They can and will get things for free because information goods' prices tend towards the marginal price, which is 0, not the cost of production. Or at least that's my understanding of Varian and Shapiro's "Information Rules".
There are few examples of truly getting content for free. Time is far more scarce for many of us than money is. The only times I even consider stealing content is when nobody is willing to take my money for it.
Of the top of my head, I downloaded Star Trek for my dad a couple months after it came out. He was bedridden and I wanted to see it with him. I would have delightedly paid the cost of taking a family to the theater--$30 to $50--to stream it online. Naturally, that wasn't possible so I spent an hour downloading it.
It's just seldom as easy as point and click and watch. I had to download 2 or 3 crappy cam versions first.
Only true if the goods are in perfect competition with each other which is not completely true of any information good, and especially not true for many of the TV shows that Hulu hosts.
That is true, but would you really want to pay for a service that also beamed ads at you?
Most people on the internet are willing to watch ads, plenty of people are willing to pay for stuff.
But when you start something that competes with something else that costs money and your selling point is that your service is free, how can you be surprised when people don't want to pay?
This is my all-time number one gripe about the Internet. Users too often feel entitled to getting things for free.