Google has said that it is still unsure how to make money from YouTube, the enormously popular video-sharing website it owns, but hopes to be able to do so soon.

Eric Schmidt, the search giant's chief executive, said it "seemed obvious" that Google should be able to generate "significant amounts of money" from YouTube, on which hundreds of millions of videos are watched every day, but that as yet it hadn't figured out how to go about it.

He also rejected suggestions that Google dominated the web, saying that it was outperformed by Yahoo!, the internet portal, in some areas, and added that in any case the company's goal was not "to monetise everything".

In an interview with The New Yorker writer Ken Auletta, Mr Schmidt was cautious about how profitable YouTube might be, but said he believed the site could lead to "the creation of a whole new industry." He said his optimism was based on two facts: "We know people are watching it" and "We have the luxury of time to invest."

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Google sees YouTube as a key plank in the strategy to grow its revenues beyond those it derives from the small text adverts that appear alongside search queries. The company is hoping it can use the site - which is visited by 129 million people each month - to expand into other types of web-based ads, including those which exploit the burgeoning popularity of internet video.

Last month Google said it would soon roll out a new type of video-based advertising on YouTube that would be different to the 'pre and post roll' adverts - shown before and after video clips - with which it has experimented to date, but declined to give details.

The company has also trialled so-called 'in video' ads on the site, which it bought for $1.65 billion two years ago, where a banner appears across the top of the screen while a video is played and test adverts are shown across the bottom, but the reaction has been mixed.

Mr Schmidt denied that Google monpolised the web, saying that while it may dominate the market for search-related advertising, which appears alongside the results of search queries, Yahoo! was the leader in so-called display ads. The latter - which are more similar to newspaper adverts - are preferred by companies as a way of promoting brands.

Mr Schmidt also declined to comment on a potential deal between Google and Yahoo! in relation to search advertising, which was being explored as a possibility at the time that Yahoo! was the subject of a $47.5 billion takeover bid by Microsoft.

Google's goal was to change the world, Mr Schmidt said, adding that the company did not "start from monetisation".

"We start from the perspective of what problems we do have," he said, referring to some of the aims of the company's philanthropic arm, Google.org, including those of developing renewable energy and preventing disease.

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