YouTube Streams Revenue From Movie Rentals

Christopher Coppola

YouTube will make a foray into the movie rental business Friday. The entrance begins with some of the films shown at the Sundance Film Festival in Park City, Utah.

The first five movies made available in the United States to rent from the 2010 and the 2009 festivals will cost $3.99 to view for 48 hours. The movies are available as a stream, not download, through Jan. 31 via Google Checkout. In the future, a small collection of rental videos from other U.S. partners in health and education will become available, too.

YouTube will earn a portion of the rental fee from every stream. It's not clear if the service will become available on mobile phones.

YouTube also invites independent filmmakers to join the rental program as part of the company's "Filmmakers Wanted" campaign at the Sundance Film Festival. A dedicated Web page will launch on the site to promote films from Sundance and independent filmmakers.

Studios will have an option to set their own prices, with rental viewing ranges from one to 90 days. The aim to encourage more studios to rent movies through the site could eventually create a new revenue stream to supplement the Internet ads bringing parent company Google most of its revenue.

Independent moviemakers, such as Christopher Coppola, already tap YouTube as a creative outlet. "The bigger picture, the humanitarian and the philosophical aspects seem to fit more into independent digital movies you might find on YouTube," he says. "Some ads do this, too. You look at a Gatorade ad and it's usually one person rising to the occasion, defeating all odds, doing the best they can as an individual. But in the Hispanic market the content promotes unity, working together for the good of the team."

Coppola has been working more in new media and marketing geared toward the Hispanic-American market.

YouTube's paid content feature isn't a move away from the free clips uploaded by want-to-be stars or creative teens showing off their talent, or lack of good sense. YouTube plans to launch a specific home page to offer the paid content. And while there are already plenty of online destinations to rent videos, from Apple iTunes, Amazon, Blockbuster, and Netflix, a selection from independent moviemakers creates a whole other breed.

YouTube could have found the correct road to profitability, an issue of concern to analysts since Google paid $1.76 billion for the site more than three years ago. Last summer it held talks with major studios, such as Warner Bros. and Sony, in an effort to launch a rental service.

The site also helped to monetize content by integrating AdSense for Video with Content ID, allowing media companies to generate revenue from copyrighted video content that users create and upload to YouTube. Analysts have forecast YouTube to generate roughly $700 million in revenue this year.

YouTube, last week, ranked No. 6 among U.S. Web sites where visitors spent on average 25 minutes and 25 seconds, according to Experian Hitwise. The research firm says YouTube Google video site ranked No. 2 behind Momo Mesh for Web sites that receive traffic from search term, such as "movies online" for the 12 weeks, ending Jan. 16, 2010.

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