User-Generated Video Goes Semipro

Dog on a skateboard? So 2006. A new middle ground is emerging in online video: user-generated video that is funded in a studio model by Internet distributors.

The idea is to produce interesting, viral content — instead of the 4,000th Macarena video on the 'Net — but in a way that's less expensive than a typical network or cable-TV show.


Sony Pictures Entertainment is chucking the free-for-all user-generated model in favor of giving aspiring filmmakers, actors and comedians cash to create videos. This week, the company expects to launch, the successor to video-sharing site Grouper.

Jonathan Shambroom, co-president of Crackle (née Grouper), said that there are now about 1,000 user-generated content sites.

“Every site has the exact same content,” he said.

Moreover, user-generated content is a tough advertising sell. “It's very unpredictable,” Shambroom said. “You're watching a wedding video, then the next clip might be somebody jumping off a bridge. Nike doesn't want their brand associated with that.”

Sony will shut down Grouper, which it bought last August for $65 million, and migrate the content to Crackle, Shambroom said. The Sausalito, Calif.-based Sony unit currently employs 52 people.

Whereas Grouper was focused generically on user-generated content, Crackle's mission is to find and develop new talent with what Shambroom calls “pathways to Hollywood.”

For example, it will sponsor a quarterly contest for short-form entertainment, with the winner receiving $15,000 to produce a short film and a guaranteed pitch meeting with Columbia Pictures.

The site will hold similar contests for standup comedy, with winners appearing at The Improv comedy clubs, and animation, giving users an opportunity to work with Sony's Imageworks animation studio.

“We think there's value to having a regular contest about fame. We're going to help make people famous,” Shambroom said, adding, “When you want to graduate from YouTube, you come to Crackle.”

Crackle, like Grouper, will be open to anyone who wants to post a video. However, to get featured on one of its channels, a video must either be selected by one of the site's editors or be voted one of the top two clips in a category for the week.

The business strategy for Crackle is to piggyback Grouper's popularity — the site had 25 million unique visitors in June — and tap the 60-person sales team at Sony Pictures Television.

“We are owned by a studio,” Shambroom said. “We have the resources and the DNA to fund content creators.”

Crackle joins other studio-like ventures producing online video. One of the earliest was Next New Networks, founded last year by ex-Viacom executive Herb Scannell, which plans to create 101 “micro-networks” broadcast over the Internet.

Next New Networks claims its micro-networks are now hitting into the seven-figure range for monthly video views. Indy Mogul, touted as “the first online TV network created especially for independent filmmakers of the YouTube generation,” said it had 1 million video views in June. Two of the company's other micro-networks, Channel Frederator and VOD Cars, have also hit the 1 million mark.

“We have always said that we are audience people, and the beauty of our online networks is that we have a direct relationship with this audience and know in real time if something is working,” Scannell said, in a statement.

Another startup, 60Frames Entertainment, last week announced it has raised $3.5 million to fund, syndicate and sell ads against professionally produced online content. The company was incubated by United Talent Agency (UTA) and Internet-based advertising agency Spot Runner.


The Los Angeles-based company said it will work with established artists, including filmmakers Joel and Ethan Coen, who will create content for 60Frames. Initially, 60Frames' programming will center on short-form comedy bits, expanding to include other types of online video.

CEO Brent Weinstein, 32, was previously head of UTA's online division.