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November 23, 2005

AOL cuts content deal with media platform start-up

America Online (AOL) is backing an internet TV start-up with an unusual deal that allows almost any producer of video content to distribute programming on its service, splitting revenue from advertising or fees.

By CBR Staff Writer

The deal was struck with US start-up Brightcove which is building a system that gathers and distributes video content. Brightcove gives producers a way to put video on their Web sites while also making the video available on other sites, with AOL being first.

While AOL has many deals to distribute text and video from a variety of sources, these are based on the principle of paying for the content or splitting the advertising revenue with the publishers. This deal is unusual because it allows video producers an automated way to put content on AOL without having to negotiate a separate deal.

We’ve automated a broad business distribution agreement on behalf of any producer who chooses to work with us, said Jeremy Allaire, Brightcove’s chairman and CEO. We’ve created the first self-service distribution model in Internet TV. It takes a lot of the friction out of the TV syndication model.

To use the system, producers will upload their video through a Web site run by Brightcove, and specify the terms of its distribution. They can select which sites, like AOL, will have access. Eventually they will be able to select how they want to be paid. When the service starts early next year, Brightcove will offer only advertising-supported video. Later it will allow publishers to charge viewers to rent or buy videos.

On AOL, users will mainly be able to find the programs through the video search feature, which already offers an index to video clips on the Web. AOL will also highlight certain videos on other pages of its Web site.

Brightcove gives us access to content from small and medium-sized publishers and allows those publishers to get into the game with broader distribution, said Kevin Conroy, an executive vice president of AOL Media Networks.

AOL is putting its money into the start up as well. The startup, founded by former Macromedia CTO Allaire, gained a second round of funding woth $16.2 million from publishers AOL, IAC, and The Hearst Corp., and media-centric investment bank Allen & Co. Also joining the round were existing VC investors Accel Partners and General Catalyst Partners.

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The opportunities these investors bring to Brightcove, combined with the relationships we are already developing, put us in an incredible position to deliver our open Internet TV service and realize our mission to transform the media landscape by enabling video publishers to build broadband businesses that reach consumers directly through the Internet, said Allaire.

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