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How News Corp Could Kill Hulu


Hulu's future subscription model would destroy the site.

Leave it to a financier to ruin a good thing.

The currently free video-streaming site Hulu may adopt a paid subscription model some time in 2010, according to comments made by News Corp (NWS) deputy chairman Chase Carey. For more than two years, Hulu -- backed by News Corp, ABC (DIS), NBC Universal (GE) and Providence Equity Partners -- had championed ad-supported online content and demonstrated how that model could be done correctly.

Now with Carey's comments, it looks like that dream is over.

Speaking at the OnScreen Summit in New York, Carey briefly spoke about Hulu's future -- naturally, since Broadcasting & Cable notes he's attended a total of one board meeting since joining News Corp.

"I think a free model is a very difficult way to capture the value of our content. I think what we need to do is deliver that content to consumers in a way where they will appreciate the value," Carey said. "Hulu concurs with that, it needs to evolve to have a meaningful subscription model as part of its business."

"It's time to start getting paid for broadcast content online," he added.

Although Broadcasting & Cable mentions that Carey doesn't intend to couch all of Hulu's content under a subscription heading, his statements indicate that broadcast programming -- the majority of which is free on network websites -- would be blocked by fees.

If that does indeed turn out to be the case, Hulu will fail. Period.

As of now, Hulu is an easy -- and viable -- alternative to BitTorrent trackers and a variety of unauthorized video-streaming sites. The ads are unobtrusive, the quality is more than watchable, and the variety of content is admirable. It is -- and should be -- a primer on what media conglomerates can do with copyrighted material.

Instead, those companies are taking a cue from NBC chief Jeff Zucker's comment on online video: "We're exchanging analog dollars for digital dimes." And seeing where NBC is at the moment, there's no network head worth ignoring more.

The very moment Hulu begins charging fees for content, the transition to isoHunt and BTjunkie would be sweeping and effortless. For all the purported business lost due to piracy, to risk any more site traffic with subscription fees would be devastating.

And where is this initiative coming from? There's already been talk of Hulu's less-than-optimal revenue, but recent news shines a light on who would benefit most from Hulu's demise.

Yes. Comcast (CMCSA).

Already dinged by the FCC for throttling bandwidth, Comcast is no stranger to maintaining cable subscribers by targeting broadcast alternatives. And with the company in negotiations with GE over an NBC Universal buyout -- not to mention the involvement of a former News Corp president -- several folks behind Hulu could benefit from few viewers online and more glued to the screen the old-fashioned way.

That is, unless Hulu began charging fees.

There have been numerous studies (see here and here) that show BitTorrent and piracy can't be stopped. Hamstringing a network-backed and otherwise-useful site with unnecessary fees would give the other side a huge advantage -- effectively destroying increased revenue.
To read last week's quotables, click here.
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