YouTube, the popular video-sharing Web site, has not yet counted its first full year profit but is a must-have prize for media and technology giants. YouTube is valued at around $1.6 billion, those involved in the talks said.

The talks are in an early stage and may fall apart, depending on the size of Google's offer. Other companies have also expressed interest and could rush in with higher offers.

Microsoft, Yahoo!, Viacom and News Corporation, among others, have all visited YouTube's headquarters in San Mateo, California, in recent months with buying interest in the company.

YouTube is a popular free video sharing web site which lets users upload, view, and share video clips. Founded in February 2005, the Web site has gained immense popularity since last November by letting users share short video clips - both home videos and programming copied from television.

Founded in February 2005 by three early employees of PayPal, the San Mateo-based service utilises Adobe Flash technology to display video. The wide variety of site content includes movie and TV clips and music videos, as well as amateur content such as videoblogging.

Despite YouTube's huge user base, content library, and hit count popularity, it is still a very small company at the administrative level, staffed by only about 60 employees.