The wailing and gnashing of teeth you’re hearing today from some corners of the video web comes from former users of the free version of Brightcove’s internet TV platform.  As of midnight tonight, an unknown quantity of free web video channels will simply cease to work — the result of Brightcove’s decision to concentrate its efforts on its very successful business serving high-volume media companies (the likes of the Wall Street Journal, Weather Channel, and National Geographic) and other top-of-the-line video applications like the Obama campaign’s Barack TV.

Thus ends a two-year experiment in which Brightcove offered for free a remarkably capable version of a platform for which media companies were paying tens and even hundreds of thousands of dollars.  The idea had been to create millions of ad availabilities…and to sell those availabilities to advertisers and sponsors.

Despite the superior technology of its platform, Brightcove was never quite able to compete with YouTube to build a critical mass of content and viewings.  And as a venture-backed company without the deep pockets of Google behind it (such as YouTube has), Brightcove could not hang on long enough in the “free” space while a business model for video sorts itself out.  (It still hasn’t, even for YouTube.)

On the one hand, the business strategist in me understands Brightcove’s move.  After all, despite its lavish funding, the company was clearly spread too thinly across two very different busineses — a media business and a software infrastructure business for media companies.

But the sad thing about Brightcove’s decision is that they seem to have thrown the baby out with the bathwater.  In addition to the hundreds and possibly thousands of tiny free account-holders who doubtless chewed up more resources than they generated, Brightcove is also cutting off a many promising new internet TV applications.  Brightcove has thrown these clients a lifeline of sorts, but it’s now clear that the $500 per month price point of the new Brightcove Basic service is simply too high for many of these budding applications to sustain, and they’ve now scattered to new places.

Early in Brightcove’s life, as it was coming out of an extended beta-test period and going into general release, CEO Jeremy Allaire told me that “Brightcove’s vision and product and service strategy is a mass market vision.  We anticipate that there will be tens of thousands of unique publishers and programmers launching internet TV content, and we are committed to making available business models that work for everyone.”

He committed Brightcove to a pricing model that is “highly affordable for those who are delivering non-ad supported content (whether that be small media, websites, corporations, government, non-profit or educational content).”

I love the Brightcove platform, and so do our clients at DigiNovations.  Its latest version (Brightcove 3.1, which I’ll be reviewing in this space shortly) is a brilliant implementation of a video-specific content management system and it now offers a wonderfully rich development language that supports rapid creation and customization of Flash-based video players.

But we’re finding that most internet TV channel applications start small and gather richness, content, and traffic only later.  Few of them can support a $6000 annual price tag for just the web presentation component from Day One.

Brightcove doesn’t have to be free.  There’s certainly enough value there to command a price for what Brightcove brings.  But over he last few weeks, I’ve seen enough faces go white…and then red when they hear the minimum price tag, that I know that Brightcove Basic’s current price is too high by at least a factor of two.

I still believe that that nearly every business, school, and not-for-profit organization should have an internet TV channel of some sort on their website within the next five years.  With its current pricing strategy, Brightcove may be taking itself out of contention to be the platform be the broad enabler I once imagined it could be.