Ex-Hulu Boss Jason Kilar Lifts the Veil on Vessel

Vessel_Product_Shot_ - H 2014
Courtesy of Vessel

Vessel_Product_Shot_ - H 2014

The streaming platform is working with creators like Ingrid Nilsen and Shane Dawson ahead of its 2015 launch

After remaining tightlipped for months about his highly anticipated new venture, former Hulu CEO Jason Kilar is revealing new details about streaming video service Vessel and opening its doors to content creators ahead of an early 2015 launch. 

Vessel will be a curated streaming platform for shortform video from creators such as Caspar Lee and Marcus Butler. It will have both an ad-supported free offering and a subscription offering with some ads that will cost $2.99 a month for unlimited access. The key differentiator for the subscription tier will be its early access to videos from a number of YouTube creators and media brands. 

Videos debuted through Vessel's paid offering will be exclusive to the service for 72 hours, at which point they will become available on Vessel's free tier and will be open for distribution around the web. "This is what we internally call the first window for the web," explains Kilar, who notes that unlike the film and TV industries, digital video has yet to establish a windowing system for its content. "The message to consumers is, 'watch your favorites here first.'"

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Vessel is already working with a number of creators — including beauty and fashion vlogger Ingrid Nilsen, actor Shane Dawson and comedy duo Rhett & Link — who will upload content for its early access window. It has also signed deals with a number of traditional media and music partners, such as A&E and Warner Music Group. In addition, Funny or Die, VEVO and BuzzFeed will distribute content on Vessel's free offering. Now, under the creator preview that begins on Wednesday, Vessel is opening up to all shortform video producers who want to apply to the service ahead of its launch. 

Creators who built their followings on YouTube have long complained about the economics of the Google-owned streaming platform, which typically takes a 45 percent cut of all advertising revenue. But, at the same time, many are weary of taking their content elsewhere and losing their loyal audiences.

So, to incentivize creators to join Vessel, the company is offering incredibly creator-friendly terms. Some early creators were given advances against their revenue stream, Kilar says, to help the service build up its content offerings. But all creators will receive 70 percent of the advertising revenue generated around their content. Meanwhile, 60 percent of subscription revenue will also go back to creators, allocated based on the creator's share or minutes watched. According to Kilar, this gives creators the opportunity to earn $50 per thousand views, or 20 times the average $2 to $3 CPM that they see on free, ad-supported services. 

"We wanted to make sure we were being very good partners," says Kilar. "We are a platform business, and we want others to create valuable businesses on top of our platform." 

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Kilar's has big ambitions for Vessel. His hope is that by introducing a windowing model to online shortform video, Vessel can help creators build larger businesses and, over time, raise the quality of content on the web. He likens the industry to the early days of cable before HBO and Showtime were creating critically acclaimed television. "It's a reimagining of what video can be," he says.

But the big question for Vessel is whether audiences will pay for content that they have long found on YouTube for free. Kilar thinks there is a group of passionate fans willing that will pay to see that content early, and Vessel is working with creators to make sure that they don't disrupt their normal content distribution strategy. 

"If somebody has a business today on the free ad-supported web where they release content every Tuesday, we’re strongly counseling everybody to keep doing that," he says. "Don’t change it, but provide your biggest fans access as early as Saturday. Your biggest fans will want access early — they will happily pay $2.99 and everybody else will continue to get it on Tuesday. We don’t want any change to their current business, we just want to be the missing piece to the ecosystem."

Kilar founded Vessel with former Hulu chief technology officer Richard Tom. The company, which they announced in June via a blog post, has raised money from Amazon CEO Jeff Bezos and Silicon Valley venture capital firms Greylock and Benchmark.