Friday, April 23, 2010

Can A Free Website Make Money With A Pay Platform

Hulu, that online alternative to cable TV, is moving away from a free website model. Not satisfied with an ad supported revenue model, Hulu seeks a second source of income with a pay model approach. "Under the proposal, Hulu would continue to provide for free the five most recent episodes of shows like Fox's "Glee," "ABC's "Lost" or NBC's "Saturday Night Live." But viewers who want to see additional episodes would pay $9.95 a month to access a more comprehensive selection, called Hulu Plus, these people said." But will consumers pay?

And no doubt that these pay programs will also include commercials so essentially you are paying for cable on the web. So the choice, pay your cable bill or your Hulu bill. But wait, isn't the reason consumers cut their cord to cable is because they were tired of paying for TV. What was once free should be free again. So to ask these users to start paying again may present them with a bit of a dilemma. How the consumer responds and how much revenue Hulu receives from this new model will ultimately decide whether it expands or dies on the vine.

Can consumers accept an online subscription service for TV programming? Will they start paying for something they have been getting free for a couple of years? Or will they move away from Hulu and seek their content from other sources? Clearly this move by Hulu is a stepping stone. Most current content is still available for free. This subscription model is clearly aimed at the heavy user. But losing your best customer could be a concern to Hulu. A drop in use will affect ad revenue and could prove disastrous. Once you lose a customer, it is hard to win them back. So be careful of this slippery slope you are taking; it could be profitable, but it could also end your business.

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