youtube/photo: oddsicle.net

SAN FRANCISCO (Reuters) - YouTube, the leader in Internet video search, said on Sunday viewers have are now watching more than 100 million videos per day on its site, marking the surge in demand for its "snack-sized" video fare.

Since springing from out of nowhere late last year, YouTube has come to hold the leading position in online video with 29 percent of the U.S. multimedia entertainment market, according to the latest weekly data from Web measurement site Hitwise.

YouTube videos account for 60 percent of all videos watched online, the company said. Videos are delivered free on YouTube and the company is still working on developing advertising and other means of generating revenue to support the business.

The site specializes in short -- typically 2-minute -- homemade, comic videos created by users. YouTube serves as a quick entertainment break or viewers with broadband computer connections at work or home.

News Corp.'s MySpace, the social networking site popular with teens, has a nearly 19 percent share of the market according to Hitwise. Yahoo, Microsoft's MSN, Google and AOL each have 3 percent to 5 percent of the video search market. Collectively, these four major Web portals have a smaller share than either YouTube or MySpace.

In June, 2.5 billion videos were watched on YouTube, which is based in San Mateo, California and has just over 30 employees. More than 65,000 videos are now uploaded daily to YouTube, up from around 50,000 in May, the company said.

YouTube boasts nearly 20 million unique users per month, according to Nielsen//NetRatings, another Internet audience measurement firm.