Ustream TV is one of a crop of “Lifecasting” startups that offer a voyeuristic spin to the video uploading and viewing experience. Lifecasting’s biggest celebrity to date is Justin Kan at Justin.TV, who has been broadcasting his life 24/7 for about a year now.

Rumors are suggesting that Microsoft has offered Ustream $50 million and Ustream will probably reject this offer despite the fact it has only about $2 million invested so far in venture capital, and presumably low revenue. Microsoft’s interest appears to be as an advertising platform for Microsoft products, perhaps a clever move in that Microsoft can amortize this type of aquisition over many years and reap the advertising rewards forever.

The rumors come from Silicon Valley’s online gossip rag Valleywag, which for all the criticism for the snarkiness and inaccuracy of the personal attacks often does a good job of reporting on “real” tech news items. Valleywag reports that Ustream was offered 50 million by Microsoft and that it’s likely to turn this offer down, and that some sort of activity has been confirmed by the Ustream CEO Brad Hunstable.