Hulu iPhone app price tag angers fans, should not have been a surprise

The Hulu Plus app for iPhone is free, but unlike the television content on hulu.com, the content available through Hulu’s app comes with a price tag. This should be a surprise to precisely no one. The original Hulu business model, in which users could watch full length television episodes for free on a website an exchange for sitting through the embedded ads, is failing for the same reason that the traditional network television business model is failing: viewers skip ads. Unlike with a DVR, where viewers can fast forward through the ads, Hulu viewers don’t have such an option. But they do have the ability to mute the ad and go do something in another program on their computer, such as checking their email, in order to kill the fifteen seconds during which Hulu’s ads run. So it’s not a surprise that with Hulu’s ads being ignorable and advertisers not getting their money’s worth, the service is now looking at pay-for models, and decided that the iPhone userbase would be its testbed.

It’s not a bad idea in theory, as iPhone users are the type who are willing to pay $200-300 for the cellphone they want, as opposed to the majority of the population who still chug along on whatever free flip-phone was tossed at them during contract renewal. But Hulu has apparently mistaken taste for chumpiness, as the company thought it could suddenly get iPhone users to pay for a service whose one and only claim to fame was that it was free.

Hulu’s problem is that by offering a crappy television experience through a lame webpage for years and using the “but it’s free!” mantra to build an audience, Hulu ended up attracting the kind of users who won’t pay for anything unless they absolutely have to (and yes, a portion of the iPhone userbase does fit this description). Now that the free model has been proven not to work, Hulu now faces going back to its overly thrifty audience with its hand out, asking for money that it’ll never get from them. Worse, by virtue of gaining a “crap but free” reputation, Hulu will now have significant difficulty marketing its pay-for service to those members of the public who are willing to spend their money but only on quality stuff. If Hulu had charged a bit for its service from the start and had used that revenue to improve its user experience, the company might now be able to sell its product to those who are willing to open their wallets. But once you’re known for being a “crap but free” kind of service, you’re generally stuck with that model for better or worse.

Keep in mind that Hulu is owned by the television networks themselves and was started simply so those networks could have a bigger bargaining chip when it came to negotiating with Apple about television shows in the iTunes Store (its the same reason, in fact, that the major record labels convinced Amazon to launch AmazonMP3, which not coincidentally, is now being held back by its “crap but cheap” reputation). As Hulu has only ever existed as a pawn in a larger tactical strategy, its original business model is no longer working, and its sudden attempts to move to a different strategy are being met with outrage by existing users and indifference among potential new users, one wonders how much longer Hulu will be around one way or the other. On the other hand, the iTunes television model, in which users pay two to three dollars to “own” an episode that they’ll most likely only watch once before discarding, hasn’t exactly been a success either.

So even though it’s killing the television industry financially, driving the highest quality shows off the air, and pushing us further into reality TV hell, most of us will continue to stick with our DVRs until something finally gives. But considering how thoroughly Hulu is being run through the shredder today by iPhone users who have made it clear through their posted App Store comments that they have no intention of ever paying a dime for something as crappy as Hulu, one has to wonder what if anything will save television.