digital mish-mash

I’m one of the few, I guess, who hasn’t used Hulu much. We get DIRECTV at our house, at a cost of about $55 a month. I watch TV on TV, not at my desk. When I have used Hulu–to watch “Arrested Development, for instance–I found my TV reverie interrupted by the choppy playback.

But Hulu obviously has a lot going for it. The ready access to a huge catalog of shows, the ability to watch TV almost anywhere, the user rating systems, the ease of spreading content virally. And the free-ness. If I were better at reining in the family budget, I would spend less on a subscription service and take advantage of the bounty right in front of me.

Hulu was founded with the idea that it could be supported by advertising. It has a large and growing audience. It is making money–an estimated $164 million this year–but it is losing money, too.  As the former chief of CBS Digital Quincy Smith said, the advertising dollars are still, by and large, on the air, not online.

If Hulu’s audience continues to grow, would advertising eventually cover its costs? Maybe. I still think Hulu should charge for some of its content. Good programs cost money. The cable/satellite TV models show that people are willing to pay for quality TV and to have more TV choices. Even in this economy, cable networks like Showtime and HBO are adding subscribers. Why not take advantage of a model that is working?

Perhaps Hulu could charge to stream the programs most in demand, such as new or original programs. Older programs could be streamed for less or for free, with ad support. There could be an option to pay per stream, as well as a range of monthly subscription packages. The success of Apple’s App Store shows that if the price is reasonable, people will pay with a quick click.

To counter Hulu, Comcast and Time Warner are teaming up on an initiative called TV Everywhere, which  would allow people with cable or satellite subscriptions to watch their programs online. If this initiative moves forward, it only makes sense that Hulu would follow suit with a paid model. In fact, there are rumors that Hulu has already has a subscription model in beta. The web has tried giving everything away for free, but at a cost to content creators. My hunch is that it’s about to try the paid model again.