YouTube, the huge video-sharing unit of Google (GOOG), has a 42 percent share of all videos watched in the U.S., according to comScore. Last month that was almost 9 billion pieces of content. It may be a huge number, but most analysts think YouTube still loses money because it cannot bring in enough revenue from advertisers to cover costs.
Marketers have stayed away from YouTube primarily because its content, mostly created by users, is idiosyncratic and often vulgar. The resolution of the video is also usually low.
YouTube may have finally come up with a way to turn a profit. It is in late-stage discussions with several major studios to rent feature-length films to its users. A number of media outlets have reported that Google is talking to Time Warner (TWX), Sony (SNE), and several other companies that own large studios, about putting their movies on the service. YouTube will probably charge $3.99 per rental.
The program may work -- and it may work very well. YouTube's content may be heavily user-created, but its audience is massive. It would only require a very small portion of the site's visitors to rent movies to make the program a rousing success.
Google may have finally found a way to make money on YouTube.
Douglas A. McIntyre is an editor at 24/7 Wall St.