By snatching Arrested Development from Hulu, the network has shown the limits of online video.

On Sept. 11, the third season of Arrested Development went missing from Hulu.com, the popular TV-on-demand Web site. On Oct. 9, the second season followed suit. The kidnapper warned us in advance. A bulletin was posted as a heads-up, confirming that the kidnapping was premeditated.

After Sept. 11, Season 3 episodes will no longer be available for online streaming. After Oct. 9, Season 2 episodes will no longer be available for online streaming. Season 1 episodes will continue to be available on Hulu.

The removal of the pun-riddled family comedy—one of Hulu’s marquee and most successful shows—is mysterious, but it’s not a whodunit. Hulu pulled the trigger, but it was Fox that commanded it. Hulu had no choice but to follow the order. Fox owns 32 percent of Hulu and is the producer and distributor of Arrested. Even though the show ran on Hulu, Fox was the one controlling Arrested’s fate. The removal of this one show is not an unimportant incident. It has plenty to tell us about the realities—and limitations—of the online media model.

There’s precedent for this kind of disappearance. In the beginning of 2009, Hulu removed almost three full seasons of FX’s It’s Always Sunny in Philadelphia without any warning. (FX is closely related to Fox, as both are children of Rupert Murdoch.) After an outcry of disapproval, Hulu CEO Jason Kilar entered the fray and apologized. He also offered this clarification:

We did this at the request of the content owner. Despite Hulu’s opinion and position on such content removals (which we share liberally with all of our content partners), these things do happen and will continue to happen on the Hulu service with regards to some television series.

A Hulu spokesperson told me it was the same situation for Arrested Development. Hulu routinely removes content from its site, of course. Most current shows only have five episodes up at a time, with the oldest one rotating offsite once a new one comes in. But this is different; this is the elimination of a show that hasn’t aired new episodes since 2006 and has always been a part of Hulu’s repertoire. When the site first launched in 2008,  Arrested was a major bragging point.

So we know the suspect; what’s the motive? This is no pedestrian show. In April 2008, Hulu said that “Arrested Development fluctuates between the No. 1 and No. 2 series on Hulu.” (This was before Disney (DIS)—and thus ABC—also bought into Hulu.) Moreover, the company has claimed it earned more revenue per ad on Arrested Development (and some other shows) than some networks can charge for their primetime offerings. That ad revenue, of course, gets sent Fox’s way, too, since it's the owner of Arrested. (Total Hulu revenues are estimated at about $120 million this year.) So if Fox was making money from Arrested episodes, why take them down?

The most logical theory: Fox thought the online episodes might be tempering DVD sales, where there’s real profit to be made. Note that Fox only asked Hulu to remove the last two seasons of the show. The first season is still freely available (and ad-supported) on Hulu. Perhaps Fox is using it as a feeder program to DVD sales of Seasons 2 and 3.

Hulu would not go into the specifics of the removal, suggesting I speak to Fox. A spokesperson from the company did pass this along: “Hulu is a distributor of content rather than the owner of the content, so rights are constantly being discussed and determined in partnership with the creators/owners.”

When contacted by The Big Money, Fox declined to comment.

Considering the show is off the air (unlike Sunny in Philadelphia), there’s little logical explanation other than this being about DVD sales. Just about the only legal places you could watch Arrested were online and on DVD, so it’s reasonable to think that there’s incentive to scale back one in hopes of stimulating the other. But this strategy also implies something else: that the addition of Arrested to Hulu hurt DVD sales in the first place. The actual numbers, though, don’t bear this out.

Reliable DVD sales numbers are notoriously hard to come by, but Bruce Nash over at media stat-tracking site the-numbers.com helped me out. It’s clear that before Arrested was released on Hulu it had picked up a following, increasing its first-week DVD sales with each release of a new season. But once Arrested got on Hulu, it didn’t seem to affect sales much; sales numbers were already headed downhill far before Hulu debuted. The show made its public online debut when Hulu did, on March 12, 2008. Nash’s data show negligible difference for sales in the weeks following Hulu’s launch and the weeks preceding it. In fact, since it has gone on Hulu, Arrested has often beat its year-over-year sales numbers in any given week.

(This is where I offer the disclaimer that Nash’s numbers are inexact and have all sorts of caveats. His site doesn’t survey Wal-Mart (WMT), its numbers are relative to a title’s peak sales week rather than absolute, some of the figures are extrapolated, etc.)

There’s one other mysterious thing about Fox’s Arrested removal. They were still making money on the show when it was on Hulu. Twice over, in fact. Every ad that runs during the show obviously brings in money for Hulu, plus it’s shared with the distributor of the show that’s carrying the ads. Fox is also a shareholder in Hulu, so any profits that don’t get pushed over in the role of distributor also trickle down via Fox’s role as shareholder. That means that Fox will potentially lose money on this deal if DVD sales don’t budge.

In practice, this kind of takedown request squashes the utopian idea that the Web will one day become television’s library. When scanning through the massive list of content on Hulu, I’ve started to wonder what would happen if we digitized all of our content. Out-of-print DVDs could retire to the Web and still collect pension checks via ads; old gems wouldn’t have the high barrier-of-entry that DVD sets carry; anybody could see what Ed Asner looked like in the ‘70s anytime they wanted. As I said, utopia.

But for this to happen, the content providers need to respect the sanctity of the library. They can’t just go repossessing their intellectual property whenever they feel like it. For now, the business model is so new that there’s still experimentation going on. Hulu is far from a library. But if the numbers hold and Fox doesn’t end up earning more money with Arrested off the air, there’s no reason for them not to return the seasons to Hulu. If Fox’s experiment with a DVD-only model fails, it may end up proving the worth of ad-supported sites as repositories for old content. If all of this is beneficial in the long run, I’ll grant Fox immunity for kidnapping Arrested in the first place.