The Internet is good at making videos go viral: Upload a video of your baby boogying to Nirvana or your cat getting lost in a cereal box, and there’s no telling how many people will see it. But making money from your clips is a whole other matter. If you’re a filmmaker, comedian, or musician trying to transform your video content into a small business, there aren’t many good options out there. To make money on YouTube, you need to have thousands of subscribers, which often means reeling people in with free content for years. And for small-time content producers, it is close to impossible to break into Netflix, Amazon, or Hulu.
Enter VHX, a new platform that could be a game changer for video makers. VHX, much like Squarespace or Shopify, gives people the tools to set up an elegant website. However, with VHX, videos are the main attraction. VHX is a white-label service, so users can remove VHX from the branding altogether if they wish. The platform comes with an easy checkout system that allows users to buy movies. Today, VHX is announcing a new service through which content producers can create a subscription video service where consumers can pay a recurring fee to have access to all content on the site. In both cases, content producers have the freedom to set the price for their videos, with VHX taking a 50-cent cut from each video sold and a 10% slice of overall sales. This is especially good news for serialized shows, which can now do better with each fresh episode, and indicates how VHX is positioning itself in the robust online video galaxy.
“We see ourselves as existing between the open, egalitarian, low-barrier-to-entry nature of YouTube, but paired with the very high-quality experience of a platform like Netflix,” Jamie Wilkinson, CEO of VHX, explains. Wilkinson points out that technology has made almost every part of the video making process better. The cost of creating a film has gone down, and it is now easier than ever to discover new material. The one remaining problem is how to make money in the distribution process. “It is still not easy to sell content online in a high-quality channel,” he says. “There was a lot of content that used to be sold on DVD that suffers in the digital video ecosystem.” For instance, people who made short films, documentaries, workout videos, or educational courses used to be able to sell their work on DVD, but they have struggled to find their place in a digital world of free content.
These are exactly the kinds of people flocking to VHX. Among the VHX client base today, you’ll find Gaiam yoga instructor Rachel Brathen selling videos of yoga sessions you can do at home, outdoorsman Steven Rinella offering a series of how-to hunting videos, and Black & Sexy TV, a comedy series targeting black audiences. But lots of bigger names have also found VHX to be a good resource. Foo Fighter and former Nirvana drummer Dave Grohl has launched two movies, Sound City and Sonic Highways, on the platform. Comedian Aziz Ansari put out his Dangerously Delicious comedy special using VHX, and Vice Films and This American Life have both released content on VHX. Since VHX launched in beta in late 2012, publishers have already made $5.7 million selling their videos to more than a million customers.
Before starting VHX, Wilkinson was already deeply embedded in the world of video content–specifically of the viral variety. He is one of the founders of Know Your Meme, a website that scans the Internet for memes, and which was acquired in 2011 by Cheezburger Network. To launch VHX, he partnered with Casey Pugh, who formerly led the development on online video experiences for Vimeo and Boxee. Wilkinson and Pugh had already worked together on a project called Star Wars Uncut, a crowdsourced remake of Star Wars movies that won them a Primetime Emmy award. These diverse experiences have given the pair insight about the gaps in the existing video distribution world. This is perhaps why investors have been keen to entrust them with funds to grow their venture. So far, VHX has landed $10.3 million in funding, including a $5.8 million series B round last month.
A big selling point for VHX is that it doesn’t require exclusivity, which makes it unusual in the space. “The name of the game in the premium video space is about creating walled gardens around your content,” Wilkinson says. “What we’re trying to enable is a way for anybody to use VHX in some capacity.”
This means, for instance, that Grohl was able to sell his movies directly through his VHX-enabled websites, but he was also able to sell them on iTunes and Amazon. For Grohl, selling through his own domain name allowed him a lot more customization in terms of branding, pricing, creating bonus content, and offering preorders. But fans who discovered his work on other platforms could easily buy his content there.
Another key for VHX’s content producers is that it allows them to gather a lot of information about who is buying their work. VHX can tell users where customers are from, how they arrived at the website, and what their emails are. This means that someone like Grohl could send emails to people who purchased Sound City when Sonic Highways came out two years later, offering them special preorder deals. As this suggests, the downside to working with VHX is that all creators and producers must also figure out how to reach an audience that may not already exist for the non-Grohls among us. This is a promotional problem that the company is aware of, and has plans to address in the future.
All in all, the VHX model is yet another huge departure from previous distribution platforms, which leveraged a series of middlemen: Content producers would sell videos to a distributor who had relationships with movie theaters and stores, and eventually the movies would end up in the hands of fans.
“This meant that content producers had absolutely no connection with the fans,” Wilkinson says. “We’ve structured our entire model so that artists can sell directly from their own website, because they are the ones that the fans have a relationship with. We’re trying to be Netflix for the everyman. We want everyone to run their own video store.”