Our take...
While the provision of independent movies and special interest content on a paid basis is not especially significant, the potential for YouTube to extend this to premium content is interesting.

The amount of full-length TV shows and movies available through YouTube – on an ad-supported basis – has been increasing gradually in the US, but this is generally under video player carriage deals. Rather than licensing content to YouTube, major rights holders are simply embedding their own online video player in the portal to extend their own platform reach. For example, YouTube is one of more than 300 affiliates for the CBS Audience Network. Crucially, rights holders are also throttling content availability through YouTube; Sony Pictures makes around 60 titles available for streaming through its online service Crackle but only offers 15 titles via the player it embeds in YouTube. The online giant has had more success in the UK, where it has agreed syndication deals with local broadcasters Channel 4 and Five for the catch-up TV programming which drives online video consumption. In general, though, major rights holders remain reluctant to offer their content alongside YouTube's user-generated video, particularly illegally uploaded versions of their TV shows and movies, fearing it may devalue their portfolio.

The transactional model is a new feature for YouTube, but this is not the first time Google has tried to charge for video content – Google Video Store was launched in January 2006 offering paid downloads, but was discontinued in August 2007. Like most services without a device strategy, it failed to gain traction as most consumers are unwilling to pay for video content which is tied to the PC. As an established destination for video content, YouTube arguably stands a better chance of building a transactional business, particularly if the company can find hardware partners. YouTube has already been integrated into Yahoo's Widget Engine which makes it available via a range of internet-connected TVs.