Brightcove central

Here's an interesting post from Bambi Francisco's blog:

Brightcove, a rising star in the sizzling-hot online video sector, is morphing into a promising contender in the heated battle to be the uber-television network for the Internet generation.

Brightcove is expected on Monday to unveil a host of services including a distribution platform for content owners as well as Brightcove.com, a central repository to access the aggregated works of its big-to-small media customers.

The Manhattan-based company, which burst onto the scene with high-profile venture backers, such as Accel Partners, Hearst and InterActiveCorp. (IACI), started two years ago as a Web-based publishing toolmaker to help media companies or professional individual producers create broadband channels.

Brightcove is pursuing a two-pronged strategy that puts this young upstart in the midst of a war against video aggregators or distributors of movies and television shows, such as Google (GOOG), YouTube, Apple Computer (AAPL), to Amazon.com (AMZN) and next year, Netflix (NFLX).

No doubt, it's a fluid space, with future outcomes as varied as the business models of the companies now competing in it. The opportunity to deliver tomorrow's video has called forth many unlikely rivals from one with roots as an online bookseller, to a PC-maker, a search engine and a site where anyone could share their favorite cat-in-the-bathtub home videos. Now, Brightcove, the toolmaker, wants in.

Perhaps it's not surprising to see many companies with variegated pasts collide as they iterate their way into promising new business opportunities. But, while they may be eyeing the same goal today, their motivations are certainly different.

It seems to me that one possible fate of this publishing toolmaker to the media stars, with increasing reliance on ad-revenue scraps, would be the path journeyed by DoubleClick, an ad-serving company which went private last year. Despite the booming online advertising market, DoubleClick's general ad-serving business seemed to commoditize.

Brightcove's open-distribution approach

Brightcove CEO Jeremy Allaire is too smart for that. Or, he's got excellent advisers.

"We're the next generation of 'television operators' or 'platform operators' as they're known, which includes the kind of role that cable and satellite operators have provided in the past," Allaire, who came to MarketWatch studios for an interview with me, boldly claimed. (Full disclosure: MarketWatch is a client of Brightcove).

"However, we've designed our model to reflect the way the Internet operates, which is, of course, radically different than the closed systems of past distribution," he said. "On the Internet, content owners can have their own brands, their own 'spoke' destination sites, and relationships to consumers and affiliates, and that's very much what we've enabled with the launch of the Brightcove Network and our consumer and syndication marketplaces." (Please visit my MarketWatch blog for my interview with Allaire.)

Translation: Allaire's approach is to be the platform layer for content publishers across the Web; the distributor across the Web for smaller content owners; and at the same time be video central as Brightcove.com becomes the one central destination site for the content produced by all its partners.

The network

The Brightcove Network is essentially the name for the company's combined distribution and advertising solutions for content producer needs. Brightcove's distribution platforms range from Brightcove.com's destination site, Time Warner's (TWX) AOL Video, and video search portals. Content owners can also generate advertising by using Brightcove's AdNet or Pay Media service.

While certainly advertising relationships and a broad distribution strategy is a good structure to have, Brightcove.com could be the biggest beneficiary in the future.

As the main hub, Brightcove.com is a place where the company's large media customers - from studios, newspapers, music labels, etc. - can distribute some their shows for free, for rent or for purchase, will share shelf space with the productions of individuals or free agent producers. It's not much different than what we see on YouTube or Google, or the many smaller video-sharing sites, such as Gubba, that have struck deals with copyright owners of popular shows.

But it's hardly game over. And, Brightcove has one advantage. It already has relationships with some media companies since, well, it's had the pleasure of being the toolmaker to the stars. Among the companies it calls its broadband channel partners include Warner Bros. Telepictures, SonyBMG, Warner Music Group, Bravo (NBC Universal), Oxygen, and New York Times. Monster.com (MNST) is one of Brightcove's clients.

To accommodate its clients' interest in tapping into the user-generated video phenomenon, whereby the audience offers up videos to get recognized or to win a prize, Brightcove is launching a private-label video-upload service. This service is similar to the ones that launched last week. The difference is that those services overlay social network features on top of video.

Ambitious Allaire

Many might say that Brightcove is going in all sorts of directions to hit on all the popular themes of the year. Allaire's ambition raises the question of whether he can pull off so much at one time. It's no wonder Allaire is currently nailing down another round of venture financing, adding to the already $28 million he received in prior rounds.

Money helps, indeed. There are so many video-sharing sites that want America's video creations that the only way to win over the content owner, however big or small, is to offer economic incentives. After all, recognition as an incentive only works if there's a critical mass of people watching.

To provide incentive to content producers, Brightcove is going to give 50% of the gross advertising revenue to content producers who use its broadband channel platform. That's a nice premium over the portion that video-sharing site Revver offers to content owners, which is a split of ad fees net of certain costs.

But it's unclear whether Brightcove will top Metacafe's offer to pay $5 CPM (thousand impressions). After all, user-generated content may sell for only a $1 per CPM. Metacafe is one of the top video-sharing destination sites. It, too, plans to announce its economic incentives on Monday. (Go to my blog to watch my interview with Metacafe CEO Arik Czerniak.)

Another video site that pays for content is Break.com. Founder Keith Richman told me that his company has spent $280,000 for about 1,000 user-generated video clips.

So will Brightcove have a chance at being the top destination or marketplace for videos on the Web? He seems to certainly have sets his sights higher than companies that just want to be destination sites.

As I said above, it's a two-pronged strategy Allaire seems to be taking. In many ways, it's like Google, which seems to have figured out how to be a centralized repository for advertising, but the underlying provider of ads for sites across the Web. But in media, content owners always get a bit sensitive about aggregators for fear they'll lose their audience to them. Brightcove, though it will let its media partners decide whether video is played on Brightcove.com or the partner sites, faces a potential problem of being friend and foe.

Whether Allaire can prove to be more friend than foe will be one of his challenges next year.