According to comScore reports for February, 5min was the leading provider of video in food, video games, travel, health, beauty/fashion, home, and auto. In tech, they trailed only CNET and Adobe.
So why haven’t you heard of it?
For two reasons: first, it doesn’t produce any content at all, and second, because while it has a decent amount of traffic to its own site, it isn’t particularly interested in publishing content either.
Instead, 5min is focused on positioning itself as the leading middle man in online video. The company strikes deals with producers of what it considers premium video — which is to say, not user generated content and not videos from content farms — and offers them up to publishers. So far, 5min has around 40 thousand hours of video which it distributes to over 700 publishers.
Cofounder and CEO Ran Harnevo argues that this is the only way to build a scalable business in niche video space. While companies like eHow and Howcast, for instance, have done an impressive job building up destination sites, consumers will always be more likely to arrive at how-to videos through search queries; dominating the space is about SEO and casting a wide net, not building a popular destination. Producing quality video content is even more difficult to scale.
Ran thinks 5min’s platform, on the other hand, can scale up indefinitely. Its VideoSeed platform lets publishers add a few lines of code to their templates that will automatically add (fully monetized) videos that are related to every page they produce.
5min obviously faces some real challenges. To make serious money, it will need to make good on that potential to scale. The exact deals vary, but producers, publishers, and 5min split revenues from these videos roughly equally. Given that, and a very generous estimate of CPMs, one expert tells us that the company’s 100 million streams per month would be good for about $750,000 in revenue ($6.75 million annualized) as an upper bound.
Another challenge for 5min is a crowded field. AOL recently acquired StudioNow for $32 million to help it attack many of the same verticals.
Still, Ran is confident that steering clear of costly content creation altogether will keep his margins better than those of his biggest competitors and allow him to capture a huge market share. He says the company will be profitable in 2011.
5min has raised $12.8 million in two rounds of funding from Spark Capital and Globespan Capital Partners.
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