LonelyGirl15 Creators Raise $5 Million In VC To Launch Production Company

The creators of LonelyGirl have raised $5 million in venture capital in order to launch their own production company, Eqal, to produce online shows. LonelyGirl15 was the online video blog (vlog) of a girl named Bree, which attracted millions of views on YouTube and other video sharing sites ; and caused some degree of controversy when it was discovered that the vlog was in fact a scripted show.

The founders of Equal Miles Beckett, a one-time medical student, and Greg Goodfried, a lawyer, went on to create several other shows including a spin-off for the UK called KateModern that used Bebo, rather than YouTube, as its driving platform. Now the pair have attracted Series A funding from venture capitalists including Spark Capital and individuals such as Conrad Riggs, Ron Conway, Georges Harik and Netscape co-founder Marc Andreesen.

They will be producing more content across more countries, including localised versions of each of their existing shows for different markets. The company name, Eqal, alludes to the equality of user-driven content that the company espouses, and its main website LG15.com allows user feedback, chat, a forum and wiki.

The really interesting thing about these online shows, for which Eqal is just one (of the more famous) producers, is how to make money out of them. LonelyGirl15 was a massive hit on YouTube, attracting millions of eyeballs. However making money on YouTube isn’t easy – you can’t stick in your own traditional advertisements on Google’s site, and YouTube itself pays content producer partners about $800 per million views they gather, according to some paper napkin math.

Between all of its shows Eqal has racked up over 150 million views since 2006. That’s worth a grand total of $187,500 that YouTube could have paid them over the lifetime of their existence (though the partner program is younger than LonelyGirl, so they would have got less.) That’s not a great return on investment (indeed, it wouldn’t even cover costs) for two years of producing short TV shows that have managed to attract millions of people to view them, and to make money out of.

The problem for companies such as Eqal is that their audience is on somebody else’s website – the likes of Bebo, MySpace and YouTube. They can use their infrastructure to create as many web hits as you like, but they cannot currently display their own advertising on the shows they air. They cannot, either, remove their shows from these sites and onto their own, as the audience is not likely to discover The Next Best Internet Thing on a website like LG15.com that nobody has heard of.

Eqal is talking about making its money through brand integration deals. This is one possible good business model. It will be interesting to see how Eqal and its peers, such as NextNew Networks and 60Frames, attempt to develop new business channels. They could, for example, cut better deals with the likes of Google and AOL for the use of sites such as YouTube and Bebo, which are themselves making money out of the traffic that these shows draw in.

It is not yet clear if these shows will be profitable in the end. But so long as they attract vast audiences, there will always be a way for somebody trying to make good money out of them.