The first stage is, of course, the use of the internet to deliver the same content that we see on our television. According to the New York Times, viewer numbers show that this stage is going gangbusters. Each network has finalized its content host for streaming video viewing of its content. According to Nielsen, viewership via the internet jumped 16% in the first half of 2007, before many of these deals were even locked down.

Even as we struggle to figure out the dollar impact of stage one, stage two is upon us – the production of shows specifically for the internet. Here, I'm not referring to the user-generated content (USG) of Chinese teens lipsynching Backstreet Boys songs, but professional productions by some of the industry's best and brightest. Take, for example, Michael Eisner's Tornante Co., creators of Prom Queen. The recent news that Google (NASDAQ:GOOG) and Simon Frasier are working on a secret project together makes a lot of sense in stage two terms.

All of this is great news to us as viewers, but a nightmare for advertisers. In a world where content comes from a thousand sources, is distributed over hundreds of delivery systems, with advertising sold by dozens of vendors, the poor advertiser's head can spin. And not in a comedic way; in an Exorcist way.

Bud.TV, Anheuser-Busch's (NYSE: BUD) attempt to capture the young adult audience that is fleeing television for online entertainment, has fallen flatter than the head on a week-old glass of beer. The internet site carries shows specially produced for Budweiser such as What Girls Want and Vince Vaughn's Wild West Comedy Show.

The site was launched with great fanfare earlier this year, with hopes that it would soon draw 2-3 million visitors per month. In February, however, only about 250,000 visitors viewed the programming. Last month Bud.TV dropped another 100,000 visitors, according to ComScore Media Matrix.

Bud.TV ran into considerable criticism from a group of the nation's attorneys general who accused Anheuser-Busch of using it to corrupt those under drinking age. In response, the company built a screening process for potential viewers that requires them to wait while A-B verifies their age by checking against state driver's license databases.

The death spiral for this initiative is probably due to the difficulty of gaining access, and the impression that the site's vetting process invades customer's privacy. Without a proven, compelling product behind the curtain, I doubt Anheuser-Busch will be able to drive enough traffic to Bud.TV to justify its continuance. The company has been cross-posting some content on YouTube, hoping to entice viewers, but to little result.

According to Advertising Age, in March Bud.TV's viewership numbers finished just below those of a site for purchasing sheet rubber. Ouch.