Hulu + Subscription Service = Hulu Plus

Do you like your Hulu free? Then enjoy the next month, because things are about to change.

The online TV and video streaming site is going ahead with its plan to put old episodes of popular shows behind a $9.95 monthly subscription wall called Hulu Plus. The last five episodes of popular shows will still be free, plus advertising. Everything before that will require subscription.

Hulu started to turn a profit six months ago, but joint owners News Corp, NBC and Disney are pushing the site to start experimenting with additional pay models. While the journalism and music industries have tried to copy Hulu with digital storefront and Vevo, Hulu has gazed enviously on Netflix, the movie rental service which coaxes a monthly subscription fee in exchange for limitless online viewing.

Don't blame Hulu for abandoning the ad-only approach to supporting online media. Newspapers like the Financial Times and Wall Street Journal have the same combo strategy of charging for premium content and supporting the rest with advertising. The New York Times is looking to put up its own internal meter in 2011. Ad supported music sites like Pandora and Grooveshark offer limitless listening and zero ads in exchange for a monthly fee. Large media companies will continue to dip their toes into price differentiation -- charging higher levels for "premium" media experiences -- because until somebody figures out how to convince advertisers to pay dead-tree rates for pixel ads, publishers will have to soak users for some extra dough.

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Derek Thompson is a senior editor at The Atlantic, where he writes about economics, labor markets, and the entertainment business.

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