Why Everyone Is Mad at Patreon Now
Over the past four years Patreon has grown to become the de facto funding model for independent creators online—a platform where supporters pledge small monthly recurring donations that better support an enduring career instead of the need Kickstarter or GoFundMe’s per-project setup fills. But an overhaul of its fee structure announced yesterday has creators furious and patrons leaving in droves.
Patreon—which supports YouTuber channels like Binging With Babish ($11,000/month), animators like David Firth of Salad Fingers fame ($10,000/creation), and podcasts like Chapo Trap House ($87,000/month)—has long relied on a simple financial arrangement that allowed creators to receive a lump sum at the beginning of each month. Of course, that paycheck might vary somewhat because creators were obligated to eat payment processor fees in addition to the 5 percent take the platform shaved off the top.
The new structure—and why everyone is so angry—passes those processor fees on to patrons instead.
“Starting on December 18th, a new service fee of 2.9% + $0.35 will be paid by patrons for each individual pledge,” the company’s announcement post reads. “Streamlining these fees for creators and patrons ensures that creators take home as much of their earnings as possible.”
Sure, that math checks out—until you factor in a mass exodus of pledge-makers.
Beyond making the platform demonstrably hostile to donors’ wallets, creators were confused by when exactly they’d be getting paid now. Rather than at the beginning of each month, charges now appear on a monthly basis starting whenever the patron agreed to fund a creator. On its face this is intuitive, although many patrons fund multiple creators, leading to a splattering of credit card charges across a billing cycle.
Patreon responded by updating their announcement with two charts meant to illustrate what to expect. For many, this further reinforced that the change from a monthly to an anniversary model would be more of a headache.
Publicly, YouTube musician and Patreon co-founder Jack Conte is the face of the company, giving the service its for-creators-by-creators credentials. But behind the scenes, Patreon isn’t quite the scrappy operation it projects. Its other co-founder and CTO, Sam Yam, is a Stanford grad and serial entrepreneur. Among other investments, his company AdWhirl was (somewhat indirectly) sold to Google for $750 million. Patreon has raised four rounds of venture capital funding in as many years, totally over $100 million, and it used a portion of that money to acquire competitor Subbable, a platform created by YouTube early adopter Hank Green. Among those on the company’s board is former Twitter CEO Dick Costolo.
With all this in mind, many speculated the new fee structure’s purpose is to drive up Patreon’s profits, perhaps at the behest of those who invested so heavily in the company. For its part, Patreon wrote in its announcement that “[t]his was never (and still isn’t) about making more money for Patreon as a company.”
Then again, the same announcement muses that “we want a Patreon where your patrons never have to wonder when they’ll be charged, or how much they’ll be charged,” which, by the response these changes have received, could not have been further off the mark.
In hindsight, it’s difficult not to consider CEO Jack Conte’s August tweet as an omen.
via Gizmodo http://gizmodo.com
December 8, 2017 at 08:33AM