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YouTube, a leading site for watching video on the web, won new funding on Wednesday as a research firm predicted demand for internet video services was about to explode.

YouTube, which has quickly become popular for hosting video clips uploaded by its users, said it had received $8m in second-round funding from Sequoia Capital, a venture capital firm that was an original backer of companies such as Yahoo! and Google.

“This is the birth of a new clip culture where the audience is in control more than ever,” said Chad Hurley, chief executive.

“YouTube is at the forefront of a cultural shift in digital media entertainment and media distribution,” added Roelof Botha, a Sequioa partner, in a statement.

IDC, the research firm, said on Wednesday that internet video services were on the brink of becoming a mainstream phenomenon in the US and were primed for explosive growth.

It predicted in a study that the market would grow from around $200m in 2005 to generate revenues of more than $1.7bn by 2010.

YouTube reports more than 35m videos are watched daily on its site by 6m unique users, with tens of thousands of clips uploaded every day.

“It’s been growing by word of mouth but it needs to work on an advertising business model,” said Josh Martin, author of the IDC report.

“It is complying with content owners notifying it of copyrighted content [being unlawfully uploaded] and taking it down, so it’s probably not going to be shut down for that and could start to have a relationship with content owners.”

YouTube is understood to be planning Google-style contextual ads and recently partnered with the E! entertainment TV channel. It was founded in February last year and won $3.5m in first-round funding from Sequoia in November. It plans to use the new funds to expand sales and marketing and build out its infrastructure.

Its rivals in the new sector include search services such as Google Video and Blinkx and media-focused companies such as AOL, which launched In2TV last month, a free service streaming classic TV shows.

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