THE incident, captured by Russian television cameras, is one of exquisite awkwardness — magnified ten-thousandfold by the status of those involved.

It takes place at the circular table of the G8 summit in St Petersburg, when President Bush sneaks up behind Angela Merkel, the German Chancellor, to give her a neck massage. Frau Merkel flinches, then throws her hands up into the air, as if to say: “Ewww. Gross.”

Until recently, this gaffe might have gone unnoticed, circulated perhaps only between the sniggering members of a Russian television crew.

But then came YouTube.com, a website that allows friends to share short, often poor-quality video clips.

Last month 20 million people visited the website and downloaded 2.5 billion videos. By yesterday morning, hundreds of users had posted the clip of the Bush/Merkel incident, making it one of the day’s top-rated videos.

All of which has both enthralled and terrified America’s powerful television networks which, even before YouTube, were struggling to compete with the internet. “There is a big wave of video coming online and these guys want to work with us to stay relevant,” said Chad Hurley, YouTube’s 29-year-old founder and chief executive. “This trend isn’t changing, so we’re working with them to find solutions on how they can embrace what we are doing and really leverage that to help their business.”

A few months ago, however, the traditional media establishment was trying to sue Mr Hurley out of existence. NBC ordered YouTube to remove a clip of Saturday Night Live. CBS did the same, after a news clip of an autistic student scoring twenty points in four minutes during a basketball game was uploaded on to YouTube and viewed one million times.

Although YouTube takes down copyrighted material and limits videos to 10 minutes, users get around the restrictions by marking illicit clips with code words: wrestling fans, for example, search for the term “cheese soufflé” to find bootlegged material.

But with YouTube now ranked as the 18th most popular website on Earth — after being founded last year by Mr Hurley and two other former employees of PayPal, the internet payments service — media moguls have dramatically changed their approach: they are beginning to see the website as advertising.

In a spectacular U-turn on copyright policy, NBC recently struck a promotional deal with YouTube, agreeing to supply the website with preview clips from shows such as The Office.

CBS is also now talking to the company. “Our inclination now is, the more exposure we get from clips like that, the better it is for CBS News and the CBS television network,” said Sean McManus, president of CBS News and Sports. “In retrospect we should have embraced the exposure and the attention it was bringing CBS instead of being parochial and saying, ‘Let’s pull it down’.”

Analysts say the television companies have no choice.

“It’s the democratisation of television,” said Christopher Hickey, of Atlantic Equities in London. “Any internet user can now reach millions of viewers with video content, bypassing the TV networks. YouTube’s inexhaustible supply of content is likely to accelerate the defection of millions of young viewers away from traditional TV.”

Mr Hickey added that the television networks could not buy YouTube, even if they wanted to. “It would lose its street cool and the content would quickly evaporate in the direction of the next garage (underground) website,” he said.

MATCHING THE MOGULS

Uploading of copyright material is prohibited, but US media organisations NBC and CBS have had to ask for material to be removed