January 17, 2007 12:41 PM PST

Net video firm Brightcove reels in $59 million

Internet video company Brightcove has received $59.5 million in funding from The New York Times and other investors.

Brightcove helps media companies make the jump to broadband. The company is trying to take on YouTube in the crowded video-sharing segment.

The new cash will help Brightcove, founded and led by CEO Jeremy Allaire, expand into international markets, the company said in a statement Wednesday. More financial support could also help it weather a looming shakeout in the Internet video sector.

Only a year since online video became a public sensation, the industry has been defined by one segment and one company: YouTube. Nearly half of the people who watch online video go to Web sites that host clips posted by members of the public, according to a recent survey. Nearly half of that audience goes to YouTube.

Brightcove and the company's video-sharing site, Brightcove.com, like most of the others trailing far behind YouTube, are searching for a way to break out of the pack.

In Brightcove's other business--offering tools and services to companies that want to put video on their Web sites--it faces a growing list of competitors as well.

This was the business that Brightcove first started and was the opposite tack taken by YouTube, which came to prominence by giving people a centralized place to publish videos. Most of YouTube's programming comes from amateurs, and the company makes money through selling ads.

In contrast, Brightcove started by selling software tools to companies such as Sony, Dow Jones, the Independent Film Channel and Newsweek. The videos and music delivered through its software are housed mostly on sites owned by the content providers themselves, not centralized portals.

Others offering similar services are RealityDigital, which also offers software tools, TurnHere, which makes Internet video ads for companies, and SpotRunner, which makes TV ads and places them on cable networks.

In all, Brightcove has raised nearly $80 million. That could be both good and bad. With a lot of money, the company can buy servers and invest heavily in marketing. Some venture capitalists, though, say that young companies can easily get smothered in overfunding.

"When you put $7 million into a company that could have been started with $2 million, you've got problems," David Strohm, general partner at Greylock, said during the Venture Capital Investing Conference last year. "The first step they do is hire three to four headhunting firms who hire too many overpriced executives."

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