Google needs to find some way to make YouTube profitable, we've all known this for a while. Even a giant like Google can't afford to subsidize the popular video-sharing site forever. YouTube costs the search engine leader an estimated $1.65 million per day. Hemorrhaging close to a billion dollars a year to keep an unprofitable site up and running is not a sustainable business model. So how is Google going to make YouTube profitable?
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Apparently, by taking a leaf out of iTunes' book. According to a Wall Street Journal report, Google is thinking about offering movie rentals through YouTube as a way to start covering their costs. They're talking to Lion's Gate Entertainment, Sony Corp., Metro-Goldwyn-Mayer Inc., and Time Warner Inc's Warner Bros. about charging for new movies on the YouTube site. If they get their wish, titles could be available for rent the same day they come out on DVD.
It's estimated that YouTube will charge $3.99 for movie rentals, which would put them in line with the iTunes store. Any agreement Google makes is going to vary from studio to studio, but alternate payment plans were also discussed. It's very likely that some companies will allow certain movies to be distributed for free, loaded up with ads to compensate for the cost.
The service is expected to open with a three-month test phase involving 10,000 Google employees. Lengthy negotiations have pushed that timeframe back a bit, but this new service could be available to us in very short order. I can't imagine any of the studios being silly enough to turn this down. High-quality, streaming instant YouTube rentals could do a lot to cut down on piracy, and bring in a bundle of money for both Google, and the movie studios they sign with.