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YouTube working on a deal to rent movies to visitors

Google paid a premium for video streaming site YouTube and so far by Google's own admission, the website has failed to live up to its profit potential. YouTube continues to be the poster child for a site with an immense amount of traffic and little revenue.

Some reports have YouTube losing significant sums of money, though exactly how much money the video site loses is unconfirmed. YouTube is always on the lookout for new methods to monetize its video consuming users and recently unveiled a plan that would allow it to place ads on one-off videos and share the revenue with the video producer.

BusinessWeek reports that YouTube is now in early talks with some major movie studios on a plan that would have the video site renting movies to visitors for $3.95. That is the same costs that Apple rents movies for on its rental service and if the deal comes to fruition it would put YouTube in direct competition with Netflix and Amazon.

The talks with YouTube reportedly began with Warner Bros and led initially to agreements to allow more clips from Warner TV shows like Gossip Girl to be viewed on YouTube. Warner has not allowed YouTube to show full episodes of its programs to date. Reports also have YouTube in talks with Lions Gate and Sony about streaming movie rentals. Two of the major Hollywood studios are not believed to be part of negotiations at this point -- Walt Disney and Fox.

There is long standing bad blood between YouTube and Viacom that stems from Viacom's assertion that YouTube looked the other way as portions of pirated shows were viewed on YouTube. The pirated content has Viacom and YouTube working their way towards a court date with the outcome being a $1 billion damage claim.

BusinessWeek reports that with DVD sales declining, a deal with Viacom could happen. However, a source cited by the publication said, "They had better be prepared to write Viacom a big check if they think that's going to happen. There is very bad blood between those two."





"We are going to continue to work with them to make sure they understand the reality of the Internet.  A lot of these people don't have Ph.Ds, and they don't have a degree in computer science." -- RIM co-CEO Michael Lazaridis
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