Online: Video E-cards--For a Price

Americans watched 558 million hours of online video in July, according to new numbers released by comScore Media Metrix this week. A staggering 5 billion clips were watched on YouTube alone. Given that July comes smack in the middle of summer's vacation days, over the course of a year the average monthly numbers are probably even higher. What does that tell you? For starters, we sure do like our free videos.

And yet, a new company has launched this week betting that people will be willing to pay to watch high-quality original Web content—and forward it along as a video greeting card. Los Angeles-based SpiritClips went live Tuesday with nine short videos—three to five minutes in length—with heart-tugging themes. "These are all films designed to warm your spirit," says founder Rob Fried, a longtime Hollywood producer with film credits that include "Hoosiers," "So I Married an Axe Murderer" and "Rudy." "These are inspirational stories that reflect my personal sensibilities. It's a contrast to the vast majority of what's online." Fried has so far completed 20 short films that he'll be rolling out gradually, and hopes to eventually shoot 50 of them. The clips cost 99 cents to watch and $2.99 to send as an e-card (an entire episode of a TV show on iTunes starts at $1.99). An annual subscription gives you unlimited access to the clips for $24.95.

The site launched with two sample videos available for free streaming. In "Sally," a harried waitress receives a much-needed random act of unexpected kindness; "Indivisible" recounts the true story of one of John McCain's fellow prisoners of war who hand-stitched an American flag in captivity. (For the record, Fried insists that SpiritClips is a nonpartisan company, although he himself is a Barack Obama supporter). Both clips, as well as several others previewed for NEWSWEEK, are almost cloyingly sentimental and completely devoid of irony, wise-cracking, explosions, "Jackass"-style shenanigans, crazed Britney Spears fans, "Star Wars" geeks, nudity, or anything else that could otherwise render a video viral. Not that any of those things are absolutely necessary (see the infectiously delightful Where the Hell is Matt?). But among a certain demographic, they sure help.

Still, it's not difficult to imagine the Moms, Great-Aunties and Oprah die-hards of this nation sending loved ones feel-good video e-cards. But will they pay for it? Ah, there's the rub. "It's the right kind of material" for a certain demographic, says James McQuivey of Forrester research, who has been given a tour of the site by Fried. "But it's not really about video content; it's not competing with Hulu. It's really for the greeting-card crowd, which is a passionate crowd."

It is also not an easy crowd to dismiss. At about $1.35 billion annually, the market for online greeting cards is quite large, according to Paul Verna, senior analyst at eMarketer. Just under 30 million people visited e-card sites in May alone. Of the top five flowers-and-gifts retail Websites, Hallmark Cards clocked in at third with $93 million in online sales in 2007 ( and FTD held the first two spots at $502 million and $206 million, respectively; American Greetings Corp. was fifth with $85.3 million). Verna points out that although charges money for their premium e-cards, they of course sell physical cards as well. SpiritClips exists solely online. "If they build a brand and become the pioneer and leading authority—because they really are blazing a new trail—then it's possible people may pay for it," says Verna. "On the flip side, very few people want to pay for any video. About the only video that's monetizable at this point is feature films and maybe some very premium TV content."

So to make the site stickier (or at least social-networkier), SpiritClips lets members design their own cards, create their own profiles and share their favorite clips with each other. There's also a section on the site that invites users to tell their own inspirational stories; Fried will pick the ones he finds most moving and produce short films based on them. If you or anyone you know has ever gotten choked up watching life-insurance or PETA commercials, you might be in the SpiritClips sweet spot. Just be sure to grab a Kleenex along with your credit card.