By Chip Lebovitz
FORTUNE -- Two years ago, comedian Joey Diaz had little to laugh about. The then 53-year-old Diaz was opening for younger comedians, struggling to land acting gigs, and considering a career switch.
But after releasing his work online, Diaz, a comic best known for bit roles in NBC's "My Name is Earl" and the Adam Sandler film "The Longest Yard," has revitalized his career. Soon after uploading his hour-long special "It's Either You or the Priest" online, Diaz attracted the attention of the Cartoon Network, which cast him as a recurring character on "Children's Hospital." Other TV and film roles followed, including a part in "Raging Bull II." In May he headlined a sold-out, three-city comedy tour.
Diaz is part of a growing circle of stand-up comedians—from household names to people just starting out -- who are using the web to build their audiences and claim a bigger slice of sales. While sketch comedy found the web years ago -- think "Lazy Sunday" and other digital shorts -- stand-up comedians are catching on, moving their bits online and selling directly to viewers. In the process, they're upending the way that audiences find talent, and stand-ups become stars.
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Since the earliest days of television, stand-up comedians have weathered a long and often painful road to stardom: performing for free in obscure clubs, before earning paid gigs, then opening for Leno or Letterman, and in the rarest of cases, reaching the holy grail of stand-up success: a prime-time special on a network like HBO. They'd earn a six-figure advance for the show, followed by royalties from DVD sales and eventually, iTunes downloads.
But today that path is changing, and not just for comedians trying to break in to the business. Last December, comedian Louis C.K. bypassed traditional networks and released his special, "Live at the Beacon Theater," on his personal website, charging $5 per download. More
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