• by Douglas Quenqua , May 1, 2009

The worst thing to happen to network TV in 2008 wasn't the DVR, the writer's strike or the new 90210 (though that last one came close). No, TV's newest nemesis, appropriately enough, is an actual super-villain, albeit a struggling one with a crush on the girl at the laundromat, a video blog, and a tendency to break out in song.

But that doesn't mean he shouldn't be taken seriously.

"Dr. Horrible's Sing-Along Blog" is a thoroughly entertaining 45-minute musical that probably could have happened on TV, but didn't. Instead, it was released online, where it was a huge, profitable hit, perhaps proving that great content can not only find an audience online, but make money for both its creators and advertisers.

Of course, it didn't hurt that those creators were Jed and Zach Whedon and their brother Joss, the mind behind cult favorites like Buffy the Vampire Slayer, Firefly and the latest Eliza Dushku vehicle, Dollhouse. The brothers came up with the concept for "Dr. Horrible" during the writers' strike, when they were sitting around the house with nothing to do, and began talking about what they could create without much money or cooperation from the networks.

What they came up with was a quirky tale of love and superheroes starring Neil Patrick Harris that became a phenomenon online and proved that audiences would embrace content on the Web if it was done well, even if it meant sitting through some - gasp! - commercials.

"'Doctor Horrible' showed that the tools may have changed and the media obviously has changed, but content is still king," said Charles Rosen, president of New York creative shop Amalgamated and a former independent film producer. "It showed that you can create a quality model outside the studio system."

At least if you're the Whedon brothers. Thanks to the writers strike and their industry connections, the Whedon's convinced the cast and some of the crew to participate with the understanding that they might never get paid - not a business model one can expect to replicate with any regularity (unless you are rebuilding an old community theater in a heart-warming Disney movie). The final cost for the production was estimated at a mere $200,000.

But soon after "Dr. Horrible" hit the Web - in three parts, starting in late June, at no charge and without advertising - money was no longer an issue. After initially using the conceit of an ordinary free video blog, the series was later placed on Hulu, available to anyone willing to endure a single commercial before the start of each act, and the soundtrack was sold for $9.99 on iTunes. The Whedons also produced T-shirts and other merchandise and spun off the series into a comic book for Dark Horse.

Within months, the cast and crew had been paid in full, and the production has since made back more than twice its original cost. "The fascinating thing is that it was free for a while. But when they shut off the free spigot and began selling it on iTunes, people bought it - because it was good," says Ian Schafer, CEO and founder of digital agency Deep Focus.

"The thing with 'Dr. Horrible' is that it stars bankable talent with a cult following. You have Neil Patrick Harris, and you have Joss Whedon, who has this huge sci-fi following. So when it came out, it was like when you really love a band and there's a new bootleg on the market, and you have to have it," he says. "I think the lesson is that if you produce good content for portable distribution, multiplatform distribution, people will pay for it, but not until you let them know what they're paying for."

The Whedons have recently released "Dr. Horrible" on DVD and CD, both of which spent time at the top of the Amazon rankings, and talk of a sequel has been in the works from the moment the film was released.

But will The Little Musical that Could turn into more than that? Could the "Dr. Horrible" model blossom into an enterprise that could truly be a source of inexpensive, profitable content made exclusively for the Web, further siphoning network TV's increasingly distracted audience?

"This could just stand out as Camelot and disappear. Or it can be a model that is built on," Josh Whedon said in a February interview. "And I'm one of the people who needs to be building on it. That's something I'm looking into right now."

Tune in next time for the thrilling conclusion.