Hulu’s New Embed Policy Can Only Hurt It

Backstory: Hulu and Embeds
Before Hulu even had a name or its current management team, it had distribution partners: AOL, MSN, MySpace, Yahoo.
All along, one of Hulu’s most distinctive and friendly features has been that all its content is embeddable.
Since everything was embeddable even when Hulu was in private beta, a few enterprising folks recreated the site out in the open for public viewing. Hulu shut them down.
Hulu’s official partners use its embeds; they don’t re-host the content in their own video players.
Hulu content was removed from TV.com when the CBS-owned site was relaunched as a TV aggregator.

Two-year-old Hulu, which has quickly become Americans’ preferred method of consuming TV online, is now blocking startups from embedding its video library. But while Hulu is now (mostly) unfriendly to startup video aggregators, it’s still sharing its videos with its corporate parents’ friends: the big web portals and MSOs. Put together, the retroactive and inconsistent nature of a recent spate of nastygrams shows the site is feeling insecure.

Over the weekend, Hulu demanded that a newly launched video discovery startup called Rippol stop embedding all its shows. Hulu told Rippol that it can link to its full library, but not embed the videos. Rippol tells us it will comply, and replace the Hulu embeds where it can from network sites like NBC.com and Fox.com.

Rippol competitor Yidio also tells us Hulu commanded it to stop embedding, and video search site CastTV says it has also recently changed to make users click through to watch Hulu. Meanwhile, video guide Clicker declined to comment, but we’ve seen that over the last two months it’s swapped out Hulu embeds for TV network embeds as well.

While some of Hulu’s moves — keeping its content out of the living room by blocking Boxee, taking down back episodes of shows — are clearly at the behest of the content companies who control the company, this one seems different. What’s happening here is that Hulu thinks Rippol and the rest are competitors, and is scared to lose its edge as a video aggregator. Because while Hulu does host a whole lot of premium content, it doesn’t own it; the value it adds is limited to the way it presents shows. And that isn’t enough.

What Hulu could do is set up an affiliate relationship business like iTunes and Amazon. If someone sends a viewer to your content and advertising, in theory everybody wins. Startups can slice and dice revenue just like big established web portals. However Hulu told Rippol it is only “very selectively” choosing companies for “structured distribution relationship[s]” — the kind it has with AOL and Yahoo. If you’re a little startup, you’re mostly limited to linking to content through Hulu’s site map feed.

The door to Hulu embeds is still open to sites from traditional TV distributors. New sites from major players like Echostar’s Sling.com and AT&T’s AT&T Entertainment seem to be able to get official Hulu embeds (click the links to see examples).

And some startups still have embed access too. Veoh, which has long featured Hulu content sans partnership, still has a live embed library up and running, as does Prime Time Rewind (though both appear to be using the user embed code, not the slightly different partner player). And Watercooler, which creates social experiences around TV and got a deal to embed Hulu content last year, still has its authorized library available.

Watercooler CEO Kevin Chou said this morning that his site has official access to a “fairly comprehensive” selection of Hulu content. “I think Hulu doesn’t view us as a competitor. We have a large audience and a community that’s really there for the community aspects of what we build.”

To be fair to Hulu’s side of the story, embedding video is one of the more powerful ways to move content around the web. An embed often carries in-video ads and a link back to the site that hosts it. However, people who embed videos often profit from attracting viewers to their pages. And when you’re helping someone else make money, it’s only natural to want to take a cut. In a similar vein, the Dutch music rights association Buma/Stemra announced next year it will charge bloggers and video collection sites like Yubby a fee of 130 Euros for every six videos they embed (it later said “amateur” bloggers were exempt).

But what Hulu is doing with embeds seems random and protectionist, and out of character with the web-savvy reputation the wunderkind has built. The fact is, all the TV network sites seem to be just fine with aggregators like Rippol and Clicker embedding their libraries. At a time when Hulu is under pressure from its corporate parents to muck around with its model so they can make more money, it should remember that its biggest allies are on the web.

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