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Former Hulu CEO Jason Kilar Pulls Back the Curtain on Vessel, His YouTube Rival

It will cost you $3 a month to see YouTube stars' videos before they show up on YouTube.

Peter Kafka covers media and technology, and their intersection, at Vox. Many of his stories can be found in his Kafka on Media newsletter, and he also hosts the Recode Media podcast.

Six years ago Jason Kilar made a big splash in Web video when he launched Hulu.

Now he wants to do it again.

Kilar is gearing up to launch Vessel, a Web video service that uses YouTube stars as its primary draw. Today he’s offering a preview of sorts, with an explanation of what he wants to do and an open invitation to recruit video makers, who are the only people who can use Vessel today. The service is supposed to open to the public early next year.

Short version: Kilar thinks people who really love YouTube stars like Shane Dawson and Ingrid Nilsen will pay up to see their stuff on his service before the clips appears on YouTube or anywhere else.

He is signing up YouTube stars to deals that give him an exclusive three-day “window” to their videos, and he’s going to charge subscribers $3 a month to watch all of it.

More details: Hulu had a free service that had ads and a paid service that also had ads, and Vessel will have the same model. Kilar says putting ads in his subscription service will help video makers make enough money to create compelling projects.

And to lure video makers, Kilar says he can generate more money for their stuff than they can get on YouTube. He says people who give him exclusive content will get paid out of a pool that represents 60 percent of Vessel’s subscription revenue, divvied up by usage. He says they will also be able to keep 70 percent of the ad revenue associated with their clips.

On YouTube, meanwhile, content owners only keep 55 percent of the ad revenue their stuff creates, which is one of the reasons video makers have been grousing about the site for a couple of years. Kilar says his service will allow stars to effectively pocket more than $50 for every thousand views their videos generate; on YouTube, that number often nets out to around $2 per thousand views.

On the other hand, YouTube has 1.3 billion users, and it is the platform that has allowed lots of video makers to become bona fide stars.

So convincing YouTube talent to come over to his service hasn’t been easy for Kilar. Sources say he has offered significant advances to some stars to bring their clips to him. And he has also shortened the exclusivity window he was looking for — at one point this year, he was trying to convince talent to give him their stuff for 30 days, not three.

But the notion that Vessel, along with other would-be competitors like Facebook and Fullscreen, might poach stars has certainly registered with YouTube. The site has been offering bonuses to stay on YouTube, and is also offering to underwrite ambitious Web video shows.

The talent war may explain why Vessel, which industry observers expected to open this fall, won’t really go live until next year, and why Kilar is only announcing that he has signed up a handful of stars like Dawson and Nilsen so far, along with “Love Ride,” an original Web series featuring Alec Baldwin in the back of a cab.(!)

He has also cut deals with other video publishers, including Time Inc. and Warner Music Group, for access to their library of videos, which gives the service a bit more bulk, though those clips won’t be exclusive.

But Kilar and co-founder Rich Tom will still have a long runway, and will generate a lot of attention. They have a $75 million war chest, funded by Benchmark, Greylock and Amazon CEO Jeff Bezos’s personal investment fund, and a compelling backstory via their Hulu history (Tom was Hulu’s CTO).

And today’s very soft launch gives them an opportunity to let the talent they’ve signed on tell other video makers how much they like the site, which does indeed look very nice.

The very big question is whether a service whose main draw is a three-day jump on other sites will mean much for video viewers, especially YouTube viewers, who are used to seeing everything and paying nothing. I’m sure there are a subset of Shane Dawson fans who will pay a little bit to see his clips before they appear on YouTube, but I’m not convinced there are a lot of them.

And Kilar needs a lot of people in aggregate to make his model work, since he is positioning his company as a low-margin platform that only works at scale “like a retail business,” he says.

Let’s see who wants to visit his store.

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