Vimeo draws YouTube stars with promise of money

YouTube stars can draw millions of followers and tens of millions of views, but now a rival is looking to steal some of its marquee names—and draw more viewers.

Vimeo, IAC's video platform, has lured three major YouTube stars, each with millions of subscribers and tens of millions of video views.

Why? A better chance to make more money.

Vimeo screen
Source: Vimeo

"We focus on the higher quality experience, both for that creator and the viewer," says Vimeo CEO Kerry Trainor. "When it comes to monetizing that viewing experience, it's about allowing and empowering creators to actually charge for content instead of relying on a purely mass advertising-based model."

Last Friday three YouTube stars announced they will sell content exclusively on Vimeo. Joey Graceffa will release a feature film version of his popular series "Storytellers." The 23-year-old actor's film will sell for $6.99 and feature new footage, a blooper real and a new short.

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The others are ComicBookGirl19—who already is using Vimeo to offer 30-minute-long movie reviews for $2—and actress Taryn Southern, who has millions of hits for a number of YouTube videos, and is producing a feature-length film for Vimeo.

Once content creators build a massive following on YouTube, Vimeo is providing a way for them to cash in on that popularity. Vimeo takes only a 10- percent cut of the revenue the artist generates, compared with YouTube's roughly 50 percent take. And unlike YouTube, which is ad-supported, on Vimeo creators can sell content on-demand, and control pricing. Plus, they can embed Vimeo's player–and VOD system—into any website.

Vimeo is looking to distinguish itself by positioning itself as a "premium" site, focused entirely on professional and semi-professional content, unlike YouTube, which is open to anyone with a camera.

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"There are a lot of people who have built a tremendous audience on YouTube, been very successful but it is a behemoth, there's a ton of content being uploaded by users and personalities so it's hard to stand out and be heard amidst all of the video," Southern said.

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"So when you want to put out something premium I think it's really exciting for YouTube creators to be able to look elsewhere for a different type of experience for their viewers to have," she said.

Activity like this helped fuel Vimeo's 45 percent revenue growth in the second quarter. Now the company has 11,000 on-demand videos, 170 million monthly unique visitors, and nearly half a million paid subscribers to its platform.

Vimeo may have a only a fraction of YouTube's traffic, but the appeal is that it can enable creators to make more money, Trainor said.

"When a creator attracting hundreds of thousands or millions of subscribers tries to monetize through advertising you're looking at as little as a dollar per one thousand views, meaning I have to stream something a million times to make a $1,000, so even before YouTube takes their cut," Trainor said. "We have creators who are earning tens of thousands of dollars selling things single-digit-thousands of times."

Watch: Cashing in on YouTube

Vimeo isn't the only one trying to cash in on YouTube fans. Maker Studios has its own video hub, Maker.TV. And Fullscreen and Defy Media, both of which work with YouTube stars, are also trying to help talent find more profitable distribution channels.

But Trainor stresses that he's not trying to compete directly with YouTube, but create a complementary service, for both consumers and content creators, drawing an analogy HBO and broadcast television. "If YouTube is the broadcast experience on Internet steroids we believe that Vimeo can be the same premium cable experience with the same open global approach that the Internet empowers.

By CNBC's Julia Boorstin