YouTube, the iconic user-video-sharing site, is softening its stand on advertising.

YouTube once rejected the idea of obtrusive advertising — pre-rolls, big picture-window animations; anything that would diminish the visitor experience — and also promised to pioneer new forms of advertising more amenable to its format than existing models.

Now, YouTube has announced it is expanding its service menu, auctioning off search terms under a new program called Sponsored Videos.

Auctioning search terms gives advertisers preferred placement in search result listings when visitors search for the terms they’ve ‘purchased’. Google and other Internet search specialists have been doing it for years. But users and critics say the practice is unfair and can obscure the best, most useful search results by placing sponsored links above them, on the first page of returns. Most search sites now clearly lable sponsored links and separate them from genuine, ranked results by placing them in a space of their own on the screen.

YouTube’s Sponsored Videos plan will allow video uploaders to bid on search terms to promote their clips. Sponsored videos will appear beside regular search results in the new YouTube search results format.

In other news… YouTube has announced it’s lifting its long-standing ban on commercial content, concluding a deal last week to post full-length motion pictures from studio/distributor MGM.

As YouTube enters a new, more monetized era, users may well be wondering where it will all end.