BrightCove, the online video service started by Jeremy Allaire, is getting a big boost, big enough that it places the startup on the top of the video heap: it is getting a $16.2 million second round funding. Main investors in the round include America Online, IAC/InterActiveCorp, Hearst Corp, and Allen & Company.  Existing Brightcove investors Accel Partners and General Catalyst Partners are also particpating in the round. This follows a $5.5 million first round.

Along with the funding, Barry Diller is taking a board seat at the company...this is only Diller’s third board seat...the other two are The Washington Post Company and The Coca-Cola Company.

Along with these announcement, BrightCove has signed on AOL as a distribution partner: video publishers using Brightcove will have the option to syndicate their video content to AOL.com, and the two companies will market a co-branded version of the Brightcove service as the self-service platform for publishing video on AOL.com.

The content providers syndicating to AOL would be able to generate revenues from both advertising and premium video services...the ad sales would be done by AOL and content providers would get a cut of it. Similar dynamics work on premium content side.

I spoke to Allaire at length earlier today and he explained that this was a non-exclusive arrangement, and that his company will be working on other such distribution deals in the next couple of months. The deal with AOL allows any content provider to syndicate their content to AOL, an unusual and enticing proposition, as Jeremy explained. The content providers using Brightcove’s media publisher service would just have to opt-in to get their content be syndicated to AOL, and it would flow into AOL’s systems. AOL has some rules on the kind of content it will accept…

His company is already powering the online video services on sites like Oxygen.com, Lime Network, and others will be announced early next year.

The service is a Flash-based service (makes sense considering Jeremy’s background) and has elements of sharing/RSS built into it. For now, the services his company is launching are streaming-only, but will move into online and portable downloading by early next year, when the service goes fully commercial. For now, the service is technically in “invitation-only commercial preview"…

Jeremy said that Diller’s board appointment would be a big boost for the company...he said he was really impressed by how much Diller understands digital media and media in general.

NYT: 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 site.

Related:

-- Jeremy Allaire To Launch Brightcove

-- BrightCove Ready To Launch Early Next Year; Hybrid Service

-- ContentNext Series: Jeremy Allaire

-- Industry Moves: BrightCove Adds Board Members; Exec