A recently-established startup, Vessel, is pushing to revolutionize the online video industry.
Vessel, which opened to beta testers last week, will charge subscribers $3 a month for three days of exclusive access to the kinds of clips that have typically appeared on YouTube for free.
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The company is led by chief executive Jason Kilar, who built Hulu into a leading TV and movie subscription service before leaving in 2013.
At the start, subscribers will be able to watch Vessel videos, generally 90 seconds to 15 minutes in length, on the web or via an iOS app for iPhones and iPads. An Android app and connections to set-top boxes, game consoles and smart TVs are coming later. Subscribers still see some short ads along with the videos.
Videos will appear free with more ads after the three-day exclusivity window ends. And, at that point, video makers will be free to post their clips to YouTube or other sites.
“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, ” Kilar wrote in a blog post last month.
The startup is luring celebrities, record companies and consumer brands with the promise that its strategy of “windowing” short videos, or restricting access for a period of time, will attract the most devoted viewers and lead to higher royalty payments.
Vessel’s pitch to video makers is straightforward. Vessel will pay out 60% of its subscription revenue and 70% of advertising revenue in return for the exclusivity window. YouTube celebrities now usually get only 55% of ad revenue from Google and typically make a few dollars per thousand views of their videos. Vessel estimates it will pay out 20 times that return — $50 per thousand views — for the videos it carries exclusively.
“Early access is valuable, ” Kilar said in an interview with the Times. “Consumers very much want and are willing to pay a reasonable amount for early access to content; that allows you to build a great business.”
The biggest question for Vessel, though, is how many of the people who like to watch short videos are the kind of people who will pay $3 a month for early access.
Vessel won’t benefit from one of YouTube’s greatest strengths, the incredibly viral spread of popular videos, says Brett Sappington, director of research at Parks Associates, which surveys online viewers regularly. “While a video can go viral on YouTube and can be watched by anyone, Vessel’s pay wall will likely prevent a video from being watched by anyone that is not a subscriber, ” he said, according to the report.
Vessel is backed by more than $75 million from the venture capital firms Benchmark, Greylock Partners and Bezos Expeditions, the investment instrument of Jeff Bezos, the founder of Amazon.