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Yeah seems like they could put out a hulu app like they have with Youtube.
But seems like allowing that will kill sales/rentals of TV shows in iTunes. But maybe those sales already suck so they don't care? I can't imagine they sell a lot of downloads for shows freely available on Hulu, the network sites etc. It's not like they're hidden and people aren't aware of the free streaming since the networks advertise the availability of shows on their website pretty often.
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