Five independent films from the 2009 and 2010 Sundance festivals will be part of a “small collection of rental videos” to be available to US users of the popular video-sharing website in “the weeks ahead”, according to YouTube.

Launching into rentals instantly puts YouTube into competition, albeit on a minor scale, with other video content providers such as its one-time closest partner Apple as well as Amazon VOD, Zune Marketplace and others. YouTube has steadily been working towards more lucrative content by incorporating ads and giving professional outlets special portals such as the music video hub Vevo, but without paid content many full-length commercial videos have remained out of bounds.

YouTube will also be stepping in as a potentially formidable contender in the growing market of online distribution of films that includes videogame consoles, Apple’s iTunes shop and US DVD rental giant Netflix.

On the surface, this would appear to be excellent news for YouTube and should rather frighten Flip Video, which has seen its YouTube-friendly pocket camcorders take a nice chunk of the camcorder market (recent sales figures indicate that digital pocket models like the Flip, the Creative Vado HD, and the Kodak Zx1, have captured over 25 percent of the camcorder market in the U.S.). 

True, the iPhone’s video–at least initially–won’t measure up to the higher-resolution “HD” video you see on the Flip MinoHD and the UltraHD. But the samples we’ve seen of video shot with 3G iPhones aren’t too terrible (I assume the 3G S’ video will be slightly better). And in terms of sheer numbers, cell phones present a much larger beast than pocket camcorders; Flip Video has sold more than 2 million units in just two years, while Apple has sold close to 20 million iPhones. With that in mind, one could argue that having millions of iPhone owners uploading their lame videos (OK, some will be awesome, but most will be crappy) might not be a good thing for a company that’s losing a lot of money and trying to figure out ways to steer users toward sponsor-supported premium content that it can monetize. As some of you are already aware, it costs YouTube a serious chunk of change to host and store all your videos. And while it has a gazillion visitors, it’s still way in the red, and probably will be indefinitely.

If I were Google, which owns YouTube, I’d be a tad concerned about the iPhone. We’ve all seen the incredible rise of the Apple App Store and the tremendous proliferation of iPhone apps, so it wouldn’t be too far-fetched to see video-sharing-on-the-go take off with the arrival of iPhone video capture. And when I say take off, I’m really saying blast off–as in, into the stratosphere.

Perhaps I’m wrong. However, funneling more ad-free/no-fee amateur content through YouTube’s tube seems to be a recipe for more losses. Not that you should care one way or another. But I thought someone should point it out. You know, in case YouTube ever decides it wants to charge you for a YouTube-sharing app–or maybe a small monthly fee–to upload your iPhone video clips.

That would be dumb, though, right? You wouldn’t ever pay for that, would you?

The Share menu is also said to encompass options formerly situated under Export, such as converting to formats suitable for iPhones, iPods or Apple TVs. Output video is automatically added to the local iTunes library, where it can be synced with Apple hardware.

The feature may symbolize an extension of Apple’s close relationship with Google, which already has Maps and YouTube applications preloaded on the iPhone and iPod Touch. Export to YouTube has been a staple of iMovie since the 2008 release.