Vessel, the online video start-up from ex-Hulu boss Jason Kilar and CTO Richard Tom, is aiming at YouTube’s middle ground of wannabe content entrepreneurs as it launches after a 60 day beta. Vessel is designed to offer “early access to the web’s best short-form creators,” charging subscribers $2.99 per-month to get the videos, typically for an advance 72 hour window before they are available for free on other sites, including of course YouTube.
Vessel has been trying to exploit some of the issues with the YouTube model for funding content as it currently is, like being difficult to make the jump from hobbyist to self-sustaining professional creator. It is not particularly targeting the occasional producer of content for whom YouTube with its bigger audience will continue to be a more attractive destination, but that middle ground of specifically those who are on the verge of becoming self-sustaining, but who aren’t quite earning enough from YouTube’s partner program to make it. One problem with this pitch is that there are in fact plenty of people who have made it on YouTube, but Kilar’s calculation appears to be that there are also plenty who have not. But this leads onto a second problem, which is that in order to make any appreciable impact at all on YouTube or to seize a sizeable portion of its revenues, it must ultimately attract leading creators who are already earning a comfortable living there. Vessel is unlikely to fulfil its substantial ambitions just by giving emerging creators a leg up, at least not in the short term.
Therefore Vessel probably must offer even higher payments and also convince creators it is worth the risk of losing a lot of their existing audience who will not be willing to subscribe to the pay model. Although YouTube has been experimenting with paid ad-free models, virtually all its audience are accustomed to getting their content for free and are still willing to endure ads for the privilege. The example of Hulu, which also offers a blended model combining advertising with subscriptions, is not especially encouraging, but Kilar could argue that is subscription VoD and that Netflix leapt ahead not with an ad supported model but a subscription-only one.
Kilar’s core business model then is to lure leading stars to his site in return for a better deal than they get on YouTube, where they keep just 55% of ad revenue their content generates. Instead creators are paid from a pool comprising 60% of Vessel’s subscription revenue distributed pro-rated by usage, on top of 70% ad revenue.
But Kilar did have to water down his plans considerably during the months running up to the beta launch in January 2015. He wanted to offer subscribers a 30 day exclusive window before the content went on general release with YouTube and the rest, but found few creators willing at this stage to concede Vessel an exclusive window anywhere near that long. In the end the company had to compromise on a mere three days. On that basis the site opened to creators on December 17th 2014 with the promise of consumer launch early this year, which has now happened.
Much depends on early traction, given that YouTube has already responded in several ways, notably by starting to focus on its own “endemic talent”, people with big followings on the site, with the offer of support for specific shows, with promotion to its billion audience. In short YouTube is trading on its existing entrenched position, which even Vessel will find hard to shake.