For Alan Partridge, North Norfolk Digital radio is all about "sustaining and maintaining our core listenership in an increasingly fragmented market place," which pretty much sums up the increasingly downwards nature of the gauche interviewer's media career. But for Henry Normal, the man who "minds the shop" at Partridge actor Steve Coogan's production company Baby Cow, putting the one-time BBC prime time character there is simply a shrewd business opportunity. Sponsored by Foster's, Partridge is back – not just on the fictional North Norfolk Digital, but via a series of 12-13 minute YouTube videos – in a "straight to internet model" that represents a new way of working that Normal hopes will see new cash flow through into comedy.

Normal, whose own comic performing career ended about 20 years ago when he was "kicked off his own show" (Channel 4's Packet of Three), is the chief executive of Baby Cow Productions, which he co-owns with Coogan. As well as Partridge in his ever decreasing incarnations, Baby Cow is also behind Gavin & Stacey and The Mighty Boosh.

Levels of spending

In an increasingly tough comedy market, Normal believes the traditional comedy broadcasting model has to change. "The problem with TV is that it is a decreasing market. There are only five people to talk to, starting with the BBC," and with limited funds at Channel 4, ITV, Sky and UKTV, it is proving hard to maintain traditional levels of spending.

"We made Doctor Terrible's House of Horrible nearly 10 years ago, on a budget of £350,000 an episode that I don't think we could afford today. These days you are only allowed to spend between £100,000 and £300,000 for a half hour."

Baby Cow, like many comedy producers, has been experimenting with online comedy for several years, but early mis-steps helped it move to a more plausible business model. With the sponsorship of Ford Europe, Baby Cow made Where Are The Joneses? in 2007, a series of comedy shorts about a woman who finds out her father is a sperm donor, and sets out to trace her 27 siblings across Europe.

Changes in personnel and what Normal describes as "politics" at Ford meant that he has been unable to "regain control of the rights" to further exploit the programming in the traditional way, packaging it up for sale as a DVD or on iTunes.

The model for Mid Morning Matters with Alan Partridge is different. Foster's and Baby Cow were introduced with the help of the advertising agency Naked, and as soon as Normal and Coogan were prepared to offer up Partridge, it was obvious what the beer brand would go for.

Foster's agreed to stump up the production costs, and although the online show has a "slimmed down aesthetic" where all the action takes place in a radio studio because "you can't do long shots on the internet because people are watching on a small screen", the costs were similar to making a TV show, that is "in the £100,000 to £300,000 a half hour range".

Foster's, which is owned by Heineken in the UK, will have paid anywhere from £600,000 on this thinking, although the brewer won't confirm the figures.

If all this sounds rather straightforwardly commercial, nobody is complaining. Coogan says that he thought it "would be an interesting, less obvious, original way to re-introduce the character," on the basis that if anybody was going to launch a show online because they were desparate for media exposure, it would be Partridge. The creative team agreed that they wouldn't bring the Foster's brand into disrepute, and the beer company had to have faith in Coogan – and the script writer Armando Iannucci – that they would produce a high quality comedy. "We had to trust each other," says Mark Given, the brand director at Heineken, "in the same way that you have to trust a creative team at an ad agency."

Latest episode

The early signs are that Partridge fans are warming to what Coogan describes as a "myopic world of the radio studio" that he believes "somehow liberates the character and makes it more pure".

The first episode has racked up 492,000 plays on YouTube at the time of writing, and while the latest episode, 5, has dropped to 135,000, Normal claims the results are a success, even though a new comedy on Channel 4 would expect to be seen by 1.5m to 2m viewers. The Baby Cow boss says: "I don't want it to be too successful", because he wants to resell the programme to a conventional broadcaster after its internet airing is complete. If too many people watch it online, they won't want to catch up with Partridge on air.

"I've had three requests from broadcasters to buy the show, and we'll pair up the internet programmes to produce six 22 minute episodes." He will then follow up efforts to sell Mid Morning Matters overseas before putting it on to DVD.

To keep Foster's happy, Normal also offered the beer maker a share of the "back end" – the company will receive some money from any commercial exploitation after the initial internet broadcast window. He confidently predicts that the result will be that "Foster's will make all their money back", but Given is slightly more cautious, saying only that a profit is what Normal is aiming for, and that the beer company had not bargained on making a profit when it signed up.

Whatever happens, Baby Cow hopes to find more sponsors willing to pay for future comic projects, while, appropriately for a beer company, Foster's has been inundated with proposals to sponsor more projects. Partridge may be an unlikely harbinger of the future, but the day when top talent chooses to release some of their best work outside the broadcast system has just arrived.