Is the Web the new Hollywood?

That's the conclusion of a panel debate between representatives from AOL, EMI, Google, Yahoo and Brightcove who gathered Wednesday morning at a conference in the heart of Hollywood called OnHollywood 2006. Hosted by media-resources service AlwaysOn Network, the conference aimed to provide a forum for digital media and entertainment executives to discuss the role of the consumer in creating content and leading innovation.

According to J.D. Lasica, co-founder of OurMedia, a nonprofit supporting grassroots online media, there's been an explosion of user-generated online content, with more than 170 different Web sites playing host to users' videos.

"The audience is taking over the programming. There is a huge influx of video that we are not creating," said Ted Cohen, senior vice president of digital development and distribution at EMI Music. "A few years ago it was all about 'How do we litigate it?' Now it's 'How do we monetize it?'"

But being the most-watched video of the day on YouTube doesn't take you all the way, according to Erik Flannigan, general manager of entertainment programming at AOL. "Getting people to see your work and passing it on to others, getting exposure and a press release, all that is possible," he said. "But it is one thing to be a viral hit for one week, and another thing to be able to say, 'Yeah, I made $25 million distributing my movie online.'"

Nonetheless, short-form video is the big thing right now, said Jeff Karnes, director of Yahoo multimedia search. He noted a change in the definition of shelf space and in notions of what constitutes a hit. Thanks mainly to the longevity of content on the Internet, a clip has a better chance of reaching a larger audience, although there is not yet a reliable way to make money off a popular clip. "The problem," Karnes said, "is that the market is not there yet--there is no business model."

Jennifer Feikin, director of Google Video, observed that many advertisers are now looking for the viral form of advertising. "They think: We want to be in this business, but how can we actually get hooked up with this type of user-generated content, so we feel much more grassroots?"

Producing real quality content still costs a lot of money, noted Jeremy Allaire, CEO of Brightcove, a provider of technology for video producers that helps them sell their content on the Internet. Marketing, branding and building an audience is still critical, even if it might not be necessary to attract audiences as large as those watching shows produced by the major TV networks.

"Trying to create a mass market misses the point. It is more efficient to serve micro markets. I am not sure if 10,000 to 30,000 viewers will be economically sustainable, but I think that's the hope," Alliare said.

So how is it going to shake out?

EMI's Cohen said he doesn't believe the Web will take over. "The movie watchers' experience is still on a shared screen, whether it is at the movies or the living room TV," he said.

Google's Feikin called for patience, noting that the novelty of user-generated video has not yet worn off. She said she doesn't see such content as a threat to the film industry, but as an addition to it. "When we got the instant messenger, was that the end of communication in other forms?" she said. "No, it just meant more communication. I think it is the same with user-generated video."