Two Studios Hold Out On YouTube Movie Rental Deal-Piracy Is The Issue

Word leaked earlier this week that YouTube (NSDQ: GOOG) was going to start renting out premium movie content, putting it in a position to compete directly with iTunes. But now there’s a snag. Executives at Fox and Paramount both say they won’t move ahead with a deal because “YouTube and its parent, Google, have not taken adequate steps to stop supporting piracy sites,” according to a report at TheWrap.

It’s not surprising that Paramount is on that short list of holdouts. Its parent company is Viacom (NYSE: VIA), which has continued waging a high-profile copyright battle against YouTube in the courts. Executives at Fox and Paramount have said they want Google to do a better job of clearing pirate sites out of their search results, and apparently they want to put the brakes on YouTube renting out their content until they see better progress.

In fact, Paramount executive Frederick Huntsberry just testified to Congress about how easy it is these days to find pirate movie sites through a simple Google search.

The three big studios that have signed on to YouTube’s rental deal are Warner Bros. (NYSE: TWX), Sony (NYSE: SNE), and Universal. In addition to holdouts Fox and Paramount, a third major studio, Disney (NYSE: DIS), also hasn’t struck a deal with YouTube yet, but the reasons for that are less clear, according to TheWrap.