Earlier this month, American Cybercast, creator of "The Spot" (http://www.thespot.com) and other online serials, filed for bankruptcy protection under Chapter 11 and laid off 25 staffers, leaving only about 13 employees to handle the company's projects. Its current rotation of advertisers will play out their deals, said a spokeswoman.
"We're going ahead and doing the best we can for our investors," she said, declining to comment further. Backers of the company-Creative Artists Agency, Intel Corp., Softbank and Tele-Communications Inc.-reportedly contributed $25 million in financing.
WARY OF ALLIANCES
For Steven Koltai, a former investment banker and Warner Bros. Interactive Entertainment executive, American Cybercast's problems underscore his wariness of alliances and outside partners.
"It's a mismatch, because what the investors want clashes with what you need to do as a start-up in this business. You need to be agile and flexible and ready and willing to adapt when things don't work," said Mr. Koltai, who now heads CyberStudios, Culver City, Calif., a consortium of Web developers and studios.
Other cybersoap pioneers worry that the crash of American Cybercast will send a chill throughout the investment community.
"I saw so many proposals for online and Internet ventures last year, but unfortunately, because of what has happened with American Cybercast . . . I think the venture capital community won't touch it for six to 10 months," said Josh Greer, chairman-CEO of Digital Planet, an Internet marketing company in Los Angeles.
NAIL IN THE COFFIN
For Digital Planet, the fall of American Cybercast put the final nail in the coffin of its own plan to start an entertainment network.
The company is now producing the third installment of its thriller "Madeleine's Mind" (http:/
/www.madmind.com); the second was sponsored by Intel Corp. and Universal Studios.
Where American Cybercast erred was in an ad model that couldn't generate revenue quickly enough to sustain itself and satisfy its investors, said Alex Flagg, online media supervisor at Anderson & Lembke, San Francisco.
American Cybercast signed advertisers including American Honda Motor Co.'s Honda division, Apple Computer and Eastman Kodak Co. to packages that included banner ads, product placement and integration into storylines.
'WHO WILL LIVE AND WHO WILL DIE'
At Internos Productions, Los Angeles, which produces the "The Family Jewels" (http://www.adinsite.com/family/family.html), funding is a struggle.
"I don't think agencies have the time and manpower to evaluate all the options that are out there. We need representation to get the consideration," said David Reich, founder of Internos. "I believe the DoubleClicks of the world will end up running this business. They will choose who will live and who will die . . . because they will be selling those who deliver the eyeballs."
"The lesson we've learned is that your revenue-generating content can't rely on banner advertising," said Mr. Koltai. "To be successful, you have to create