Online video site Vessel bets fans will pay for early access | Reuters

(Reporting by Lisa Richwine; Editing by Ken Wills)

Video creators on Vessel keep 70 percent of ad revenue,compared with 55 percent that is typical on YouTube, plus 60percent of Vessel subscription revenue.

With those incentives, the new service will be an easiersell to creators than offering viewers who are used to watchingvideos for free, said Brett Sappington, director of research atParks Associates.

“Vessel must rely on content creators’ popularity andself-marketing to entice their loyal viewers into paying amonthly fee,” he said.

The service is free for one year for viewers who sign upwithin the first three days.

Vessel, which costs viewers $3 a month, was founded byformer Hulu Chief Executive Jason Kilar and Chief TechnologyOfficer Richard Tom. KFC, Chevy and McDonald’s are among the initial sponsors. Oneoption is five-second ads, shorter than the 30-second spots thatusually run before online videos. They aim to create an early window for aselection of web video, similar to the way movies are releasedin theaters before they arrive on cable TV or the Internet.

It is unlikely YouTube will lose significant revenue from amigration to Vessel, Sappington said. Other programming comes from online networks such asfood-oriented Tastemade and celebrities such as Alec Baldwin.

A YouTube spokeswoman said the platform’s creators arepulling in higher revenue, boosted last year by a program calledGoogle Preferred for advertising on the most popular channels.Year-over-year revenue rose 70 percent for the top 100 channelsafter Google Preferred launched, she said.

“Early access is very valuable,” Kilar said in an interview.”There are a lot of consumers who would love to see somethingearly.”. YouTube made its debut adecade ago and has more than 1 billion users.

More than 130 creators will provide early access to contenton Vessel. After the exclusive period ends, videos can go toYouTube, Vimeo, Vevo or other free, ad-supported sites, and arefree on Vessel.

YouTube stars such as Ingrid Nilsen, Rhett & Link and ShaneDawson are among creators whose videos will make their debut onVessel.

March 24 Online video platform Vessel launchedits paid subscription service on Tuesday, offering programmingat least three days before other websites in a bid to reshape anindustry dominated by free content on Google Inc’s YouTube.

Vessel, which raised $77 million in venture capital funds,also includes free videos with ads

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