Prior to YouTube video web-watching was an infrequent occurrence. YouTube revolutionized the Internet once again by giving anyone with Internet access the ability to post videos and watch an infinite amount.

YouTube has even affected American elections. In the state of Virginia, incumbent Republican Senator George Allen lost his reelection bid in part because he made a gaffe that was caught on camera and then posted on YouTube.

Google eventually bought YouTube for around $4 billion. That was a great overestimation of its values. YouTube generates very little in the way of profits. Many corporations are not keen to advertise for YouTube given that their ads could be posted alongside unsavory videos and many media companies refuse to advertise any of their content on the site for disputes over copy rights. Those same media companies are also suing YouTube for unauthorizes postings of copy righted material.

While YouTube launched mainstream video web-watching, it was a newcomer co-sponsored by NBC and Fox, Hulu, that has lead the way in money making in web-watching; that’s the conclusion of a recent article on Hulu from The Economist.

Hulu offers content from two-media giants and a host of others through a easy-to-use and clean format. Because it is a closed-source that offers only official content, advertisers do not have to worry about being patched up with anything unseemly. Instead, advertisers have responded enthusiastically to Hulu’s format that allows them to place ads within shows. Hulu’s video browsing is incredibly crisp, in contrast to the more low-quality images via YouTube. Although YouTube is starting of offer HD videos.

Hulu’s also offers full-length movies and television shows that YouTube could not do so without being sued. Although YouTube still receives more visitors than Hulu, Hulu is quickly catching up. In the month of December, over 250 million videos were watched on the site.

And it is now the pioneer YouTube that is placing catch-up. YouTube is signing a deal with MGM Studios to start offer movies a la Hulu.

There is often a lot of hype over new Internet companies. YouTube was no exception. But companies exists to make money, and YouTube needs to figure out how to that just as Hulu was pioneered profits in web-watching.