Amid rush to sign online talent, agencies ponder how to profit

The top floor of United Talent Agency looks the part with its expansive glass-walled offices, chic artwork and an army of fashionably dressed agents working deals for the likes of Harrison Ford.

And then there are the four guys toiling downstairs.

"This is it," says Jason Nadler, 28, waving at a crowded space that would barely cut it as a waiting room upstairs. Here, Nadler and Ryan Reber, 28, Barrett Garese, 27, and Jon Zimelis, 27, scour the Internet daily for The Next Big Thing in entertainment and pop culture.

In these dorm-room-style digs — unused foosball table, joke poster of O.J. Simpson — the young scouts who make up the talent agency's 2-year-old Web division, UTA Online, have been feverishly signing up dozens of digital mavericks in hopes of finding that rare bright light who can build a lucrative entertainment enterprise.

"There's a huge cultural change going on out there," Nadler says. "The model of how people consume their entertainment is totally up in the air."

That's not the only thing up for grabs. The foundation of Hollywood's dominance in pop culture and the entertainment industry is being threatened by the democratizing force of the Internet, which posits that anyone with a snappy idea and a video camera can dish up features to the masses.

As a result, top Hollywood agencies such as UTA, Endeavor and Creative Artists Agency are diligently mining the Web for raw talent. The process quickly has become as crucial to entertainment talent scouts as trawling smoky comedy clubs or screening obscure movies has been for generations.

Meanwhile, network executives are busy signing deals with online content producers with a knack for wooing audiences with short attention spans. This month, CBS brought on EQAL founders Miles Beckett and Greg Goodfried, the duo behind the first successful Web serial, LonelyGirl15, to help create unique extensions of CBS shows for the Web.

"The media companies know they will ignore this trend at their peril," says Larry Gerbrandt, principal with Media Valuation Partners, a consulting firm that advises entertainment companies. "The Internet is what cable TV was two decades ago. At first, the big guys balked at it. Now, they own it."

There are bargains to be had

There are some encouraging signs for the executives diving into an unpredictable world of entertainment fueled largely by the whims of twentysomethings:

•For companies used to spending millions of dollars on talent and programs, the Web is a bargain on both fronts.

"For what you spend on one TV pilot, you could do an endless online serial," Gerbrandt says.

Precise budgets are rarely discussed by talent agencies or networks, but producers agree a two-minute video can be made for a few thousand dollars.

"The beauty of the Web is that you can easily test an idea and move on," Gerbrandt says.

•Although media companies of all types continue to wrestle with how to make money from the Web, money is flowing into that part of the entertainment industry at a time when TV and film are finding it increasingly difficult to capture audiences.

Online advertising spending is projected to double to $50 billion by 2012, according to forecasting group eMarketer.

"There's no question this is a new and valued marketplace," says Lori Schwartz, director of Interpublic Group's Emerging Media Lab, which advises Web advertisers. "The convergence of broadcast and broadband will really make this big."

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