That’s a nice outcome for 5Min’s team, and for its investors, who put in $13 million, including Globespan Capital Partners and Spark Capital. (I mistakenly identified Scott Kurnit as an angel investor in the company. He was not.) Interesting that AOL (AOL), which has extensive reach already, felt it needed to invest in a distribution play, but you can read CEO Tim Armstrong’s explanation below.

And perhaps someone can ask him about it if he makes another acquisition announcement in the near future.

AOL ACQUIRES 5MIN MEDIA, WEB’S LARGEST VIDEO CONTENT SYNDICATION PLATFORM

Combination of 5min Media and AOL’s Video Capabilities Creates Powerful
End-to-End Offering

New York, NY, September 28, 2010 – AOL Inc. [NYSE: AOL] today announced it has acquired 5min Media, the Web’s largest video syndication platform.* The acquisition allows AOL to significantly expand its consumer offering of contextually relevant, high-quality video across its sites, increasing the AOL Network’s appeal to advertisers and is expected to further enhance the distribution and monetization of AOL-produced original video content throughout the Web.** Deal terms were not disclosed.

“Our acquisition of 5min Media is the latest in a number of steps we have taken this year to better position AOL to capture the growing video opportunity on the Web,” said Tim Armstrong, Chairman and Chief Executive Officer of AOL. “AOL is building a video ecosystem for the next decade. 5min Media is the perfect complement to our powerful video capabilities — it provides a missing piece in the AOL value chain that completes our end-to-end video offering from content creation through syndication and distribution to the consumer experience and monetization.”

“AOL and 5min Media share the same excitement about the direction our industry is taking, and our complementary video capabilities make us a compelling fit and an attractive combination for content creators and publishers,” said Ran Harnevo, Co-Founder and Chief Executive Officer, 5min Media. “We’ve seen rapid and successful growth as an independent organization and becoming part of AOL is a natural next step. We’re confident that AOL’s organizational horsepower, combined with the vast library, audience and syndication capabilities 5min Media offers, present compelling opportunities for AOL as well as the content creators we work with and the publishers we serve.”

Leading Video Syndication Network and Library to Enhance AOL’s Properties

5min Media is the world’s leading video syndication network with a library of more than 200,000 categorized, tagged and rated videos from more than 1,000 of the world’s largest media companies and professional independent video producers. Founded in 2006 and headquartered in New York City with offices in Tel Aviv, 5min Media has been named the largest U.S. independent video property by comScore, with more than 20 million unique viewers and more than 130 million video streams (including ad and content videos) in the U.S. in August 2010. 5min Media’s growing network of 800 partner sites allows content creators to reach this audience of targeted viewers across 21 different verticals, including six verticals – Home, Food, Beauty / Fashion, Health, Travel and Pets – that lead their categories, according to comScore Video Metrix, August 2010. VideoSeed, 5min Media’s proprietary semantic technology, contextually matches the most relevant videos with a partner site’s text content to enhance the consumer experience and increase monetization rates.

AOL has already begun to integrate 5min Media’s video content on its sites through a commercial agreement executed prior to the acquisition. “With 5min Media we’ll be able to add more video inventory to our pages. Importantly, we’ll also be able to identify video content holes among our sites, tap our StudioNow capabilities to fill those needs and create a truly ‘demand informed’ video library,” Armstrong said.

Combination Completes Next Step in AOL’s Value Chain

With the addition of 5min Media, AOL will significantly increase its consumer offering in video programming and connect consumers with high-quality video. In January, AOL acquired StudioNow, the premier online platform for quality video content creation and distribution. With StudioNow, AOL has formed a fully functional platform to produce high-quality video content in a rapid, cost-effective and scalable way for both AOL as well as third-party publishers. In addition, AOL is forging exciting new partnerships to provide relevant content to specific audiences, including partnering with: The Ellen DeGeneres Show; Marlo Thomas; The Jonas Group and MGX Lab to found Cambio (www.cambio.com); and A Squared Entertainment LLC to create children’s content featuring Warren Buffett, Gisele Bündchen, Martha Stewart and the late Carl Sagan.

In Futurama, our characters are thoroughly inundated by advertising, especially subliminal advertising that comes out of your pillow into your dreams.

– Futurama creator Matt Groening, February 1999

How do you persuade TV viewers to watch advertisements when the DVR has accustomed them to skip through them? That’s the dilemma facing television and cable networks today, one that’s so far defied a solution. But perhaps not for much longer.

The Times Online reports that the evil geniuses at Keystream have developed a new overlay advertising system that scans video content for open spaces–an unadorned wall, for instance–and slaps an ad on it, embedding it directly into the programming.

“There’s a lot of potential,” said Simon Fell, head of future technology at ITV, a company that’s testing Keystream’s technology on its ITV Local site. “If there’s a scene in a program where there’s time, then it could give us a chance to get an ad away. But obviously on television you won’t be seeing one of these appearing at a crunch point in a drama.”

Really? In this age of product placement? Ever see the list of brands plugged in the “Sex and The City” movie?

If ITV’s tests prove successful it’s only a matter of time before we begin seeing Garmin GPS ads etched into the beaches of “Lost” or Levitra logos popping up willy-nilly on “Desperate Housewives.”

In Futurama, our characters are thoroughly inundated by advertising, especially subliminal advertising that comes out of your pillow into your dreams.

– Futurama creator Matt Groening, February 1999

How do you persuade TV viewers to watch advertisements when the DVR has accustomed them to skip through them? That’s the dilemma facing television and cable networks today, one that’s so far defied a solution. But perhaps not for much longer.

The Times Online reports that the evil geniuses at Keystream have developed a new overlay advertising system that scans video content for open spaces–an unadorned wall, for instance–and slaps an ad on it, embedding it directly into the programming.

“There’s a lot of potential,” said Simon Fell, head of future technology at ITV, a company that’s testing Keystream’s technology on its ITV Local site. “If there’s a scene in a program where there’s time, then it could give us a chance to get an ad away. But obviously on television you won’t be seeing one of these appearing at a crunch point in a drama.”

Really? In this age of product placement? Ever see the list of brands plugged in the “Sex and The City” movie?

If ITV’s tests prove successful it’s only a matter of time before we begin seeing Garmin GPS ads etched into the beaches of “Lost” or Levitra logos popping up willy-nilly on “Desperate Housewives.”