"Google Inc.'s YouTube is in talks with several major studios -- including Sony Pictures, Warner Bros. and Lionsgate -- about streaming movies when the DVDs become available in rental stores and kiosks, according to sources familiar with the situation.

With DVD sales in a cliff dive and the growing popularity of websites such as Hulu, where TV shows and second-tier movies are available to watch free of charge, Hollywood finally appears to be embracing the notion that the Internet could become a major venue for movie distribution.

Movie theater attendance isn't growing, and the studios are finding it tougher to attract paying audiences that are large enough to justify the huge expense of producing and marketing their films, which increasingly are forced to compete against video games and other forms of entertainment.

Despite YouTube's dominance in Internet video, several companies already offer online movie rentals and downloads, including Amazon.com Inc. and Apple Inc. The fast-growing DVDs-by-mail service Netflix also streams films online. But with 437 million visitors a month, YouTube is the gorilla in the Internet video market, and any studio that aligns with it will be in an advantaged position against rivals. This means Google might finally be able to make YouTube profitable. And for the studios, it might be a way to win back the lost revenue from declining DVD sales.

The website initially proposed an advertising-supported model in which the movies would be offered to online viewers free of charge. Hollywood pushed for a more traditional pay model, however, in which films would be available to buy as a download or a $3.99 rental.

YouTube has been courting more professionally produced content, in part to attract advertisers who are reluctant to place their brands next to amateur videos of karaoke and wedding pratfalls. But the Internet ad business has been in a tailspin for more than a year. Online ad revenue shrank during the second quarter to $13.9 billion from $14.7 billion, down 5% from a year earlier, according to technology consulting firm IDC. And the worst isn't over: IDC expects it to continue hemorrhaging for at least the rest of the year." (Source: Los Angeles Times)

To view full-length movies on YouTube visit: www.youtube.com/movies