Another Apple Magic Trick: iTunes From Free Web Video (AAPL)

We're usually wowed by Steve Jobs' latest computer or gadget. But today we're in awe of a different achievement: He's gotten customers to pay for Web video that they could easily -- and legally -- get for free.

Check out the two most popular TV "seasons" on iTunes (AAPL) right now: "Dr. Horrible's Sing-Along Blog" and Stephen King's "N."

That means people are opting to pay ($3.99 for a "season pass", or $1.99 for each of three acts), for the convenience of being able to download "Dr. Horrible" to the iPods, iPhones and computers rather than surfing over to Hulu and watching the whole thing for free.

Similarly, they're paying $3.99 for a "season pass", or 99 cents for five episodes (there will be 25) of King's "N," an animated promo for his coming "Just After Sunset" short story collection, rather than watch it for free on the CBS "audience network," which includes Veoh, Yahoo, MSN and AOL.

Granted, lots of video for sale on iTunes has been availble for free before, but most of that is usually broadcast or cable TV (like AMC's "Mad Men", which is also available on Hulu, now that we think about it). "Dr. Horrible" and "N" began their lives as free Web shows from the get-go. But somehow Steve Jobs has convinced his customers to pay for them.

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