BusinessWeek has reported that Google’s popular video sharing site, YouTube, is in talks with various Hollywood Studios to rent out movies to their users.
Talks are still reported to be in extremely early stages, so there is no date set as yet for starting the service. In fact, it may never even materialize.
Apple’s iTunes Store, which has such a service in place, charges users $3.95 per movie. It is expected that YouTube would be looking at a similar figure.
If the deal does come through, it will be a first for YouTube, in that it will be the first time that they will charge their viewers to access content.
In spite of being one of the most popular websites, YouTube has never been financially successful. Google CEO, Eric Schmidt, has admitted that the site has not lived up to its revenue expectations. Last April, he had said that YouTube would try out various ways of monetisation, including micropayments and subscription models.
YouTube even started allowing ad sales on videos from big media companies, on a revenue sharing basis with the producers, in an attempt to capitalise on the TV ad budgets that already are allocated for these companies.
If talks with some of Hollywood’s studios do succeed, YouTube will start earning some revenue through this new channel.
Discussions were started with Warner Bros. The two companies had reached an agreement in the past to allow clips from Warner Bros. TV shows to feature on YouTube, but so far they have not allowed airing of full episodes on the site.
YouTube is also in talks with Sony, Lion’s Gate and MGM. Though Walt Disney and Fox, who are very particular about their copyrights, have not yet come to the discussion table.
Paramount Movies has raised objections to YouTube’s proposals. This was to be expected as Paramount’s parent company, Viacom, is involved in a law suit against Google. The suit which is on its way to trial, for $1 billion in damages, is based on Viacom’s allegation that Google allowed the viewing of pirated TV shows and other material on YouTube. If YouTube hopes to deal with them in the near future, Google will have to come to an amicable settlement with Viacom first.
While the studios have not been too concerned about pirated TV shows, movies are a different matter altogether.
However, the studios could also be interested in forging a deal with YouTube as DVD sales have dropped quite significantly in recent months and such a deal could be one way of making up for the losses thus incurred.