YouTube turns to pay-per-view model for movies

on January 21 2010 2:51 PM

YouTube, the world's most popular free video website announced it is now venturing into the pay-per-view market online.

In a blog post on Wednesday, the company said that it will enter into the market of streaming rentals online, starting with five Sundance films from the 2009 and 2010 festivals.

This will be the first time that the site charges for its content. The five movies on offer include: The Cove , Bass Ackwards, One Too Many Mornings, Homewrecker and Children of Invention. Each movies costs $3.99 through Google’s Checkout online payment service, and is only available this Friday to the end of the film festival, which is Sunday, January 31.

By offering a pay service, it's a clear sign that Google, which has struggled to make a profitable business out of YouTube after buying it in 2006 for $1.65 billion, is seeking new ways to monetize the site. The site has struggled to attract more advertisers to YouTube since more conservative advertisers prefer to not have their ad run alongside some of the uncensored content on the site.

YouTube said in the post that it plans to later expand its rental selection to a range of health, education and fitness categories.

Looking ahead, YouTube has already engaged in talks with several major Hollywood studios - which include Sony, Warner Bros. and Lionsgate - about streaming films on YouTube. According to New York Times, the terms will be similar to that of Apple iTunes and Netflix.

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