Lonely Girl Duo Gets VC Funds for EQAL

Miles Beckett and Greg Goodfried are creating an online studio that will be equal parts TV studio and social networking site

Miles Beckett and Greg Goodfried, the duo behind the 2006 online video phenom, Lonely Girl, have received $5 million from venture capitalists including Netscape co-founder Marc Andreessen, to create an independent online studio.

The pair say they turned down money from major media companies to build an independent studio that will let them do things their own way—create what they are calling a "social entertainment" company that will be equal parts TV studio and social networking site. The company is to be called EQAL, a shortening of the world "equal" to show that folks like them have just as much a chance to find a big audience as the huge media companies with their armies of programming executives.

The two aren't the only online programming hotshots who have found some deep-pocketed venture capitalists and who have designs on going directly to mouse-clicking videophiles. Former MTV Networks chief Herb Scannell has raised money—including from Spark Capital, one of the backers behind Lonely Girl, to create several online channels.

Webby Award Nominations

But Beckett and Goodfried have a couple of true hits already. Their shows Lonely Girl 15 and Kate Modern have been viewed more than 150 million times, the two say, and were both nominated as best drama at the upcoming Webby Awards, the Emmys for online producers. Moreover, Lonely Girl, which at the outset featured what appeared to be a real 15-year old in distress, became a national obsession among online video viewers before it was revealed that Bree, the young woman, was in fact an actress.

Beckett, a onetime surgeon, and former lawyer Goodfried intend to use the two shows—and others they are contemplating—to create their own studio to tap the social networking aspects of their current site They expect to use some of the $5 million to find new technology that will enable them to offer services such as messaging and "friending" to expand the numbers of people who already go the site, says Beckett.

The site currently uses a comment board to keep its users involved with the plots. Viewers have occasionally offered up ideas on the comment board that have become plot twists. An upcoming guest appearance by one of the characters in Lonely Girl on Kate Modern was an idea first broached on the comment board. That kind of viewer interaction is the beginnings of a larger social network, according to the two creators. The two shows use limited product placement at the moment, says Goodfried, and will look at revenue sources that include on-site advertising and subscriptions.

So far, the two say, they have steered clear of aligning with major media companies. "We've talked with all of them," says Beckett. "We've talked to MySpace ( NWS) and Bebo, everyone, and we'd rather stay independent and pursue our own vision."

The two haven't ruled out making TV shows in conjunction with a large media company, but they would rather maintain the rights to the show—and, of course, the revenue stream. That would make them a new media version of the independent production companies that now produce movies and TV shows, but then license them for limited showings on TV networks or as features in movie theaters. Not surprisingly, they say that they are already fielding tons of pitches from other, not-as-well-financed, video producers who would rather deal with them than a large media company.

Grover is Los Angeles bureau chief for BusinessWeek.

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