Under the pressure of its investors (primarily big media companies), Hulu is planning on converting itself from a free service supported by advertisers, to a paid subscription model. From an investors standpoint, this makes sense. The advertising on the website essentially cannibalizes the advertising revenue received from their television properties, not to mention at a rate substantially lower than that of TV.
As a free model Hulu offers a lot of value for its major media investors (which include the likes of NBC, Fox, Universal, and Disney) outside of its modest advertising revenue. Hulu was the first to market with an online service that offers premium content, and in a user friendly interface that actually works. Their successful marketing and implementation have led to an enormous user base and a strong brand. Having this popular property fends off alternative options, which are primarily piracy based. So while the revenue received from the advertising is small, it is better than alternative scenarios (zero dollars).
Investors like to make comments like "between $2 billion and $3 billion of professional produced content sits on Hulu -- supporting a $200 million market cap", and "trading analog dollars for digital cents", but those are manipulated comments in a failed attempt to draw sympathy and change. The content produced by these companies has a high fixed cost (the "$2-3 billion" spoken of) , but also a high margin (it costs near nothing to deliver and sell their digital media). So making a comment about the value of the content on the website is $2-3 billion, is a little like saying the content in a Best Buy movie shelf is $2-3 billion. The fact is, it is irrelevant. Most costs are made back and exceeded on initial sales, which in this case TV is broadcast advertising, and so the online revenue is all gravy.
Charging for Hulu is not creating a video apocalypse for digital storytelling, but rather just the creation of another revenue stream for big media. The occurrence seems to parallel when Apple first opened up the iTunes music store. Instead of people consuming digital music online for free (be it via piracy, or other alternatives), a new venue was opened up to purchase it. While it is definitely advantageous for music producers to distribute their music through iTunes, the store didn't kill independent producers from distributing or monetizing their music in other ways. The same is likely to happen with the Hulu, which if anything could be a benefit for online storytellers. Hulu could act as just a optional delivery channel, however not the only way to get a story told.
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