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YouTube's quest for professionally created content is about to get interesting. The Wall Street Journal reports that the video giant is in talks with movie studios to stream movies to its users for a fee.

That will bring a shift from its free video supported by advertising model, but could go a long way toward helping the site turn a profit for Google — and possibly change the game for online film viewing.

YouTube currently has rights to stream older films from Sony’s Pictures, MGM and Lionsgate, but according to The Wall Street Journal:

"YouTube is talking to Lions Gate Entertainment Corp., Sony Corp. and Warner Bros. about integrating newer titles into the existing YouTube site, most of which it would carry a rental charge. In some cases, these titles might be available on the site on the same day that they come out on DVD. It is unclear to what extent older movies or television shows will be part of the new agreements."

The Journal reports that YouTube is planning to charge $3.99 per film, the same rate that Apple charges for its movies. YouTube currently has a revenue sharing agreement that gives 70% of ad dollars to studios for ad-supported content, and that agreement is likely to extend to film content. 

This could be very bad news for Netflix. Writes The Journal:

"The agreements would allow consumers to stream movies on a rental basis for a fee. However, in some cases, the movies would be available in way that they have been previously—free, with advertising."

Over the last year, YouTube has been unveiling a steady stream of new revenue sources hoping to recoup the $1.65 billion investment that Google made in the company back in 2006. 

This new agreement could go a long way toward making that happen. YouTube has the infrastructure to create high quality viewing experiences for film online. And what's more — they have the viewership to experiment with price points. That could spell trouble for the competition.

But as more and more contenders join the space, the online film viewing audience is still up in the air. Aside from Netflix, Amazon and Apple have online film operations. Meanwhile, movie studios are launching a Hulu-esque site called Epix to stream movies online this fall.

There are no guarantees that the deal with go through, but it will be interesting to see if YouTube gains any traction with a paid service. As part of the world's largest search engine, they have access to more eyeballs than even Apple and could take a bite out of the market by pricing their content just a little lower than other pay per view sites.

But YouTube has been playing it safe with its streaming agreements, looking to get a mass quantity of video content rather than go after exclusive contracts or high revenue streams.

Meanwhile, the audience for online film viewing remains untested. To this date, 99% of all video viewing in the home still happens in front of a television set. But film distribution companies want to be established as viewers move online.

Regardless of what they charge, simply offering new release films could do a lot to cement YouTube's role as the place to go for online video.

Meghan Keane

Published 3 September, 2009 by Meghan Keane

Based in New York, Meghan Keane is US Editor of Econsultancy. You can follow her on Twitter: @keanesian.

721 more posts from this author

Comments (4)

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Avi

This is exciting stuff to see how the flagship video sharing site plans to monetize online movies, definitely news to follow.

I work for a niche video sharing site called www.wejew.com and we have started our own monetization program for launching full length movies. Just this week, we have a special documentary movie dealing with a social/political issue in Israel www.wejew.com/hitnaari and next week we will be launching a special documentary film to coincide with the anniverary of 9/11 www.wejew.com/thethirdjihad

This is a totaly new field that we are all trying out to see what methods will be win-wins for the websites and the rights owners. But this is the future of digital media.

almost 7 years ago

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dave harris

Thats fun

almost 7 years ago

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Online Movies

The move takes YouTube one step away from an ad-supported business model, but does not break the mold of other online rental deals already struck by iTunes

almost 7 years ago

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old movies

Netflix already discussed the fact that people are far more interested in watching movies online than renting so this is the right way to go. Also considering Youtube's audience, it will be quite easy for the to break into the market, provided they have a good deal to offer.

over 6 years ago

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