From Rocketboom to ABC

(page 2 of 2)

Universal and EMI also plan to sponsor online star searches (see BusinessWeek.com, 10/30/06, "American E-Idol").

Looking to Profit Online

In many cases, traditional media companies are more interested in keeping Internet stars online than putting them on air. The idea is reaching a new and, in many cases, younger audience. "When you have conversations with traditional platforms, often the biggest interest is not to leverage whatever buzz you have online to move to a traditional platform," says Frank. "They are trying to figure out how to make this model work in the online space."

Traditional media have a big incentive to court Internet stars. Online advertising is expected to grow to $25.2 billion in 2010, consuming 8.9% of all advertising spending, says research firm eMarketer. That's up from $15.9 billion—or roughly 5.7% of total ad spending—this year.

ABC has been particularly deliberate about expanding on the Web. While other news programs, such as those at CBS (CBS) and NBC (GE), have Web simulcasts and video blogs, ABC News has a 15-minute daily newscast just for Internet audiences. Most major networks have also been moving their new programs online to create more buzz and wrap in new audiences (see BusinessWeek.com, 10/11/06, "Click Here to Catch Up on CSI"). ABC is no exception, making episodes of such shows as Lost, Grey's Anatomy, and Desperate Housewives available free online.

Awards and Advertisers

Kaplan has no qualms sharing talent such as Congdon with TV. As more people become famous for vlogs, more people are likely to begin producing better blogs to attract mainstream media attention. The better their blogs, the more audiences and advertisers will want to associate themselves with online content and brokers like blip.tv.

To help market their talent, PodTech, blip.tv, Yahoo Video, Intel (INTC), Guba, Revver, and others helped arrange the first ever "Vloggies," an Oscar-like black-tie ceremony for video bloggers. The awards were handed out on Nov. 4 in San Francisco. Winning top honors were Ask a Ninja, Frank, and the crew that develops Alive in Baghdad, a series of video blogs by Iraqis.

As vlogs have become more mainstream, advertisers have also begun taking notice. They have experimented with ads on videos shown on user-generated video site Revver. They are also working with companies such as AOL and News Corp.'s (NWS) MySpace to incorporate advertising on user-generated video sites.

The Copyright Effect

However, these deals have been slow to take off because of concerns about the kinds of content on user-generated video sites. The difficulty of filtering copyrighted material from millions of user-produced videos has also given some advertisers pause, according to Metacafe CEO Arik Czerniak. To allay those concerns, Metacafe has begun paying users for licenses and uses both human video reviewers and technology to ferret out copyrighted content. MySpace has also begun aggressively removing copyrighted content (see BusinessWeek.com, 10/31/06, "Music Downloading's New Deal").

With sites moving to make user-generated content safer for advertisers, online celebrities and their videos are likely to become even more appealing for major networks and others. That means more cewebrities could turn into genuine celebrities. "The first time I ever put a video on the Net, I didn't know it would have such a great effect," says Eigo. "Now I know it can make dreams come true."

Holahan is a writer for BusinessWeek.com in New York.