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YouTube moves to offer Web-based rentals for movies

AP , LOS ANGELES

YouTube, Google Inc’s online video streaming service, is in talks with Hollywood studios to rent new release movies online, sources familiar with the talks said.

The move follows similar deals by Apple Inc’s iTunes and others.

A final deal would be contingent on pricing and an agreed-upon release date, said the people, who spoke on condition of anonymity because discussions were still ongoing.

The move takes YouTube one step away from an advertising-supported business model, but does not break the mold of other online rental deals already struck by iTunes, Amazon.com Inc and Cinemanow.com, a unit of Sonic Solutions. All of them offer movie rentals for between US$1.99 and US$3.99 each with a 24-hour viewing period.

The talks were first reported on the Wall Street Journal Web site on Wednesday.

Discussions were most advanced with Lions Gate Entertainment Corp, Sony Corp’s movie studio, Time Warner Inc’s Warner Bros and Metro-Goldwyn-Mayer Inc, all of which already have ad revenue-sharing deals with YouTube, the sources said.

The Internet site declined to comment specifically on the talks.

“While we don’t comment on rumor or speculation, we hope to expand on both our great relationship with movie studios and on the selection and types of videos we offer our community,” YouTube spokesman Chris Dale said.

If YouTube becomes a rental channel for movie studios, it would mark a return to what Google used to do before it bought YouTube for US$1.76 billion nearly three years ago. Aside from offering free looks at short clips, Google Video sold the right to view some movies and TV shows.

Google got out of the online video rental business shortly after it bought YouTube and poured more resources into building a larger audience for YouTube’s totally free service.

YouTube is still unprofitable although Google management says it’s close to making money, thanks to all the ads on there now.

A source with direct knowledge of the deals in the works said YouTube plans to begin a three-month test of the online rental service this month.

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