The awards ceremony late Tuesday was hosted on the sidelines of the famous French Riviera festival. About 2,000 short films were submitted, and 1,012 films from 86 countries were picked to compete. Hundreds of thousands of people watched the movies, posted comments or voted on their favorite picks.
Films that generated buzz online were whittled down by a jury, and Lee had the final say.
Lee believes there's more interesting, innovative material online than on TV or in movie theaters.
"If people want what's standard they're going to watch television," he told The Associated Press. "First of all, people are getting tired of having stuff chosen for them. They want to make up their own program. They also want to be introduced to new things - new ideas, new thoughts, new stories, new talent, new people."
Richard Recco, a 39-year-old from the New York City borough of Brooklyn who co-wrote the screenplay for 2001's "3,000 Miles to Graceland," won the short film award for his directorial debut, "Officer Down," about a crooked policeman.
Recco wants to turn his short film into a feature-length picture, and he says his Babelgum success has helped persuade investors to contribute $5 million to the project.
"At a regular festival, you submit $60 and your film," he said. "You don't even know if they watch it. But at Babelgum you get to see your movies on there, you get to see how many hits you get. ... Everyone around the world is watching your film. The more they watch it, the more it rises to the top."
Brian Deane of Ireland won the social-environmental prize for "Without Words," which draws attention to the problem of suicide.
He was happy to have it play at festivals, but even happier when it found a wider audience online.
"Personally, my film has a message to it, so I wanted to get it to as many people as possible," he said.
Italy's Andrea Lodovichetti won the "Looking for Genius Award" for "Sotto Il Mio Giardino (Under My Garden)," about a boy who suspects his neighbor of killing his wife and burying her in the yard.
Online, "the link between the director and the people is direct and immediate - it's a very interactive system," he said.
Babelgum, which was started by Silvio Scaglia, founder of Italian telecommunications company Fastweb, launched its site for the general public about a year ago. The site uses peer-to-peer technology. Competitors include Joost and VeohTV.
Advertising is still in a testing phase on Babelgum, where publicity spots don't interrupt videos. The site focuses on independent film, adventure sports, nature and travel. It also has content licensing agreements with news outlets, including The Associated Press, Reuters, PBS and BBC Motion Gallery.
Other winners were Remy Schaepman of France with "Quidam Degomme (A Sheep on a Roof)" for the animation prize; Emanuel Exitu of Italy with "Greater - Defeating AIDS" for the documentary prize; "Mouthface" by Antonin de Bemels of Belgium for the music video prize; and Ambroise Becchio of France with "The Pocket Crossborder" for the spot/advertising award.