A fetching blond Englishwoman in a white sundress lounges on her bed and eyes her webcam. “Have you ever lied to your friends?” she asks. She has lied about a bunch of things—including her name, she admits. Then her video goes black.

So begins the opening minutes of KateModern, the second online serial from the creators of the lie that started it all, lonelygirl15.

When lonelygirl15 started posting videos on YouTube in June 2006, she was just another kid laying her life bare online. Fans dug Bree’s rants about her annoying parents and the way she mugged with her purple monkey puppet. But as her strange story unfolded, it seemed increasingly phony, and set off an internetwide chase for the truth.  

The curtain went up a few months later, revealing that behind the girl fighting a religious cult was a trio of twentysomething filmmakers and an exec at Creative Artists Agency. Lonelygirl was in fact a new kind of dramatic form—the Web serial. It transformed the YouTube confessional into interactive drama, blurring fiction with reality—and picking up sponsors and millions of viewers along the way.

Instead of the creators getting co-opted by Hollywood (they say they’ve turned down production deals from major Hollywood players, but won’t name names) or becoming one-bit wonders, they set off to expand the genre (and their wallets). KateModern, which just launched its second season in January, builds on that pioneering model, both in format and financing. While Lonelygirl consisted mainly of short YouTube clips, KateModern plays out over a sprawling social network, buttressing the vlogs with everything from instant messages to flash mobs. The serial subsists on advertising that’s incorporated into the show.  

Barry Parr, a media analyst for JupiterResearch, a technology research firm in New York City, says this is just the beginning. “Everyone’s trying to figure out what can be done with social networks,” he says, “I would expect to see a lot more experimentation to come.”

Shot in London and running on Bebo.com, a leading social network in the U.K. and Australia, KateModern also revolves around a troubled young beauty trying to escape her dark past and forge a new identity. In fact, the creators have set the saga of this 19-year-old art student inside the same underworld that plagued Lonelygirl, expanding a fictional area in cyberspace where serial characters live and interact. Just like Bree, Kate and her friends struggle to ward off a secret society called the Order. “It’s kind of like the Marvel universe, where the comics are separate but they feed the same reality,” says Miles Beckett, the 30-year-old co-founder of LG15 Studios, the startup behind the Web serials.

As with the first show, the story is built around bite-sized videos that appear five days a week and run from banal to creeptastic. Kate cleans her room. Kate’s pal Charlie does aerobics. Kate struggles with psychotic breaks. It’s the standard stuff of online diaries. But to follow the drama, viewers have to click between feeds of different characters. Instead of watching, say, an hour-long drama on TV, it requires the viewer to take an active role in piecing together the overarching story.