Last week, Vimeo CEO Kerry Trainor announced he was stepping down as the leader of the streaming service. The move comes at a time when the company has grown tremendously — going from 40 to 200 employees and increasing their revenue five-fold during Trainor’s four years at the helm — but has yet to find a concrete way to transition their platform to being a place where customers come to buy content.
In many ways, Vimeo’s situation reflects the same predicaments faced by indie filmmakers: It’s never been easier to generate and share high quality content that will find an audience online, but without advertising, how can independent content creators monetize their work?
Founded in 2004, Vimeo developed a core following of filmmakers by being ad-free and the first high quality HD streaming player on the internet. With the rise of DSLR cameras, independent filmmakers needed a home for their new HD content and the streaming service was the logical choice.
The brand loyalty filmmakers have for Vimeo has only grown over the years, with yearly plus and pro subscriptions ($60 and $200) — which allow the uploading and sharing of large sized HD files — being an essential tool for virtually all independent content creators. In fact, the large percentage of the revenue growth that has come during Trainor’s tenure came from adding close to 500,000 new creators willing to pay these fees.
Not surprisingly, Vimeo also became the preferred destination for filmmakers to share their short films and an audience for their unique content quickly developed. In response to increased traffic and a dearth of content, Vimeo added curation in the form of “Staff Picks,” which highlights the best of Vimeo and regularly brings 50,000 to 200,000 viewers to the type of quality short film found at a film festival.
It’s easy to see why Vimeo’s parent company IAC saw so much potential in Vimeo and invested money in their growth under Trainor — paying subscribers were generating a distinct “Staff Pick” brand of content and there was a huge audience looking to watch it. The next step was for Trainor’s team to take this very healthy ecosystem and find a path for their content creators to sell films to their dedicated audience, which would generate a new source of revenue for creatives and Vimeo.
The first big step would be the creation of Vimeo On Demand, a self-distribution VOD platform that offered an extremely attractive 90/10 split (industry standard is closer to the 70/30 split offered by iTunes, where Apple take 30% of the VOD profits and returns 70% to the content owners). The platform seemed like a perfect fit with so many Vimeo filmmakers graduating to features and with the perceived benefits of self-distribution in the age of social media, crowdfunding and dwindling theatrical distribution, filmmakers could sell their features directly to their fans.
The next step was to develop original content to feed the on Demand channel and eventually build a library that could become a stand alone subscription service, similar to Hulu or Netflix. Smartly, the company looked toward their own community for the first high profile project and backed “High Maintenance,” a web series about a Brooklyn pot dealer who makes home deliveries, which had already developed critical acclaim and an audience while on the Vimeo platform.
The experiment was clear: Could Vimeo, by putting money toward production and marketing of “High Maintenance,” get their viewers to pay for a show they previously watched on Vimeo for free. Then once they developed enough original programming like “High Maintenance,” could they transition their users into paying a monthly subscription fee to watch a whole slate of originals?
Although numbers were never released, by all accounts the “High Maintenance” experiment worked — the show developed a passionate following — and appeared to be a strong first step toward organically building off their brand. What Trainor and his team could not anticipate was the seeds they were planting would be quickly washed away by a tsunami of original streamable content coming from other SVOD services. Netflix and Amazon were suddenly willing to spend billions on a slate of original programming, while HBO and Showtime spun off stand alone streaming services. With much of this content targeting a younger cord cutting audience and featuring edgy series, festival indies and documentary films; Vimeo’s little web series was just a blip on the radar. And then, its potential on the platform was short-lived. HBO snapped up the program, which will air on its network this fall, leaving Vimeo without its most promising new show.
None of this to say that Vimeo is in trouble. Trainor leaves a company having built upon their already strong fundamentals: 280 million monthly users, 710,000 paying subscribers, and over 36,000 titles in the Vimeo On Demand library (a number that will grow to 50,000 with the acquisition of VHX). But with a company that believes strongly that their brand was built on being ad-free, the challenge remains: Can it create a path for independents to sell the cool shit they make?
IAC CEO Joey Levin, who will be temporarily taking the reigns at Vimeo while they search for Trainor’s successor, has indicated unequivocally that the answer to that question is yes. “On programming, we don’t intend to get into the multibillion dollar war on content,” he wrote in his letter to shareholders in May. “Instead, we’re giving our creators the tools to circumvent a legacy ecosystem that’s been built to award too much power and profit to the distribution, and not enough to the creation. The marketplace we’ve created is small today, but growing.”
Of course, this is music to the independent content creators’ ears. Vimeo will continue to invest in them and the potential for them to make money on the platform. In the age of SVOD giants and multi-billion dollar battle for content, the question becomes this: How is Levin going to organically transition Vimeo from a service creators rely upon to a market they can use to reliably generate revenue? Many filmmakers will be waiting for the answer.