YouTube has settled a six-month dispute with NBC, after the TV network decided to relax and climb into bed with the video-sharing behemoth.

The turnaround is unbelievable, and a huge positive for YouTube. Some months ago NBC’s legal department forced YouTube to remove the ‘Lazy Sunday’ sketch, taken from NBC-owned Saturday Night Live. Like much of the content on YouTube, the clip was used without the permission of the copyright owner, in this case NBC.

Before being removed, the sketch was watched about 6m times, and was cited as a factor in helping put YouTube on the map. Indeed, if you search on Google for ‘Lazy Sunday’ you’ll find YouTube in pole position, above NBC, a sure sign that it was popular.

With NBC allowing the legal heavies to do their thing, it seemed that a policy of cooperation was about as far away as you can get, but now the TV network has done something extraordinary. Yup, NBC has embraced YouTube, and it is a deal that should work well for both parties.

The “strategic partnership” will see YouTube create a dedicated channel for NBC content, which, interestingly, will be managed and uploaded by NBC personnel (rather than users, presumably to ensure quality…).

YouTube will promote exclusive clips from the TV network’s forthcoming fall schedule, as well as footage from shows like The Office, which digital-focused NBC recently started selling via iTunes. The Office was a huge hit for NBC and accounted for one third of the sales on iTunes, with clips being purchased by video iPod owners.

Our sole concern about YouTube has been about permission and piracy, since much of the video footage is unauthorised, but the NBC deal might be a watershed for the video-sharing site. More Big Media brands will surely follow, for the brand exposure, and to be able to control their content on YouTube. Either that, or YouTube surely faces more legal hassles from the major content owners.

YouTube, founded as recently as February 2005, has enjoyed a period of astonishing hypergrowth. According to figures from Hitwise, it is the largest video-sharing site by a stellar mile, with more than 60% market share. It is four times bigger than Google Video Search, and 15 times bigger than Yahoo’s video service. Hitwise also says that YouTube has broken into the top 50 global websites, ranked by traffic.

Here is the Hitwise data for the Top 10 Video Sharing Sites in the UK, Based on Market Share of Visits (week to 24th June 2006):

YouTube - 62.85%
Google Video Search – 15.68%
3 MySpace Videos – 8.60%
MetaCafe – 5.19%
Yahoo! Video Search – 4.01%
Veoh – 1.24% – 1.06%
Grouper – 0.60%
FileCow – 0.38%
10 Yikers – 0.38%