Challenge To YouTube By Vessel Depends On Subs/Ad Combo

Jason Kilar, who with fellow ex-Hulu executive Richard Tom is launching new video site Vessel, this morning gave a glimpse of what’s the big deal. Turns out it might be that Vessel is a good deal, for creators. At least that's how it's being sold to them. It’s offering the people who make popular videos a chance to make serious cash.

In a blog to creators, Kilar explained that Vessel, which will launch early next year, will charge consumers $2.99 a month, but also present advertising that he promises won’t make users wretch. But that dual revenue stream gives Vessel an opportunity to pay more for content.

He wrote:  “Vessel’s business model (subscription + advertising) will deliver unusually attractive economics for creators, allowing them to pursue their dreams and share ever more ambitious work with their fans. During the early access period on Vessel, we estimate that creators will earn approximately $50 for every thousand views (up to 20x the levels earned from free, ad-supported distribution).



"After Vessel’s early access period, creators will continue to earn money through distribution of their videos on the free, ad-supported Web – on Vessel and anywhere else they choose. Free, ad-supported distribution plays an important role in the future of video, and we do not see that changing. Vessel was created to serve as a critical, missing piece of the puzzle for content creators, with Vessel playing one part among many that collectively help creators achieve their dreams.”

That sounds like a good deal to some creators. TubeFilter reports that YouTubers Shane Dawson, Ingrid Nilsen, Caspar Lee, Rhett & Link, Connor Franta, and Marcus Butler are among those committed to Vessel, and so is the Warner record label, actor (or whatever) Alec Baldwin and UFC, the barbarian Ultimate Fighting Championship brand.

One early word of caution came from Frank Sinton, CEO of Beachfront Media, who wrote in an email, "Particularly with YouTubers, fans are asking for more access to their favorite online video stars. With Vessel's model, premium access to YouTubers' content doesn't really address the fundamental desire of fans to be more intimately connected with creators. I'm eager to see where engagement comes in because to truly build sustainable online video communities, you need to foster engagement."

Maybe engagement just happens later?  After 72 hours of exclusivity on the pay portion of Vessel, the videos can travel to wherever creators want to take them, including YouTube, and they’ll also be available on a subscription-free version of Vessel that accompanies the pay side.

This is pretty much what others suggested YouTube should have done a while ago—separating the YouTube franchise brands from the random user generated content. And as reported, YouTube has now been approaching some its MCN brands and presenters and offering them a better revenue split than the 60/40 many of them get.

Right now, Kilar, the former Hulu CEO, is seeking content and today launched where would-be talent can go and kick the tires on what Vessel will look like.

As interesting to me is what Vessel will make YouTube look like. Though YouTube is an entire zoo of 800-pound gorilllas (with more than 1 million paid contributors, to note just one), no doubt the Vessel launch will create change from the incumbent.

From a user standpoint, YouTube has a kind of Costco feel to it—kind of a warehouse of video that lacks any soul but a lot of merchandise. Maybe a YouTube creator would say it’s better that way—let the MCNs create the aura. But I think not.

Vessel aptly seizes on the idea of newness, as if YouTube needed a second act. Kilar writes that  “some creators feel the need to ‘graduate’ to another medium (e.g., traditional television) to make more money, leaving their digital audiences behind. In this process, the creator often cedes control and stops making the content fans want most. We believe in a world where consumers can enjoy top quality content online — a world where creators can build real businesses and take their productions to new heights.”

There are and/or will be other YouTube competitors, including Yahoo, and to varying degrees of seriousness, there are some crabby creators who need a yin/yang situation. They’re about to get it.
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