In 2006, a theater unlike any other opened its doors and invited any and all to take the stage.

Millions accepted the offer, turning video-sharing site YouTube into the Web's largest and most influential talent show. The site's popularity also helped to usher in a new era in entertainment: Internet video.

YouTube, which hosts user-submitted video on its site, offers anyone the means to communicate to a mass audience, a power once held exclusively by TV networks. The networks, however, should be credited with helping to introduce YouTube to the public. It was a skit from NBC's comedy warhorse Saturday Night Live, which someone posted to YouTube last February, that triggered a wave of interest in the site.

NBC complained that the material was copyright and demanded that YouTube remove the clip. The question of whether YouTube encourages people to violate copyright law has dogged the company ever since, but at the same time the controversy only helped to raise the site's profile.

The YouTube audience began to mushroom, but more importantly so did the number of people who contributed clips. As the site began to harness the creativity of the masses, it emerged as a new and powerful communications tool. In addition to becoming an Internet equivalent of open-mic night at the local bar, YouTube proved to be a type of digital town hall.

Besides all the clips created by budding dancers, musicians, comedians and movie makers, one could see mini-documentaries produced by soldiers fighting in wars across the globe. Church sermons, campaign speeches and "vlogs"--the term used to describe video blogs--from millions of individuals were posted. Porn sites began posting cleaned-up clips on YouTube in an obvious attempt to drum up business.

After YouTube videos of violent arrests stirred public outcry, investigations into potential police brutality were launched. The reputations of school teachers were tarnished after they were filmed yelling at students. Canadian police recently posted a surveillance video of a murder suspect on YouTube, leading to a man's arrest last week. Iran, a country accused of denying citizens free speech, recently banned the site.

YouTube became a hotbed for so-called viral marketing, the term used to describe how a product or service can be promoted over the Internet by members of the public. One of the early examples of this was Bowiechick, an 18-year-old Oregon girl who touched off a craze for Logitech Web cameras after altering her screen image to look like a cat or a bee with computer-generated avatars. Time magazine named YouTube "Invention of the Year."

Despite the huge following YouTube boasted, analysts have questioned whether the company could ever make money. They have predicted that the unseemly material and copyright violations will scare off advertisers.

This didn't stop Google from acquiring the profitless YouTube for $1.65 billion in October. Since the sale, Google has tried to make deals with entertainment companies to avoid being sued for copyright infringement.

Where is the so-called GooTube going in the new year? The company will face a growing set of challenges that includes competition from traditional entertainment companies as well as me-too competitors, such as Revver, Grouper and Guba. It must also prove to Google stockholders that there's big money in becoming the P.T. Barnum of the Internet.

--Greg Sandoval

2006 Highlights

Does video have a Napster problem?

As Hollywood adapts to online realities, video-sharing sites could soon face a day of reckoning.

Can BitTorrent thrive in the mainstream?

Insiders say deal with Warner Bros. is good for industry, but some aren't sure its technology can work for consumers.

CNN snatching page out of YouTube's book

CNN wants some of the clips finding their way onto popular video-sharing sites, such as YouTube, to make an appearance on the cable news channel.

Sony gets into video sharing with Grouper hug

The entertainment giant's Hollywood studio pays $65 million for Grouper, a lesser light than the boffo YouTube.

Microsoft to take on YouTube

"Soapbox," which made its beta debut Tuesday, is a place for uploading home footage on MSN Video.

TVUPlayer: Another Napster?

The video service is building an audience but legal experts wonder about copyright issues.

Brightcove aims to create video marketplace

Are microchannels the answer to finding the right online video? At least one start-up believes they are.

Revver puts money where its talent is

The video-sharing site has landed YouTube stars through revenue sharing. Is this the future for online clips?

Google shares ad wealth with videographers

Landmark deal could spell trouble for video-sharing sites that can't afford to share profits with talented clip producers.

TV networks may form anti-YouTube cabal

Fox, Viacom, CBS and NBC Universal are talking about creating a video site to compete with YouTube, source confirms.