A New YouTube Rival Wants to Snag Stars With Promise of More Profit

A New YouTube Rival Wants to Snag Stars With Promise of More Profit

Shane Dawson, director of "Not Cool," an entry in the filmmaking competition series "The Chair" on Starz. (Courtesy of Starz)
Shane Dawson, director of “Not Cool,” an entry in the filmmaking competition series “The Chair” on Starz. (Courtesy of Starz)

(Business Week) – People now invariably use the word YouTube when describing a specific type of online video: a relatively short segment produced by someone who couldn’t walk through your average high school cafeteria without getting mobbed. Now the founder of Hulu is betting he can persuade people to dissociate those types of video from YouTube itself.

On Wednesday, Dec. 17, two former Hulu executives—Jason Kilar, one of the company’s founders, and Richard Tom, its former chief technology officer—offered a preview of their new company, Vessel. Like Hulu, the company will offer a free service with advertisements and a premium service with a subscription fee. In Vessel’s case, the subscriptions will cost $2.99 a month and will feature exclusive content from creators who grant the company a three-day window during which videos will play only on its site.

For months there have been rumors about potential YouTube competitors. Aside from the Vessel founders, much of the speculation has centered on George Strompolos, the chief executive of YouTube network Fullscreen. If there’s a way to succeed at this, Vessel is well positioned to do so. Its founders are big names who have tens of millions of dollars in funding and deep connections in the media industry. But they’ve also got two major challenges: The company has to persuade YouTube stars to focus on another platform, and it has to persuade YouTube viewers to pay for something they’re used to getting free.