YouTube today took a major step towards converting clicks to cash by launching its first "branded channel" - a project spearheaded by popstar Paris Hilton and designed to reap profits from the video website's exploding popularity.

The privately-owned site, which recently announced it is showing 100 million videos a day, will now offer advertisers the opportunity to create cutomised sets of web pages that will carry videos, adverts and other content.

Warner Music Group is the first to roll out one of the dedicated channels, with a campaign for Ms Hilton’s album, Paris, which was released today. A video link to the page is on the right hand side of the YouTube homepage.

The advert also allows users of the site to rate the music video - today at lunchtime Ms Hilton had scored two out of a possible five stars - and to buy mobile ringtones.

Fox Broadcasting, which is owned by News Corporation, the parent company of Times Online, has paid an undisclosed amount for a banner advert to appear above the Paris advert, to publicise its television drama, Prison Break.

YouTube, which was launched in February 2005 by 29-year-old Chad Hurley and has raised at least $11.5 million from Sequoia Capital, the venture capital firm, will share subsequent revenues from the Fox campaign with Warner.

Today's move marks a long-anticipated change in tack from YouTube, which to date has focused on providing a forum for members of the public to post homemade videos.

Several of the amateur offerings have become online cult phenomena, attracing tens of millions of hits.

But in recent weeks YouTube has started a concerted drive to commercialise its site, which is part of the so-called "web 2.0" group of online companies that allow users to post their own content and collaborate on projects.

It is under pressure to raise revenues to fund the cost of streaming such high volumes of content. According to estimates, it pays at least $1 million a month in bandwidth costs.

The Techcrunch blog said: "Some people have been concerned that it would be a challenge to turn its huge traffic into money. Thus Paris Hilton to the rescue."

YouTube is also in talks with Warner Music and Britain's EMI Group to show music videos online. YouTube has said it wants to carry all major music videos within the next 18 months.

Mashable.com, a blog that tracks web 2.0, companies said: "It’s pretty clear that YouTube is a powerful branding platform - and not just for stars like Paris Hilton."

It said that social networking sites such as MySpace (also owned by News Corp) have "totally changed the nature of advertising - users now make friends with brands, and advertising is no longer about pushing content to people when they don’t want it."

Google, the online advertising leader, has launched a similar service to YouTube. As part of a separate project, it also offers video adverts which are only played when a user clicks on them.

After this year's Sun Valley conference in the US, the annual gathering of media executives organised by investment bank Allen & Co, it was speculated that YouTube could command a price tag of as much as $1 billion. Some analysts disputed that figure, citing potential copyright issues with much of the content posted on the site.

Click here to view the Paris Hilton channel channel.

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