The long-gestating Vessel, a subscription-based online-video site backed with big bucks and aggressively recruiting YouTube stars with fat contracts, came out of stealth mode today. In a blog post by CEO Jason Kilar, the company said it is launching a “creator preview” so online video talent can set up a presence on the site ahead of a public launch in “early 2015.”

Vessel_Logo large horizontalDespite trying to keep a low profile, the company has been closely tracked in Silicon Valley and across the YouTube creator universe, given its leadership and financial backing – more than $75 million from Amazon founder Jeff Bezos‘ Bezos Expeditions investment fund, plus blue-chip VC firms Greylock Partners and Benchmark Capital. Kilar was Hulu’s founding CEO and formerly with Amazon, while co-founder Richard Tom was the company’s CTO and formerly with Microsoft.

The company also has started a bidding war for top talent on YouTube, where hundreds of young creators have built audiences in the millions and are now branching out into new areas, helped by a growing ecology of multi-channel networks, managers, agents, live tours and licensing companies. Bezos’ involvement has also stirred interest, particularly when Amazon bought gamer-oriented live-video site Twitch this fall for $970 million, after Twitch had negotiated for months with Google.

To attract video creators (and their big audiences) to Vessel’s stable, the company has offered guaranteed contracts worth hundreds of thousands of dollars, or more. One former adviser to a major YouTube beauty and fashion vlogger told me Vessel offered her client a guaranteed contract worth eight times what the star had been making with YouTube. The star, who already has a wealth of licensing and endorsement deals beyond YouTube, ultimately declined Vessel’s offer.

Image (1) Machinima-logo__140320205524.jpg for post 701999The site will offer fans early access to stars’ videos for a $2.99 monthly fee. The service, which is focused on mobile users (i.e., all those Millennial and younger YouTube fans), also will offer an ad-supported version of the service that provides access to the stars’ latest work, 72 hours after a clip first appears behind the pay wall. Creators also can post on other sites after the initial 72-hour period passes. The FAQ said a large number of film, TV and online video creators are already on the site, but did not identify them. An official image of the app, however, includes logos from Project Runway, Alec Baldwin’s Love Ride, foodie site Tastemade, gamer multi-channel network Machinima and Jay-Z’s Life+Times.

The blended subscription and ad model is designed to significantly increase the revenue video creators generate compared to YouTube, where the Google subsidiary takes 45 percent of the advertising revenue and the creator (plus any multi-channel network helping maximize ad sales for the creator) splits the rest.

In the FAQ for the new site, Vessel promises a new approach to revenue splits, with the creator getting 60 percent of subscription revenue based on their share of views, and 70 percent of ad revenue. A creator could get $50 per 1,000 views behind the subscription wall, which it calls a “gamechanger” to the online-video business. Vessel will also pay creators for referring new customers to the site.

Here’s the statement that Kilar posted on the site’s blog today:

Over the past few months, there has been a fair amount of speculation about what we have been up to here at Vessel. In advance of our consumer launch early next year, we’d like to share a bit about our mission and what we have been building.
Our team is full of people who are unusually passionate about media and all that it can be. Around the time that my co-founder, Rich, and I started Vessel, we observed that the audiences so coveted by traditional TV were gravitating toward a new generation of digital storytellers. Many of these voices have become brands in their own right, building passionate audiences that rival the size of the most popular shows on network and cable TV. We are eager to help recognize and foster the explosion of new, talented voices.
Despite the many positive things that the internet has made possible in media, to date there hasn’t been a clear path for most of these talented creators to build sustainable, enduring businesses on the basis of their video storytelling alone. We believe that media can, and should, do much better.
Today, most creators and content owners put their content on the free, ad-supported web in the hope that they can create a sustainable business. However, they often only earn low, single-digit dollars for every thousand views their videos generate. At this level of monetization (or even 5x this level of monetization), it is extremely challenging – if not impossible – for most creators and content owners to realize their creative and professional ambitions if this is the sole manner in which they release their content.
This is not just a creator problem – it’s a consumer problem too. Challenging economics constrain which ideas creators can afford to pursue. This means fans may never see a creator’s next big idea, or experience it in the way it was originally envisioned. Making things worse, 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.
This is why we created Vessel.
Vessel provides early access to the web’s best short-form videos through a low-priced subscription service. These videos are presented in a beautiful, curated experience dedicated to creators, the stories they tell, and the fans who follow them.
Early access on Vessel will be offered for only $2.99 a month, a low price made possible by incorporating a modest amount of advertising. For those not as interested in early access, we also have a free, ad-supported version of the service, where videos become available after their early access period.
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.
Today, we are officially opening the Vessel service to creators from around the world. We are referring to this as Vessel’s Creator Preview. Each day, there will be more and more creators loading their videos onto Vessel in preparation for our upcoming consumer launch. We will work with creators to ensure that their videos, shows and channels look amazing.
As of this blog post, there are already a large number of creators who are in the midst of loading their content onto Vessel. These creators represent the best of the web – from both new and traditional media. Each day, more premium video creators will join Vessel and share their content for early access. We look forward to making this content available to fans.
If you are a creator (or content owner) with a passionate following and a desire to build a meaningful business, apply to join our community. If you are not a creator, but want to receive an invitation to try our service when we make it available to fans early next year, you can do that here.
Bringing positive change on this level won’t be easy, and we recognize that it won’t happen overnight. However, we have great conviction that we can help the internet deliver on its potential for consumers and creators. We take inspiration from the gifted storytellers and business leaders before us who traveled similar pioneering paths as they fashioned the film and television industries. We are ready for what will surely be an epic third act.
Welcome to Vessel. Watch your favorites here first.
Jason Kilar
CEO & Co-Founder