Convopage
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Here's what I think is happening with @Patreon - this year they raised $60m in Series C venture funds at a valuation of $450 million (after raising $30m last year and more than doubling the company's size - almost always a mistake). Yet they make about $8 million per year. 1/10
279 replies and sub-replies as of Dec 08 2017
Most sane company valuations are 10x-20x revenue, with 20x being a high-end for desirable acquihires by Google/etc. Under that math, Patreon should be worth $80-$160 million. Yet they raised at $450m. 56x revenue! This means they're under intense pressure to increase $$$. 2/10
What's an easy way to increase revenue without having to drive more traffic? Change your fee structure. Before, creators were paying the fee. A user pledged a dollar, was charged a dollar, and the creator got, say, 60 cents. Patreon takes a cut of that 60 cents. 3/10
Now, the user pays the fee. So they pledge a dollar, they pay a buck forty, the creator gets a buck, and Patreon takes a cut of that buck. On top of this, even though credit card fees are flat, Patreon is charging a percentage, so they make extra money on higher pledges. 4/10
Any indication you see from Patreon that this was done with the best interests of the creators or the users in mind is a lie. This is a purely revenue-based decision driven by the venture capitalists who now own a huge chunk (probably the majority) of the company. 5/10
I'm not even saying this is inherently bad. Companies have a right to make business decisions designed to increase revenue. However, their disingenuous nonsense about working with creators and users to do what's best is obvious marketing spin. It's insulting. 6/10
And the fact that they won't even give creators the *option* to eat the fee themselves (which, again, would result in a loss of revenue for Patreon vs. just forcing this change on them) tells you that generating revenue is more important than satisfying their customers. 7/10
And that's a long-term bad strategy that I suspect is going to backfire on them. It will be very, VERY interesting to see what @kickstarter chooses to do with their new "Drip" service (a Patreon clone) in relation to this. 8/10
There's also an opening here for @PayPal to enter this space, if they want to. 9/10
Anyway, that's what I believe is going on with Patreon. All of the information I used in this thread is publically available, including Patreon's funding rounds, company size, and revenue numbers. 10/10
Thank you for sharing your thoughts!
The only reason I can see is the obvious one that if they apply the charge 10x but only have to actually pay it once, they get the other 9x.
yeah i think some sap got hit with finding a way to massively boost revenue on each pledge and foolishly thought this would sneak by people instead of just making the whole thing look like thievery
With a Series C that big and a nervous board, that's doubtful. It would be irresponsible for directors to not have a say in a few restructure this big, especially if they're the ones pushing for the change.
They're getting rid of the monthly charge and going to charging each pledge the time of the month when you pledged it.
Why would you invest in Patreon it's a fucking subscription service
There's probably an obvious reason that involves fraud
That can’t be right - that would be a grievous assault on the concept of an interchange fee, which I think is what they are claiming to pay
2.9% + ¢35 probably comes from the industry standard fee of 2.9% + ¢30 (Stripe, Amazon, PayPal, Authorize and other processors) per transaction.
Wow, that actually might be miscommunication then (Hanlon's razor in action).
I agree this is how it should be, however they might have technical or legal limitations.
Couple of notes: Creators do not get the full dollar value. They only gain about 6% over the old system. Patreon's share more than doubles, however.
Second note is that the updated payment system at Patreon is a violation of Visa's (and most likely Mastercard's) rules.
This creates a lot of drama for a fairly small increase in revenue to Patreon.
I think it was a tremendous mistake on their part and I won't be surprised if they never roll it out.
honestly after hearing about this I canceled a few of my 1 dollar pledes to patreons I was a "drop in the ocean" to (over 3000 dollars a month) so yea, already patreon is going to be getting at least a dollar less from my use of the service.
I find your assessment nail-on-head accurate and as a creator of multiple podcasts and more multimedia projects in the future have informed my patrons to use direct @PayPal donations while we figure out @drip. @Patreon has made a grave misstep.
Patreon responds, it's not good.
Patreon still doesn't get it. We as creators do not want costs passed down to our patrons. Share this and the previous video to make sure Patreon hears us. T...
youtube.com
yoooooo thanks for telling me about drip -- gonna send that to my favorite creators
I'm going to love the drug dealer analogy out there. Provide a cheap service, then when your clients are hooked jack up the price. Online real estate advertising is a good example: used to be free, now there's a fee and it's boosting like a North Korean rocket.
I'm relatively successful on Patreon and I came to the same conclusion. Very unhappy. I'm already working with my listeners to explore other options.
Not exactly a defensible business or technology either. Many big companies poised to replicate. Even a bootstrapped startup could enter.
Thank you for the breakdown, as a supporter of more than one creator, Patreon's changes are not okay with me, so for now I am choosing to leave Patreon and support my creators directly. @JamesKelseyART - that is why you just got a CC of my e-mail to Patreon, by the way.
Very informative, thank you!
Afraid I'm not sure. I haven't investigated whether Paypal has a better offering, was just saying they could CREATE one if they wanted.
the advantage to using Patreon is that it provides specific tools specifically for creators to deliver exclusive content to patrons.
Many within the sex industry rely on Patreon for revenue. PayPal is run by Puritans who've banned sex workers from their service (after denying them the money they made, of course). Without Patreon, people who make adult sex education media & such will have no where to go.
It’s not like “send one dollar to someone over the internet” isn’t already a solved problem.
Plenty of opportunities to steal Patreon’s creator base from under them, and that’s inevitably what will happen.
I would loooove to see Paypal create a service like Patreon's. They're a good, long-standing, reputable company and I'm sure anything they put out would be excellent and well thought out.
PayPal is super great and better than every other way to receive money online. @PayPal needs to get on this.
Alas @PayPal is terribly prudish and flails about at the slightest hint of moral panic/controversy. They aren't suited to supporting artists
I would absolutely not trust Paypal with anything that I make a living from, given their history
I've been using PayPal for this since the 1990s. There are reasons to not like them, of course.
Already jumped over to @PayPal subscription and one of my users has already paid a year in advance lump sum instead of monthly. No complaints here!
Fuck it. @venmo should get in on this ma
What do you think about (in the mid-future) Distributed P2P apps taking over this space (with no middleman at all?) Perfect use case afaics.
They better come up with a better name if they want to compete.
i wasn't super excited about drip when it was announced but now i'm really intrigued by how this will play out, especially once they open it to the more creators
In Drip's current FAQ... help.d.rip/hc/en-us/artic… "For both (per-item / monthly) subscription tiers, the exact amount you pledged is the amount Drip will collect. "
When am I charged for my subscription?
For monthly subscription tiers (ex. $7 per month), subscribers will be charged at the time of checkout and on the same day each month going forward. For per paid post subscriptions tiers (ex. $2 p...
help.d.rip
While this may drive people to drip, that page has all the feel of "we haven't quite gotten our heads around this". If you want to change tiers for a drip (horrible name), you have to completely cancel and start over, losing all status. That's just not well thought out.
But who is the customer to patreon?
That's a good question. It *should* be the creators but I'm not sure they see it that way.
I would love this option. As it is, I've knocked 5% off all my reward tiers to eat the fee, but that's a lot of work for creators with more tiers/content than I have.
I hated the "baffle them with bullshit" disingenuous nonsense that seems all too common these days, in all things
They are doing it for money, sweet talk about helping someone its rubbish... Same like naive believe "politicians are there for people".They are there for the"sponsors that paid their campaigns"to get there. Each "should wear a dress with all sponsors"
Yes, they're doing it for the money. But ... they're a business. Businesses do things for money. It's their messaging that's the problem
The messaging is very patronizing (which is funny from a company called Patreon), and people don't respond well to that.
Exactly. Silly things happens... example, I personally had to make a complaint about the complaint department for lying to me over the phone. Luckily it was recorded and couple of people had some extra training and a record after that...
I share your opinion, I just wanted to point out that its unfortunate how the system works and that the priorities and honesty are secondary to satisfying the "profit numbers"...
Couldn't agree more. In general I think venture capital funding leads to very unfortunate company behavior.
When a small company has more than one owner, its just question of time when they start clashing with ideas. On bigger scale, it multiplies...
yep, and when the owners are venture capitalists, what they care about is pumping up the company's valuation, not catering to its users
thats why I'm doing everything what I can myself. I wanted to release the pyramid case first, but have been let down by die casting manufacturer, I have decided to release other case first... I'll never sell any part of my company... One decision...
Well I mean they can't do anything if they run out of money.
Certainly not. As I said in the thread: businesses have a right to make decisions to increase revenue. It's their messaging that's been bad
Honest question, who has ever in the history of businss messaged higher prices well to buyers? Not asking rhetorically, could be convinced here.
I don't have an immediate good answer for that. But Coke's still in business and they're not still charging 2 cents / bottle. :)
it is also inherently bad; VC literally collapsing the successful structure of the company in pursuit of returns.
What's happening is that no attempt is being made to build a stable long-term biz. They just want to get bought for $1bn+.
right, I'm just saying, that *is* the VC model - it's purpose is returning investments at a profit, not building LT businesses
Fair enough and agreed. I just meant that not every company making changes to their revenue model is inherently evil or anything.
ohh, my bad, I misread you.
wherever we divulged at, it's a great synopsis, and I thank you for it.
I, however, am comfortable saying it is inherently bad to run a company with the intention of extracting all measurable value and destroying a consensual soft monopoly in order to raid coffers and then pissing in the artists’ faces when they complain.
Credit card fees are not flat, but I don’t disagree with your analysis about them pursuing more revenue. Fees are a percentage.
Not anymore. Many flat options like stripe
Stripe is flat percentage; Chris meant flat rate per transaction.
But I can’t believe Patreon is slitting its creators’ throats. It’s greedy and wrong and weird. I agree with the analysis about revenue versus investment Chris made. It’s sad!
It's a bummer. I am not in love with the Silicon Valley "grow as fast as possible at insane costs" method of building a company.
I agree with this statement fully
They’re going to lose all business to whoever can charge like 10% less or so, this is just stupid. And greedy.
Any whiff of greed will drive donations or patrons away as quick as they can shift
Credit card fees aren’t flat
Yep, this was noted earlier and I acknowledged the mistake. Credit card fees have moved from scaling % to flat %, but are still %-based.
No, credit card fees are not flat. All credit card fees are a percentage of the ticket size.
Yep. I acknowledged this mistake. Can't go back and edit the tweets, unfortunately. Flat % (used to be scaling %) ... but still %-based.
It also looks like if the user dials their pledge back such that they only pay a dollar, Patreon still comes out ahead compared to the old system but the creator gets *hosed*.
> credit card fees are flat
Standard credit card fees are 2.9% + $0.30 per transaction. This is an average, as the percentage can be variable from month to month, and it also varies on the bank (fees for AMEX and Discover are higher).
Yep, I've acknowledged this error. Wish I could edit the tweet. Used to be scaling %. Now flat %, but still %-based.
Because Patreon’s bulk of transactions are probably in the $1 range, the fees can add up quickly, especially if your bank account is not optimized for microtransactions. Moving the fees to the patrons seems like a good business move and leaves more money for the creators/Patreon.
I'm not necessarily questioning the business move (I'd need more info). Their handling of it has been mostly patronizing lies. Not good.
I haven’t seen how they’ve been handling it, so I’m out of the loop on that. 😁
When I pledge $1 to 15 creators, they don't process it as 15 transactions -- they lump them together as one transaction specifically to reduce that fee. That was the whole appeal of the service to me in the first place.
So, for monthly pledges, they’re adding the fees to each individual pledge instead of all your pledges in bulk?
So far, I’ve only pledged to creators who have it set up so I only pay when they release things. Those are charged individually.
Yep, they just updated their blog post and @ramsey you're right. No extra money, but really confusing comms.
blog.patreon.com/updating-patre…
Chris they’re using Stripe as their payment system — it takes 2.9% and $.30 on every transaction
Yep, noted this in a followup but sadly can't edit the original tweet. It's a flat % (used to be scaling), but still a %.
I was wondering why they can't prorate the first payment and bundle all payments after that.
I think Stripe could do that.
fees charged by CC companies are usually a combination of a flat, per-transaction fee and a percentage of the transaction value.
Who processes payments for Patreon? And what do they charge Patreon per transaction?
Please don't spread false information. paysimple.com/credit_card_ra… Credit card transactions have a percentage attached to them as well. Every credit card company and PayPal themselves charges percentages on transactions. en.wikipedia.org/wiki/Interchan…
Credit Card Processing Fees and Rates Explained
For an easy to understand breakdown of credit card processing fees, check out our guide on the different types of transaction fees and how they are calculated.
paysimple.com
Please tell me where these companies that charge flat fees on a CC transaction are 2.9% and $0.30 is super standard. If there are places with no % at all I’d like to know.
I think patreon are using stripe, which charges $0.30 + 2.9% per transaction. They probably get a volume discount because of the number of transactions, but I don't think they'll make any more from the %.
By what measure are credit card fees flat?
I've addressed this. I was incorrect. It's a flat percentage now, instead of fluctuating, but still a percentage.
Is Patreon 60/40 split? I thought it was 95/5? (I don't disagree with anything else you stated.)
It's 95/5. But it was 95/5 on the post-fee amount, previously. So like, you pledge $1, visa takes .40, patreon takes 5% of the remaining .60
Now they're changing it to "you pledge $1, we charge you $1.40 or whatever to cover the fees, then patreon takes 5% of the $1"
Ah, that makes more sense. Those fees are insane, though. I think we're paying $0.10 and ~ 2% per transaction. Someone with the volume of Patreon should be able to do far better.
Also, as @ryanqnorth points out, they are applying the fee to EVERY pledge even though the bill users in bulk. This will be a huge rev driver for them. I think my initial analysis re: VC is pretty on the money.
I wouldn't be at all surprised if this were the case.
Agreed.
They don't take 40% but they take ~2% plus 35 cents. So on a dollar pledge, it's close to 40%.
The currently split is variable, but around 80-85% goes to the artist.
What happened to the 40 cents then
But your next point about CC processing fees seems valid (I do not know much about them but if they are flat I think you're right that Patreon would get more from higher pledges).
Now, the user pays the fee. So they pledge a dollar, they pay a buck forty, the creator gets a buck, and Patreon takes a cut of that buck. On top of this, even though credit card fees are flat, Patreon is charging a percentage, so they make extra money on higher pledges. 4/10
Why wouldn’t they take their cut before processing fees?
Seems to me like a better way of increasing revenue than this.
90 cents.
The impact of this change on their revenue is tiny though? Previously they got 5% of 97%, now they get 5% of 100%. If they keep moving $150M/yr that makes $225k, so like one developer salary+benefits?
They're spinning it like that but I don't trust their math. Also, if they add the fee to 10 pledges, but only bill once, they keep the diff
What difference? Credit card fees aren't flat. 3% is 3% whether the bill is aggregated or split.
Ryan North explains it here. They're not just tacking on the percentage.
Change to Patreon's fees | Ryan North on Patreon
Official Post from Ryan North: Hey everyone, by now you may have gotten a message from Patreon about a change they intend to make to their fee processing system. They sent this email to creators yesterday:They're pitching this as an improvement for us and you, but it's really not. What they're doing is making you pay the fees we
patreon.com
If i pledge a dollar per post to someone, and they post four times in a month, I'm not getting charged $4+2.9%+$0.34 (or whatever it is). That 2.9%+$0.34 gets added on to ALL FOUR pledges, despite me only being charged once per month.
Valuable acquihires...huh? Word salad.
That does not promising to me... 😓
Thank you for all the good information. They are also making it very difficult to provide them with feedback, which means they don't want any. This is going to backfire on them since most of us will find a way to support our creators outside Patreon.
One way to provide them with feedback is to stop using them.
I am not baling on my creators as long as they use Patreon since I can presently afford the additional fees. Most of them are looking for another place/way to create. And I am hoping Patreon will change their mind.
I did a writeup with various options on things folk can do, if that helps at all:
Patreon Changes - What They Are, What You Can Do
Patreon Changes - What They Are, What You Can Do
exilian.co.uk
Nice list of options. It would be useful to at least address (even if you choose not to recommend) reducing or cancelling pledges, which is what I chose to do, thinking that hitting Patreon in the wallet is the clearest signal. I also explained in the post-cancel survey they do.
I've now updated to address that - thankyou, very good point. Basically my view on it is "check with creators first" - if we can starve Patreon of revenue by having some folk walk, then 100% good job, but it's worth checking we're not literally starving creators in the process.
I know a lot of streamers on Twitch use Patreon, and I think the only alternative for them at the moment is Gamewisp. I think it would be a good thing to add to your list there for those coming in as game streamers; the other alternatives don't really seem to fit the bill.
Thankyou, added :) I don't know much about the streaming world, but I flagged it up and put the link there so people can check it out if that's their area at least!
You can support creators in other ways, right down to sending them direct donations. Patreon made it easy and offered audience contact and content tools, but it doesn't mean it's worth it.
Sure! I just think it's important to keep creators in the loop and supported through getting out of Patreon's systems - and ensure that people don't end up with unexpected income gaps as a result of this. All I'm saying is "talk to them"; patrons & creators need to work together.
Yep, I'm leaving but with an explanation and with a request to my creators to forward their Paypal or other payment links (if not already obvious on their websites). @Patreon doesn't want small $$ donors? They don't have me, then.
You don't have to bail; As I've been saying to anyone who'll listen, just send the money to the creator's directly (this has been getting easier for individuals of late anyhow) and cut out the leech... I mean, middle man. I mean person. 😉
#BoycottPatreon
The problem is that, when a service can be replaced by setting up Google Alerts with a PayPal link...people like me are going to replace that service when they do something like this.
Sending your creators a monthly check would be cheaper than giving through Patreon
See if your creators have alternate funding platforms (Kofi, etc) and/or recommend they check out @drip
Unfortunately, a lot of people depend on patrons for food, medicine, rent, etc. In principle moving to another service would be great, but could be very painful for a lot of folks.
they don’t want the users that it will hurt, is what the commentary on this is teaching me. they want popular youtubers.
The best part is, artists on Patreon generally have the ability to mass-email all their pledgers. So it'll be easy for them to tell everyone that they're switching to another site, and why
Good thread is good
as someone who was considering getting into Patreon, thanks for the info.
Why can't companies be happy making some profit, why must they always go for all the profit. Be happy with what you have. Greed is the number 1 thing ruining this planet
shareholder-based capitalism demands constant growth
What's the worst that could realistically happen if they stayed the same size, getting similar profits each quarter. generally curious i know nothing about stocks
very basically b/c im also a stock newb. u buy a stock at X, and if the stock doesnt change to X+, ur investment made no real return. if u arent making ur shareholders a return, then ppl wont buy ur stock.
This isn't typical "stocks" that anyone can trade. These are growth-stage venture capitalists who are investing (mostly) other people's money with the expectation that their portfolios will return a 10x return before the company goes public and other people get in on the action.
They buy a LOT of stock for a cheap price so they can give the company cash to hire people and grow faster than anyone else and produce a 10x company before competitors can gain traction in the market. So if the company grows, but doesn't grow fast enough, everyone ends up fucked
one thing i never understood, when you are making a decent profit why do u need to sell stocks? or is just too expensive to run a business on profits alone and a 10x return seems rather excessive
Companies sell shares (stock) of the company in exchange for cash, and in new business ventures, cash is King. Without it, you can't hire people to build/maintain the product or market it to new users. Often, a competitor comes in and grows faster and box the others out.
You coukd grow a company like Patreon slowly and be happy making a 1 or 2x return, but in startups, being the first business to "own" the market and become the go-to brand for a given product/service, you have to move really fast. Cash = speed = better chance to win the race.
A VERY common scenario is a company starts, gets users, makes a little money but for whatever reason, runs out of cash before they're profitable or are scraping the bottom of their own barrel. At that point, turning down a pile of money (from VCs) risks losing the whole thing.
In general that kind of stagnation is viewed negatively by investors. Since most executives are paid at least in part by stock options, part of their compensation rests in increasing share price (or in this case valuation). This typically leads to growth or die trying mentality
Right. If you gave a company $60 million, you expect to get a lot more than $60 million back.
So really it does all come down to greed. Nobody supports an idea because it's a good idea. They support the idea because of what it can do for them. We're all lizards clambering over each other in a bucket.
It really depends. There are companies out there just trying to offer a good product at a reasonable price. Most are not VC-backed.
Sad about Patreon. The FX company I work for is VC-backed and is on a mission to (eventually) charge customers zero-fees (we revise our fees downwards, growing by increasing users and volumes).
1) Companies are profit/NPV maximization devices.
2) The life cycle of such companies seems to have 3 phases: grow the customer base, monetize the customer base, trim costs. I guess Pateon is now in the 2nd one.
3) This seems more like a "figure out how to justify a laughably generous valuation" move than a "maximize value" move.
4) This seems to undermine the key strength of the platform... that it was a good way to get a little bit each from a lot of people.
its always bothered me. u take an idea and suck the life out of it b/c ur forced to evolve b/c ur company's "health" is measured by growth rather than how well u stick to the original idea
I believe in that case you'd prefer to stay private, and take profits, rather than offer shares.
there are a few other options (the internationale starts playing)
Yeah I get that, which is why I don't get the impetus to go public, beyond whatever tremendous amount of money that then gets the people in the company, which puts us back at the original point I suppose.
Right. The expectation of constant growth just isn't sustainable. This allegiance to stockholders who will always want more than last year is killing shit. "How can I get the goose to shit 2 golden eggs?"
Hey my 401k is investing in these startups. I'd like to retire someday
lol retire
If someone could work with us to build a platform, we have the gear, bandwidth, and operations to do everything else.
We are ok with a flat 5%, to cover processor fee plus costs + modest profit.
Sounds a lot like cancer.
All capitalism requires constant growth.
Corporations by law have to aim to deliver profits for their shareholders, not any other higher purpose or public service
Capitalism, my dude
Because the quickest way to loose investors is not growing every year
The answer is simply "capitalism". This shit has been documented for over a century now.
There is no ethical consumption under capitalism.
They needed money. So they got funding. Investors want s return.
I always feel a bit of pleasure when companies crash and burn after chasing after the whole pie instead of being happy with the ample half-pie they had before.
The web industry has become oligopolistic. No startups can actually survive on their own anymore since the dotcom bubble burst, so their only business strategy is to get bought out by Google, Amazon, etc.
Cost of living goes up. Worker pay goes up. Cost of regulatory compliance goes up. If the company wants to exist in a decade, they need to do R&D, try new things. That costs money which comes directly out of profits.
A company like Patreon wants and needs to grow if it really wants to make things better for its members though. They need to push into new markets, which costs money. They need to leverage deals, which takes size, which takes growth, which takes money.
Maybe it seems nefarious, or greedy, but really, a company with a mission like @Patreon needs to grow to a certain size to be worthwhile. As long as they're not bullying would-be competitors or abusing their members/customers, we shouldn't begrudge them that.
Why? 😢
(No comment)
Seems like a pretty dumb move considering so many that use it live and breath Twitter. They didn't think they'd get called out?
Host your own! We do!
I'm just starting out and today I lost 2/6 of my #patrons and had a 3rd one lower the amount they were giving me. All 3 are a direct result of this change by @Patreon (@PatreonSupport) It really sucks. ☹️
And this, in turn, is going to bite Patreon themselves in the ass. Great job!
must read
Thank you for sharing this!
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Be a Patron - Bradford Loomis
Hello! My name is Bradford Loomis. I’m a husband, father to three beautiful children, a songwriter and performer. My Story I always knew that I wanted to write and perform music. It was pretty much all that I could think of in high school. Not knowing how to pursue such an aberrant career path and …
bradfordloomis.com
Why can't they be happy making $8 million a year? I would be.
It's not about being happy with what you've got or being a resource for the community, it's about making a valuable-looking business you can sell to a tech giant.
I was being facetious. Not everyone needs to do such a thing, they could just sit on what they got, like their creators.
Unfortunately, they can't do that when they have investors for which they are contractually obligated to maximize profits.
I know how it works. But they didn't need to go down the VC funding route in the first place.
It's so goddamn depressing.
I wouldn't try and rationalize startups hahaha, it's ridiculous to no end
I thought maybe they lost money because they allow porn and investors don't like that but this makes sense too!!!
Have you seen this analysis?
i have. it's pretty upsetting.
As soon as a viable alternative to Patreon appears (and it will), I'll be jumping ship.
AHOYYYYYYY!!!!
Chris - i hear you, but this is not what's happening. You don't have to believe me, but I'd be happy to discuss in person if you like. We just updated our blog post with more info here: blog.patreon.com/updating-patre… We rolled this out to de-aggregate pledges, not to make $$$
We’re Updating Patreon’s Fee Structure. Here’s Why. - The Patreon Blog
In order to continue our mission of funding the creative class, we’re always looking for ways we can help creators continue to grow their creative careers. We’re committed to building tools that transform communities into thriving, long-term membership businesses. A large piece of that puzzle is pre
blog.patreon.com
Hi Jack, thanks for the direct response. Was not expecting this thread to go viral like it has. I'll read the update. You have the right to make your choices w/o explaining yourself to me, but I'd be happy to hear more if/when you have time.
Please DM tho if you'd like to chat because my notifications are a tire fire right now. Lucky I saw your message at all!
Okay hi here's my take on the @Patreon fee update (and my first thread!).
Some commentators have talked about it as a “look what VC money does” thing. That’s a valid convo, but this is not an example of that. 1/8
Chris Buecheler on Twitter
“Here's what I think is happening with @Patreon - this year they raised $60m in Series C venture funds at a valuation of $450 million (after raising $30m last year and more than doubling the company's size - almost always a mistake). Yet they make about $8 million per year. 1/10”
twitter.com
Because of your new fee structure I'm cancel most of my pledges.
why’d you change your logo to that terrible one.
Because they payed a pile of money for a new logo and had to boost fees to pay for it?
I think you're being shafted on fees if you're paying that much. Those are "through the nose" rates, the ones you get with zero haggling for a relatively high-risk enterprise. There's an opportunity here to shop around, and get a WAY better deal.
De-aggregating pledges further harms patrons. Some of us pay per-transaction fees for, say, currency exchange. It also makes it harder to track spending on Patreon. I do not see a tangible benefit that couldn't be adequately replicated by pro-rating pledges instead.
Here's a proposal to fix your original problem. For CUF pledges, charge 1 month immediately. Next month, pro-rate the payment so that 1st and 2nd payment together make (1 month + actual slice of previous month). Afterwards charge normally.
At first blush, this seems like an excellent solution to the problem that doesn't throw away all the benefits we have from aggregation.
instead of this anniversary thing and unbundling from first of the month, wouldnt it be better to pro-rate the partial first month, then bundle on the first of every month? fewer, lower fees.
Yes, let's de-aggregate pledges so that everyone has to pay more fees.
At best this change is an incredibly poor "update" & at worst it's a $ grab. You've effectively made all small pledges not viable.
You should have explained that this was about de-aggregation from the start instead of framing this as being for the creators benefit. Your users run their own businesses, they aren’t children. Clarity is really key for cultivating trust.
You should be working with all creators here, and not just your biggest revenue earners. It makes sense to make changes and improve your product, but you should be sharing the roadmap with us so we aren’t blindsided.
I just think it would've been nice to hear back from Patreon on all the formats that I reached out to. As a creator that got ripped off terribly, I was devastated and am probably leaving Patreon. Wish someone actually responded to me (Don't worry, I read the faq 30 times)...
I’ve been a patron for some years now. The new fee structure does make sense for creators but it isn’t optimal for patrons. By not aggregating charges you make patrons pay more for the same outcome and the difference goes to the banks in fees. That’s not right.
This post says nothing about aggregation. What are your reasons for de-aggregation? I can see no benefit to patron or artist, only to Patreon.
How the HELL - I mean really - did @jackconte at al. make Patreon so ridiculously complex and political?
Hey @jackconte, as a creator, this does not come across as anything but a move to hurt small creators, int'l patrons & creators & to penalize folks who try to spread their patronage around with a lot of smaller pledges.
So not greedy just really, really bad at making sound financial decisions. Aggregated pledges were the whole damn point. No one likes paying payment gateways; your service was a way to reduce that. Was.
I don’t see why as a patron I have to pay your business overhead
Yeah, but could you not anyway? Regardless of intentions, this is universally unpopular and has directly resulted in me losing a lot of patrons today. Not helping creators. It is costing me money. When the patrons are unhappy, they leave.
Nobody is praising this. We hate it.
As stated, your new system for somebody who backs 10 people for $1 per month will pay an extra 33 cents a person per month, of which the creator gets only 6 cents. Saying this isn't about making you more money is a transparent dodge and fools nobody.
If it is the case that this is for creators and patrons as someone who is both: *let us choose*
This is really really bad for those who pay currency conversion fees (like me) - I really need to have one charge a month. Happy to eat some extra when I first subscribe, but after that why not one charge?
I like Jack's and Patreon's complete transparency. Thats so rare for a company! Here's hoping any confusion/complaints get settled and Patreon and creators continue to grow.
The problem is, Jack, that we just don't believe you.
This... This is "Hi I have a lot of Reasons to give you that don't actually add up, hahaha please stop leaving plz."
What strikes me as the simplest option for pay-up-front and aggregation is to round the first payment two weeks. Your first "month" is max 6 weeks so aggregation continues after at least 1 month passes.
The rest of the article makes sense but I don't understand the logic behind this part where you unbundle the per-posts. Seems like the new structure should allow that since fees no longer fluctuate for creators and it saves patrons money.
With this move, @Patreon has pissed on my dozens of micro-pledges. So I'm outta here, and will follow the creators I supported to any new platform they go to.
De-aggregating the fees in this way is wasteful at best- you will be just transferring a lot of money to banks. Not pateons, nit creators. It is not worth it if creators lose patrons. As a patron, I DON T WANT to see X charges from Patreon/month - it would be hell 2 keep up with.
Also, it seems that the worst in this case scenario is the per creation payment fees. I would say that if a creator cannot estimate how many creations they plan/month, it is logcal for them to be payed at the end of the month. Once. Everybody else should not be penalized.
If you wanted to avoid double-charging people who are in the up-front category at end-of-month, why not have a pro-rated 1st charge then keep to regular monthly schedule, so charges still get aggregated without overpay? I'm not convinced.
(days in month - day subscribed) * fee == Charge on first of next month. or (days in month - day subscribed) * fee == Charge immediately. Prorated values are nothing new and yet are not listed anywhere in your blog or response, Nor being a company that 1/2
Handles all the pay outs up front, charges the fees based on all users for the third party to condense the charges even more so everyone could get a boost in what they are receiving. Even after reading all of this it makes no sense to have done this as far as I can see. 2/2
De-aggregating pledges is actually a thing nobody wants, though? Please, please, please, I am begging you to NOT go through with this change. We're losing subscribers over it.
But I don't want you charging me multiple times a month. The whole point was you did it once.
De-aggregation will make a lot of patrons leave. I'm not leaving my creators yet but right now I'm looking for another option.
Unfortunately the cure is worse than the disease. There are other ways to handle the issues with aggregation without losing all the benefits and giving more of our supporters' money to CC companies.
The core problem is the credit card companies and their fixed per transaction fee I percentage is fine it's scales but the fee punishes smaller pledges if you pledge $10 to me the fee is $0.30 if you pledge $1 to me the fees $0.30 1 is 30% 1 is 3% big difference
The current structure for credit card transactions is not made for microtransactions that it punishes microtransactions heavily this is why many businesses have a minimum purchase for credit cards because that he can be very punishing on very small transactions
What I don't understand about this change is why the patrons are suddenly responsible for helping the site stay up. I'm not supporting Patreon. I'm supporting the person I'm donating to. The creators should be the ones paying any fees. I can give them money somewhere else.
What sucks is I was planning on finally backing a few creators with the $1 pledge. But with those fees that isn't viable anymore.
Source on this first thing? Where can I confirm this info?
Could they be going off revenue before creator payout?
Does that *really* need to be a 1/10? I got the gist
You know, if Patreon had offered a Patreon pledge to support servers and fees and registration and whatever, I’d. Probably have done that and for more than the $0.80 a month they’re going to lose when I yank my small pledges.
I strongly believe that I, as a consumer of “free” service who usually has a bit extra, should participate by paying a bit. I have donated to Ravelry since I joined over 10 years ago. I pay for shareware. But forcing extra fees to line exec pockets is a no-go.
Patreon isn't doing anything that revolutionary. Honestly I'm amazed there haven't been any competitors up until now.