Through San Francisco-based iFilm's Web site, Internet users will be able to view "dailies" from the film on their home computers, watch scene rehearsals, and even communicate with the director and actors through email, discussion groups, and chat forums while production on Scheme takes place.
"It's a way for people to begin marketing a film by building an audience around it," said Rodger Raderman, CEO and founder of iFilm.
iFilm, launched in February, airs 250 indie films directly through its Web site. The site averages 10,000 visitors a day.
Scheme, about a homeless urban commando who chooses to live in open defiance of the law, will be shot entirely on digital video for $150,000. The film is expected to be completed in January.
Nilsson, 59, has enlisted a cast of individuals from his Tenderloin Action Group, a workshop of homeless actors he has been training for the past nine years, to appear in the film. He employs the group in all of his movies.
Nilsson's previous film, Chalk, is available to view on iFilm.
"I'm tired of American distribution," Nilsson said. "The Internet is a whole new venue. To me, it's an experiment. I want to demystify the movie-making process. By inviting the consumer onto the set, I'm convinced we'll get a better product."
Said Raderman, who also served as a producer on now-defunct cybersoap East Village: "We're using the Internet to create a powerful promotional tool. If you invite film lovers to witness and participate in the production of a movie, then they'll definitely want to see the finished product."
iFilm most recently conducted the first simultaneous in-theater and Internet screening of the indie film Dead Broke, starring Paul Sorvino.
Directors Todd Vero (Frisk, Shucking the Curve) and Todd Lincoln (The Honey Pot) also are expected to begin opening up their next film shoots on iFilm next month.