Hollywood hits the stop button on high-profile Web video efforts

In some cases, big media ventures financed talent who had already succeeded on the Web, like the comedy troupe Handsome Donkey that made "Squeegees," with more money than they could come up with on their own. In others, they attracted better-known talent with the promise of more creative freedom. Turner's SuperDeluxe featured videos by comedians including Dave Foley, who starred on the NBC sitcom "NewsRadio," and Bob Odenkirk of HBO's sketch comedy series "Mr. Show."

And viewers responded. "Young Hillary Clinton," a comedy depicting a grade-school-level Clinton honing her barracuda political instincts, produced by 60Frames, attracted nearly 1 million views on YouTube alone.

But unlike other media, where larger numbers of viewers lead to higher advertising revenue, high-volume traffic on the Web hasn't necessarily translated into big money. Advertisers in short-form Internet video pay about $10 to reach every 1,000 viewers, so even a video that gets watched more than 1 million times -- a big hit by Web standards -- might not generate more than $10,000. Three- to five-minute-long "Webisodes" cost $5,000 to $25,000 to produce.

"So many of the major media companies thought they could just make a good show, put it online and sell advertising," said Jim Moloshok, a former Warner Bros. and Yahoo executive who is now chairman of online advertising company Betawave. "That's like taking a radio show and running it on television."

It wasn't Hollywood's first foray into online entertainment. The initial euphoria over the Web in the late 1990s attracted such big Hollywood names as Steven Spielberg and Ron Howard, who started POP.com, a project that was scrapped before launch. The dot-com implosion of 2000 also claimed hyped ventures such as the Digital Entertainment Network and Icebox.com.

Then by 2006 Web mania swung back in full force, with YouTube leading the way. Entertainment companies tried to jump on the bandwagon by building their own video sites, such as DotComedy, which launched in 2006, and SuperDeluxe and This Just In, which followed in early 2007. In theory, this made more sense than putting videos onto YouTube, since the companies would be able to keep the advertising for themselves rather than sharing it with a third party.

The problem was that building a short-form video website that people would turn to is extremely difficult because YouTube is so dominant -- the Google Inc.-owned giant attracts 60% of the U.S. audience watching video on the Internet, according to comScore.