army of computer jockeys from Santa Monica to Brooklyn is quietly creating a New Hollywood by conjuring up hundreds of short bursts of animated or live-action entertainment from their second bedrooms or kitchen tables.

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Even though the online flicks can be crass, irreverent, even downright gross, companies such as Ford (F), Miller Brewing (SBMRY), and AT&T (T) are taking notice, placing products in the films themselves or running ads next to the videos. Going a step further, companies eager to connect with a younger audience are hiring these new filmmakers to create commercials. "It is becoming a business instead of a pastime," says Frank Dellario, a co-founder of Brooklyn's ILL Clan Productions, which has created shorts for MTV2 and other channels and commercials for Audi.

Improved broadband speeds and penetration, as well as growing demand for content for wireless devices and game consoles, are giving the genre a boost. Soon, plans for Internet protocol TV (IPTV) by giants like Google (GOOG) and Yahoo! (YHOO), which lets viewers see shows on both TV and computers, could create an even bigger opening. In fact, edgy fare is precisely what's connecting with teenagers, college kids, and, increasingly, older folks getting hip to the Net's vast offerings. "There's a wealth of cool content out there that plays well with our demos," says David Cohn, general manager of MTV2, which airs the shorts on its show Video Mods.

As with any kind of fringe media, these new filmmakers pride themselves on producing their work on the cheap. Three-minute shorts can cost as little as $1,000 and rarely more than $50,000 to produce. They often star girlfriends or feature the voices of out-of-work comedians. And because it costs so little to get started -- a computer, some software, and a digital camcorder -- there's no shortage of counterculture Spielbergs flooding the Net. Atom Entertainment, founded in 1998 and today the reigning site of this category, has 6 million monthly visitors to its various Web sites that act as a distributor for the films, much like a cable channel. Atom pays as little as $500 per short, say online producers. But the site also gives content creators a small cut of the ads preceding their flicks. That can mean popular shorts can make more than $200,000, says Atom Entertainment Chief Executive Officer Mika Salmi.

BOTTOM DOLLAR

Still, it's a tough way to make a living. The hippest Web sites of the moment, like MySpace.com, purchased by News Corp. (NWS) (NWS)last summer, build communities of young videophiles by offering viewers a chance to show their work. That free content drives the price down for even the hottest pros cranking out films for the Web. "It has become like independent filmmaking," says Internet investment banker Michael Montgomery. "The good ones will get attention and money. Lots of others get nothing." It has also created a rarity among the online crowd: bidding wars. Last year, JibJab left AtomFilms to jump to MSN after the site agreed to host JibJab's advertising on its servers.

Internet filmmaking also serves as a showcase for directors eager to hit the big screen. Jason Reitman, the 28-year-old son of Ghostbusters director Ivan Reitman, says he was able to raise money for his upcoming independent film, Thank You for Smoking, in part because of the attention he got from three live-action films he made for AtomFilms. Icebox Inc. is producing one of its shorts, Queer Duck, into a full-length movie for Paramount Pictures Corp. (VIA) More telling, Creative Artists Agency Inc., which represents such directors as Steven Spielberg and Robert Zemeckis, now represents the JibJab brothers.

Some of these newbies, however, say it's best to keep some distance between the old and new cultures. By steering clear of large studios, John Evershed, CEO of Mondo Media, says he has gotten better deals from smaller middlemen to distribute DVDs and merchandise based on Mondo characters. Its hit short, Happy Tree Friends, in which cute critters are often torn to pieces, has sold more than 500,000 DVDs through stores like Blockbuster and Best Buy. And its stickers, key chains, and plush toys are big sellers in retail chains like teen-centric Hot Topic. "Large media companies have their own way of doing things," says Evershed, "and it's not always the right way for us." Now there's a creed for the alternative Hollywood.

By Ronald Grover


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