The short film reflects the way society is changing,' Berlinale chairman Dieter Kosslick said last week, announcing the festival's increased interest in the form. 'It is radical without constrictions.'

It is a strong claim for a form that has often been little more than a calling card for wannabe feature makers. Is there any reason to believe the short film is growing up as a commercially artistic and viable medium in its own right'

In terms of numbers, the answer is a resounding yes. Berlinale Shorts curator Maike Mia Hohne says the world premieres that have been chosen for the competition in February have been selected from 1,500 submissions from 64 countries. Last month's Encounters Short Film Festival in the UK similarly attracted 1,750 films from 66 territories. There is barely a festival that has not upgraded its shorts section and numerous new events have sprung up around the world.

Kosslick's suggestion of an inherent radicalism cannot be dismissed as hype. With the short now being anything up from the one-minute mobile telephone film, it has become a participation sport, challenging what has been historically a very top-down business.

In assessing whether short film has a business future in its own right, it is worth remembering it has a commercial past. The short film was a mainstay of cinema for much of its history. In the US, a 20-40 minute short preceded the main feature in theatres since the 1920s - a trend duplicated in many countries with local variations. But by the 1960s, the second feature cost too much money for audiences who could get their newsreels and shorter forms of entertainment on the television.

Now, however, digital productions are cheap to make and the technical equipment available is becoming more sophisticated at lower costs. Reaching audiences is considerably cheaper too. Lower cost DVD and the internet are connecting films to audiences. Digital cinema may also turn the costs argument firmly in favour of the short film.

The big question now is whether there is any demand. Perhaps the biggest problem for shorts as a business is inherent in the expansion of production that has sparked renewed interest in shorts in the first place. If everyone is a film-maker, how can you spot a good one' The democratisation of film is a wonderful thing that was meant to remove the elitist 'gatekeepers', allowing consumers increased choice. But the bewildering selection on offer has in fact made the gatekeeper role more important than ever. Very strong competitive festivals have been established around the world - France's prestigious Clermont-Ferrand short film festival celebrated its 30th anniversary this year - and new events are emerging, largely exploiting the distribution potential of the internet. The rise of the documentary in recent years has also cross-fertilised the short-film market.

'There's a lot to be said about the democratic ethos of YouTube, where a lot of people gain recognition. But selecting talent through a jury can't be matched,' says Enrico Cullen, director of development and external affairs at Arts Engine, a US company that runs Media That Matters Film Festival, which showcases short films. The festival receives around 500 submissions per year. 'We've seen huge acceptance of the short film as a viable media platform,' he adds.

Those advocating a viable commercial market can be divided into two categories: those who believe it can be assimilated into existing business and those who see it creating its own commercial platform.

For the former, there are signs of optimism. The short has in recent years, begun to find its way back on to theatre screens.

At the most mainstream level, Pixar is perhaps the best-known proponent of the form. The company has been making theatrical shorts since the 1980s, which have become an integral part of the Pixar offering since the late 1990s. The company's shorts have also become an important part of the DVD extras package and has also found additional audiences by allying itself with iTunes.

The UK's Aardman Animations has enjoyed similar success with that strategy. The company distributes original content such as the Angry Kid short to mobile telephones in the UK and 17 other territories, and online with another short-film pioneer, San Francisco-based Atom Films. It is a key part of the company's distribution business and a good revenue stream.

'The future looks good for short films,' says Robin Gladman, digital content manager at Aardman. 'With the emergence of new digital platforms and on-demand services, fans of short films can find their content more easily. For many short-film makers, these new technologies will provide a better prospect of getting their films distributed, seen and earning money.'

This year, there have been some relatively successful attempts at the 'omnibus' or 'portmanteau' film - a collection of shorts packaged as a feature. Cannes commissioned some of the world's leading film-makers to create Chacun Son Cinema to mark its 60th anniversary.

'I wanted to see if it would be possible to gather a big number of very short films and tie them together in a way that would elicit emotion, resonance, dissonance,' says Cannes president Gilles Jacob.

The experiment impressed critics and has been followed by similar projects. Cine Plus' Moving The Arts, for example, brought together shorts from Atom Egoyan, Hal Hartley, Christian Petzold, Julio Medem, Laetitia Masson and Jia Zhang-ke. The Golden Rooster awards in China also commissioned its own shorts compilation.

The most successful omnibus effort at the box office this year has been Paris Je T'Aime, a celebration of the French capital that has taken $2.3m in France.

The omnibus has the advantage of acting as both a theatrical experience in its full length or can be divided into its constituent parts - as happened at Cannes, where individual shorts were shown before competition titles.

A niche market for cinemas

Theatrical distribution is, of course, important. The UK-based Future Shorts network has been successful in creating short events in cinemas around the world. Demand from a theatrical perspective looks set to remain as a niche, at least in the mainstream.

Paul Ward, director of Irish Multiplex Cinemas, reflects the view of many when he says: 'We put them on only as a favour to the film directors who make them. The only potential for short films is as a free download on YouTube. If anything, they're just a means of getting some exposure for the film-makers. There is no commercial benefit to anybody.'

But there is a precedent to the rapid expansion of short-form film on television. In the 1980s, the pop video came out of nowhere to become a major business, again driven by technical innovation. The rise of MTV and thousands of copycat services around the world has created a generation that understands a short form of film-making. Many leading film-makers cut their teeth on pop videos, including Michel Gondry and Olivier Dahan. What is to stop history repeating itself' Cable channels are already emerging which are devoted to short film.

The cheapness of the product works in its favour. In this respect, the internet seems to be the perfect vehicle. Established film-makers are exploiting the medium. The UK's Shane Meadows, for example, has posted a back catalogue of around 100 shorts online through EM Media, Warp Films and Film4 (see below, right).

'Shane's approach to technology is getting more people to see his work. We want work that breaks the mould,' say Suzanne Alizart, head of partnerships at the UK's regional funding agency, EM Media.

But for many young film-makers, breaking the mould is not their aim.

'The only reason to have a short film is to use it as a calling card,' says Michael J Groom, the writer of Simon Ellis' UK feature Dogging: A Love Story. 'There's no money to be made from short films, as there is no paying audience. When I first wanted to get into the industry I decided not to go down the short-film route, as everyone else was doing it. I decided I would rather write a feature-length script and sell that.'

'It's very rare to get someone to pay to download a short film,' says producer Jonathan Taylor of London-based Dan Films, which produced Marcus Shepherd's short film El Hoppo! The short screened at the London Film Festival. 'I certainly haven't made short films to make money, it's purely just a way of getting yourself noticed, a practice run for feature films.'

Online communities

'There are increasing platforms for short films through the internet, downloads and Cinema 16,' says UK producer Adrian Sturges, who has made nine shorts and Rupert Wyatt's The Escapist. 'I've used the BBC Film Network website for my shorts and it has led to further exposure.'

A desire for exposure allows, as in the BBC's case in the UK, the creation of an online community. The ability to upload films onto an established network is exactly what many are looking for. Ambitious new media networks such as Joost, Babelgum and Jaman are also signing up content.

As a business, it is growing in stature due to its ability to unearth new talent. As a means of making serious money for the film-maker and hence establishing a new viable commercial form, it has a long way to go.

'There are no TV buyers for short films in the UK. No-one will pay a decent price per minute to put a short on TV,' says Matthieu de Braconier, development executive at The Bureau, a UK-based company that produces arthouse films.

De Braconier is responsible for Cinema Extreme, a short-film initiative funded by the UK Film Council's New Cinema Fund and Film4 Lab. 'If you want something to be a business proposition, you have to have a revenue stream. The question is, 'Where is that at'''

The answer will likely prove the most radical notion of all.