Hollywired: Movies on the Net

But just as the elder Eisner understands Main Street, USA, the younger Eisner, 27, and his partner, Bruce Forman, 29, understand fraternity row. Booty Call attracts 1 million unique users a month. And starting this month, they'll have to pay three to five bucks a month to see all of it.

"It's one Taco Bell meal, two nacho grandes," says Eric Eisner, clad in baggy jeans and a green sweater. "If you're complaining about it being too much, yet you have a computer with broadband access, well, you're not being very reasonable." Forman, the (relatively) buttoned-down one of the pair, adds: "The jokers are no longer wild all over the place. The free ride's over."

While it's easy to shrug off the plight of the failing dot-com companies, there's a real effect on consumers. Companies that broadcast original Net programming must now figure out a way to actually make money. Pay-per-view online will remain the exclusive purview of live sports and big-budget movies. Charging a subscription price (just as Showtime, or Sports Illustrated, or a hundred profitable porn sites do) will become a more common solution for the Romps of the Net. "Whether it's HBO or a cell phone, we're pretty comfortable paying a subscription fee," says Michael J. Wolf, a senior partner of the media and entertainment group at Booz Allen & Hamilton. "Membership models will absolutely work on the Internet."

Of course, just as it is on television, most of the entertainment available on the Web will still be free, driven by ad revenue, often in the form of bits of streaming media. Ironically, these ad-based companies welcome and even promote file-sharing technologies like Napster, which serve only to disseminate their product and increase the eyeballs viewing the ads. "It's like turning a piece of entertainment into a grass fire," says John Evershed, CEO of Mondo Media, an animation company that syndicates its cartoons, each with an embedded 12-second ad, to more than 30 sites. These ads will become harder to skip through as the companies get more sophisticated. One of the sponsors of Mondo's popular Thugs on Film series is Altoids, which the main characters, Stubby and Cecil, have been known to munch on during the show. Invasive? Perhaps. But it's at least one price you're going to have to pay to see high-quality programming on the Web.

The visionaries of film, video, and animation have already set up shop online -- is Hollywood about to take the plunge? Our annual Hollywired report takes a look at where the industry is now and where it's headed.