Does FunnyOrDie need Will to live?

'Landlord' home strives to regain momentum with more star tenants

These days, Will Ferrell and writer-producer Adam McKay are busy shooting their next film, Sony's "Step Brothers." Which is fine by Mark Kvamme, their business partner in the online comedy hub Although they are preoccupied with a different project, Kvamme knows there are fringe benefits to the pair being in production.

"When he and Adam are on a movie, they've got cameras and lights, and there's lots of things they can do on-site," said Kvamme, who is preparing to upload next week Ferrell's first video for FunnyOrDie since June 25.

And not a moment too soon. Since Ferrell transformed it into an overnight sensation six months ago by appearing in its inaugural vignette, "The Landlord," FunnyOrDie has largely squandered its traffic influx despite new videos from many other stars.

The venture is expected to announce as early as Monday changes to the site, including the potential addition of new celebrity partners. A spokeswoman for FunnyOrDie declined to elaborate.

FunnyOrDie launched in April and drew an impressive 4.5 million unique visitors that month, according to comScore Media Metrix. But that number plummeted 81% to 873,000 over the course of the following four months. By Nielsen NetRatings' count over the same period, FunnyOrDie dropped 73%. ComScore did note a slight rebound in September, to 1.4 million.

Representatives for FunnyOrDie contend that the drop is not as sharp as third-party measurement services have tracked; internal data derived from Google Analytics indicate 3.6 million visitors from Sept. 11-Oct. 11.

But Kvamme, who as general partner at venture capital firm Sequoia Capital has steered financing to some of the Internet's biggest success stories, including YouTube, is keeping the faith. "Landlord," he contends, was such an unexpected phenomenon that the site initially wasn't prepared to capitalize on its success.

"The good news is we've got 'The Landlord,' " Kvamme said. "And the bad news is we've got 'The Landlord.' It didn't give us the time to build out the things we wanted to do."

But skeptics wonder whether FunnyOrDie is coasting on the fumes of "Landlord," characterizing the site as a one-trick pony passing itself off as a well-stocked stable. In the fast-moving world of Web 2.0, FunnyOrDie's strategy already feels anachronistic to some, relying more on one-off celebrity cameos rather than episodic content and emphasizing a singular destination portal as opposed to widespread syndication.

What FunnyOrDie is learning the hard way, noted Scott Roesch, vp and GM of MTV Networks' AtomFilms, is the need to surround a hit video with additional content offerings that keep surfers returning to the site.

"When they didn't have a follow-up of the same drawing power and caliber, their traffic naturally plummeted back to earth," Roesch said. "You can't sustain a business around one hit video."

While it may still be early in the game for FunnyOrDie, its struggle could prove a humbling experience for the collective of powerhouses that joined forces to spawn it: Sequoia, Ferrell and McKay of shingle Gary Sanchez Prods., CAA and law firm Barnes Morris Klein Mark Yorn Barnes & Levine.

But don't let the impeccable pedigree fool you: FunnyOrDie was started on just $17,000 and a skeleton crew. They produced a simple Web site that hosted a single video: "Landlord," in which Ferrell plays a delinquent tenant who squares off against a tyrannical toddler.

In a matter of days, FunnyOrDie achieved the kind of brand recognition that most Web sites don't see after years in operation; it took YouTube nearly a year to reach the same traffic. Having generated more than 46 million streams to date, "Landlord" is already the third-most-viewed Internet video in history.

And with Ferrell to thank for that, FunnyOrDie's initial success seemed like Hollywood finally had figured out how to meld Web savvy with star power. The site was a game changer, proving that Internet video could sustain more than just user-generated content.

But while Ferrell has followed up with several skits, including a "Landlord" sequel, nothing has moved the needle the way he did his first time. August was particularly bad for FunnyOrDie, where it didn't finish even within the top 10 for humor sites, according to Nielsen. Even — a competing site that Time Warner declared in July would have its plug pulled the following month — beat FunnyOrDie during its last weeks of operation.

Having "Landlord" at launch ended up creating a false baseline for FunnyOrDie traffic, Kvamme said.

"If I had to do it all over again, I'd have 'The Landlord' today," he said. "But you can't plan those sorts of things out."

Smaller traffic spikes have come courtesy of other celebrities Ferrell, McKay, CAA and Barnes Morris have wooed to contribute their own funny videos, including Danny DeVito, Jenna Elfman, John C. Reilly and Bill Murray.

But the latest addition, Eva Longoria, may be the site's smartest decision since "Landlord": After 10 days, her parody of the Paris Hilton sex tape already is the fourth-most-watched video in site history, amassing nearly 2.7 million streams.

Perhaps the most remarkable aspect of FunnyOrDie's ability to attract top-shelf talent is that they aren't paid. Some are enticed by creative freedom; others are eager to curry favor with Hollywood power brokers or expect an image-burnishing boost from young demographics. FunnyOrDie has also been used as a promotional platform by the likes of DeVito, whose risque short may have contributed to a ratings hike for his FX series "It's Always Sunny in Philadelphia."

Peter Karinen, an actor and writer who starred opposite Murray in the sketch "Fact Checker Unit," is hoping to attract attention to the concept for exploitation in other mediums. "FunnyOrDie didn't pay us anything," he said. "We wanted to do this for exposure."

But many doubt that FunnyOrDie will be able to remain compensation-free; revenue splits for top talent are likely in its future. Representatives for the site are said to be making the rounds to sign promising comics for pay deals.

And then there is the matter of Ferrell, who also is an equity partner in the site. It is unlikely that he will be able to top "Landlord," and Roesch wonders how much longer an A-list star is willing to dabble online.

"How much time and energy will Ferrell devote to this effort?" Roesch said. "If he moves on to other things, it will become more difficult for (FunnyOrDie). Regardless of how much time he spends, it has to build beyond being a showcase for Ferrell."

Execs with FunnyOrDie note that, traffic aside, there are other encouraging signs: Average time spent on the site per user continues to inch up, and 40% of its users are repeat visitors. To cash in, FunnyOrDie brought on its first advertising sales exec only last month, and Hollywood took notice, promoting the Sony theatrical "Superbad" and the CW series "Reaper."

As for the possibility that an acquisitive conglomerate might want to take a more substantial investment, Kvamme isn't interested.

"I don't think established media companies would help us that much," he said. "We're bigger than what they're doing."

Kvamme envisions FunnyOrDie continuing to attract talent, which he acknowledged as essential because the site could not be dependent on Ferrell alone. "If that's the case, then we failed," he said. "It has to stand on its own."