When it comes to the Great Tech Wreck of 2000, Hollywood will long be remembered for the incredible carnage caused when it tried to take its content online. Amid the flop of Pop and the end of DEN, some content-oriented startups like Hypnotic.com and Mediatrip.com are still running strong. Their secret: keep one foot firmly planted offline, preferably on a studio lot.

Hypnotic was conceived in 1999 as a showcase for short films on the Web. Like Atom Films and iFilm.com, the early incarnation of Hypnotic then known as Reelshort.com confined itself mainly to Internet distribution of independent films and to an advertising-based revenue model.

Then came the handshake with Vivendi Universal's Universal Pictures last March. That transformed Hypnotic into a kind of studio-within-a-studio, with a mission to discover talent, distribute films online and offline and to promote ongoing projects for Universal. As part of the deal, Universal gets a first look at all the material collected by Hypnotic.

"Our decision from the very beginning was to not compete with traditional Hollywood and to figure out ways to work with traditional media companies," said Hypnotic CEO Jeremy Bernard. "That set us apart from many others. Of course, we did it in a much bigger way than we ever imagined by partnering with Universal."

Bernard, a former television and film producer, declined to discuss the financial arrangement with Universal. The studio, he said, holds "a large minority stake."

Universal is hoping that Hypnotic's content library will hold the next big thing or, as Bernard says, "the next Tarantino." Unlike iFilm and Atom Films, Hypnotic acquires the rights to all films shown at the site, paying the aspiring filmmakers between $500 and $1,000 for each film a modest sum for a "Pulp Fiction."

"Universal executives typically don't have time to check out or develop the kind of work we acquire," Bernard said. "These films are always below their radar."

Not for long.

Film festival

One of the first collaborations with Universal, and one that Bernard said will be repeated annually, kicked off in December with a short-film contest called "The Hypnotic Million Dollar Film Festival." A winner landed a $1 million production deal at Universal. The Hypnotic-Universal contest asked aspiring filmmakers to send in short films. Of the several hundred received, organizers culled 25 finalists. Five of the films were available each week at the Hypnotic site. Visitors to the site rated the films, with the top five passing into the next round. The final five were asked to submit a pitch or script for the feature film they hope to make. A five-member panel, including director Jay Roach and a Universal executive, judged the finals. The finalists' five short films were shown during the Sundance Film Festival in Utah in January.

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