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YouTube To Test Movie Rentals

Google is exploring ways outside of advertising to earn money from its online video site.
Google-owned YouTube plans to test a video rental service with five films from the Sundance Film Festival that will be made available on Friday.

On Wednesday, the eve of Sundance, YouTube said it would rent the films to U.S. users through Jan. 31, the last day of the independent film festival. YouTube said it would provide details Friday on the films and how they would be offered.

In the weeks ahead, YouTube also plans to offer rental videos from U.S. partners across other industries, including health and education. In addition, YouTube launched the "Filmmakers Wanted" campaign to try to attract more independent filmmakers to join the rental program.

Contributors would set the price of their videos and the amount of time they are available. The owners of the film will also keep "100% of their rights," YouTube said.

Missing from the YouTube blog post announcing the latest offering was any mention of major Hollywood studios. Without such partnerships, it's unlikely YouTube would be able to compete with established companies offering movies over the Web, including Netflix, Blockbuster, Apple, and Amazon. Most of YouTube's content comes from short clips uploaded from amateurs. TV and movie production companies also use the site for marketing purposes.

YouTube's relationship with Hollywood has not always been smooth. Google and the site are named in a $1 billion copyright-infringement lawsuit filed by Viacom in 2007. Viacom claims Google isn't doing enough to keep copyrighted content from being uploaded to the site without permission.

The Wednesday announcement indicates that Google continues to look for ways other than advertising in trying to turn a profit from YouTube. The site has struggled for years to strike a profitable ad model, given its high infrastructure costs.

Analysts differ on how much of a money trap YouTube is for Google. While Credit Suisse last April predicted Google would lose $470 million on YouTube in 2009, market research firm RampRate pegged the loss at $174 million.

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Mary E. Shacklett, President of Transworld Data
James M. Connolly, Contributing Editor and Writer