Special is a new startup offering online video creators a way to move beyond advertising for their income.

The service was created by the team behind tech consulting and development firm Triple Tree Software. Special’s co-founder and CEO Sam Lucas told me that the team had already “scrapped our way from nothing to a seven-figure annual revenue,” but when the founders met with Next Frontier Capital (Next Frontier, like Special, is based in Bozeman, Montana) they pitched a bigger idea — an app where creators charge a subscription fee for access to premium content.

While Triple Tree started in the service business, Lucas explained that the goal was also to create “a product company that we could sell for $100 million.” Now Special is announcing that it has raised $2.26 million in seed funding from Next Frontier and other investors.

It’s also built an initial version of the product that’s being tested by friends, family and a handful of creators, with plans for a broader beta test in October.

With online advertising slowing dramatically during the COVID-19 pandemic, YouTube recently highlighted the fact that 80,000 of its channels are earning money from non-ad sources, and that the number of creators who receive the majority of their income from a source other than advertising grew 40% between January and May.

One of the main ways that creators can ask their viewers for money is through Patreon. Lucas acknowledged Patreon as a “very big inspiration” for Special, but he said that conversations with creators pointed to a few key ways that the service falls short.

Special

Image Credits: Special

For one thing, he argued while contributions on Patreon are framed as “donations” or “support,” Special allows creators to emphasize the value of their premium content by putting it behind a subscription paywall. The existing service supports paywalls as well, but that leads to Lucas’ next point — that Patreon was built built for creators of all kinds, while Special is focused specifically on video, and it’s built a high-quality video player into the experience.

In fact, Lucas described Special’s spin on the idea of a white labeled product as “silver label.” The goal is to create “the perfect balance between a platform and a custom app” — creators get their own customizable channels that emphasize their brand identity (rather than Special’s), while still getting the distribution and exposure benefits of being part of a larger platform, with their content searchable and viewable on web, mobile and smart TVs.

Creators also retain ownership of their content, and they get to decide how much they want to charge subscribers — Lucas said it can be anywhere between “$1 or $999” per month, with Special taking a 10% fee. He added that the team has plans to build a bundling option that would allow creators to team up and offer a joint subscription.

Lucas’ pitch reminded me of startups like Vessel (acquired and shut down by TechCrunch’s parent company Verizon in 2016), which previously hoped to bring online creators together for a subscription offering. In Lucas’ view, Vessel was similar to newer apps like Quibi, in that they directly funded creators to produce exclusive content.

“It’s a billion-dollar arms race, with what used to be a technology play but is now a production studio play,” he said. Special doesn’t have the funding to compete at that level, but Lucas suggested that a studio model also provides the wrong incentives to creators, who say “Hell yeah, keep those checks coming in,” but disappear “the moment the checks stop.”

“I almost think it’s an egotistical play,” Lucas added. “The company thinks they know best what a creator should produce for an audience that doesn’t exist yet. We say: Let them do it on Special. Do whatever you want, as long as you follow our terms of service, and own your creative vision.”

It might also seem like a big challenge to recruit creators while based in Montana, but Lucas replied that Special has more access than you might think, especially since the town has become “such a hotspot for extremely wealthy people to buy their third home.”

More broadly, he suggested that the distance from Hollywood and Silicon Valley “allows us to not follow the trends of every new streaming platform and [instead] truly find those independent creators underneath the woodworks.”

Source: TechCrunch