Facebook wants up to 30% of fan subscriptions vs Patreon’s 5%
techcrunch.com
techcrunch.com
So i made a new item for liberapay, since I thought it was worth it.
Also, I would much rather see Liberapay on the frontpage of HN than Facebook "fan subscriptions"...
We have enough multinationals that try to claim 30% on top of someone else's work.
Liberapay doesn't take anything off the top
I doubt they'll be able to get away with the terms as is, but it wouldn't surprise me if they manage to successfully charge significantly more than Patreon and still get a lot of customers.
So logically creators should only use FB for access to new audience, build a relationship with the newly acquired audience, and pivot to direct billing or Patreon for recurrent collection.
Sending an API request, to the credit card company, to bill the monthly payment, does not cost a lot of money.
Getting your audience to switch platforms for the monthly payments is a compartively easy thing to do, compared to setting up your own video hosting site.
I remember their promo videos promising access to "millions of people" and "your imagination is the limit". Turns out it isn't feasible to spam all the people in your friends list with all your updates, so Facebook decides who sees which. Want more people to see your posts? Your wallet is the limit.
I'm not seeing anything inconsistent in that position. They didn't promise free access to their audience. The imagination of how much you can spend is indeed the limit.
It was literally the default setting until they started making people and orgs pay to reach all _of their own, organically grown_ audience.
People were advertising their FB pages in advertising, on billboards and signage all over the country for a couple of years. I'm talking like Realtors and run-of-the-mill small businesses, etc. It all just turned out to be free advertising for Facebook because they changed their mind after reaching scale and needed to turn on some more profit.
Patreon is the outlier, and they're dropping hints now that it probably isn't going to last: https://www.cnbc.com/2019/01/23/crowd-funding-platform-patre...
I feel like these two are much harder than the others. How does the app store help you with beta testing? Isn't discoverability basically a lottery?
By discovery I mean lots of users go on the app store and search for apps to download directly, no marketing or SEO needed. Adding the website, trials, SEO, etc helped a bit probably, but my app seems to just live on app store organic searches.
But at the end of the day what can I do? There's not really competition to drive the commissions down. If another app store came up and offered 10% commissions and the audience I'd go there instead.
Not a "gamer", so I don't really know what "Steam" is/does, but I suspect they must have some kind of moat.
I'm not sure that people are comfortable with Patreon taking a 10% cut.
I'm not happy about eBay taking a 10% cut, but they have a monopoly. Jack Ma, please bring Taobao to USA!
Yup. Competition is good for the market in general, and for consumers in a more indirect way, but balkanization of content space and having to deal with the crappy apps of me-too competitors is a real pain.
(There's probably some economical theory around this that I don't know, but my gut-feel classification is this: competition is good for consumer when competitors are providing the same, or at least directly substitutable, goods and services. Individual video games - and music, movies, books - are not substitutable goods, so the competition is useful only to the extent you can get the same game/movie from any of the competitors. Exclusive publishing deals make competition harmful to the consumer.)
Yes, there is a pretty standard economic proof that much of capitalism is based on. It says that an economy is most "efficient" (you can take a class on that word), when three pre-requisites are met:
1. Perfect information: Everyone knows the value of everything.
2. Commodities: Products created by competitors are equivalent. This works well for oil and bananas, but not so well for much else.
3. Access to Capital: This means new competitors can start competitors and enter markets easily. This isn't so easy when there is regulation, monopolies, or network effects.
In short, there is a set of circumstances when things work really well. However, in the real world, those circumstances rarely arise.
I don't really want a monopoly, though, having more than one store is better in the long run, even if it sucks having to register for multiple services. At least it's not like streaming where your costs go up the more services you register for.
The ideal would be if Steam could let other publishers plug in their platform for a much smaller cut of the profits and handle sales, forums, friends, wikis, with the other publisher handling distribution, marketing, etc. Or at least if it could function as OAuth and I could use my Steam profile on other publishers' services, carry over my friends list, maybe achievements, etc. Of course that still leaves Valve in a monopoly position, but I think it's an ok compromise.
The problem with "competing platforms" is that they're mostly not competing platforms. Recently Metro: Exodus was pulled from Steam store to be sold as an exclusive on the epic store. This is not competition, this is a monopoly on distribution of a title.
When different platforms emerge where most platforms have most titles (or offer DRM free like GoG or Humble Bundle), then we will have actual competition.
The game developers who were around before Steam, know how much that costs (promotion wise), and know they get a lot for that 30% cut. The same is true for those other platforms.
You seem to be a person that expects all internet platforms offer their stuff for free.
And another thing: all of those platforms mentioned have competitors, so calling them monopolies is quite strange. It's not because they are market leaders that there is no alternative (which monopolies don't offer)
In the same way you can put a store in a rural place, or you could put in in New York 5th Avenue with warrantied traffic.
And of course that 100% does not take into account your cost of hosting, creating or adapting the necessary infrastructure and maintenance.
> Starting from October 1, 2018 (i.e. revenues prior to that date are not included), when a game makes over $10 million on Steam, the revenue share for that application will adjust to 75%/25% on earnings beyond $10M. At $50 million, the revenue share will adjust to 80%/20% on earnings beyond $50M.
(https://steamcommunity.com/groups/steamworks/announcements/d...)
The Epic store really isn't much of a competitor at all yet, the only reason it's having any impact at all is because they've been paying developers to release exclusively on the Epic store.
Which might be for the best, Steam is in dire need of a serious competitor (I know GOG and co exist but sadly they have not been able to make a real dent in Steam's marketshare).
Steam has dropped so many balls and the main thing going for them is inertia.
Also, just because paying a large cut to various middlemen is common does not mean it is ok.
Maybe someone in China could, but they don't directly compete.
GoG has a niche they're trying to expand, as does Humble. A few other small stores. Game company ones (EA, Blizzard, Ubisoft) are not even close. Funny enough, the small shops often resell Steam keys...
> You keep full ownership of all content that you post on Patreon, but to operate we need licenses from you.
> By posting content to Patreon you grant us a royalty-free, perpetual, irrevocable, non-exclusive, sublicensable, worldwide license to use, reproduce, distribute, perform, publicly display or prepare derivative works of your content. The purpose of this license is to allow us to operate Patreon, promote Patreon and promote your content on Patreon. We are not trying to steal your content or use it in an exploitative way.
Facebook, on the other hand, has numerous ways to benefit that don't proportionally benefit the creator, including from indirect revenue sources like advertising and data enrichment that don't flow back to the creator in any way. I suppose this is alright when you are just showing cat photos to your family, but it's quite different when you are basing your business on someone else's market-dominating platform with large negotiating leverage. And there are known cases where Facebook has been known to very liberally appropriate ideas from companies that are competitive with them (e.g., Snapchat).
So if your content would make a good ad for Patreon, you've given them permission to use it without compensating you.
Google has a guarantee on when your deleted data disappears from tapes in vaults, and it was something that every engineer at the company had to think about (not to mention a ton of work in actually implementing it). You may wish for Some New Startup with 2 engineers to do it for you, but it's hard, takes time, and nobody actually cares. Look at how many people use Patreon despite that policy. Why spend years of engineering work when your lawyer can get the problem fixed in 5 minutes? It's just economics.
The real problem is when Facebook uses that content to further their business interests. Likewise, the publisher shouldn't be sending that rejected manuscript around for others to mine for ideas.
(that said, to avoid the temptation that gives rise to this precise problem, it's common practice for publishers to return rejected manuscripts)
That argument makes no sense if you're talking about publishing, AKA making something available to the public.
But the real world of production computer systems is not always the happy path. Consider the case where you delete your account, then the service suffers a database problem, and your content doesn't actually get deleted (failover to a replica, restore from backup, etc.) Now they are violating that contract with you. That is why they make the terms of the contract "in perpetuity" so the engineers can fix the production system incrementally, rather than saying "welp, there's a risk of a lawsuit if we failover to the backup, so we're shutting off the website and paying back the shareholders, everyone go home, we're done here".
Like I said, some companies take a middle ground where they really do guarantee deletion even if unhappy events take place at exactly the wrong time. It is possible. It's just not very economical.
If this was just about liability, the terms could be much narrower. They're intentionally broad to guarantee the maximum benefit to the platform and allow them to come up with other uses for that data later on.
This is exploitative and only works because of the power imbalance between platforms and individual creators. Even if you follow the idea of the "free marketplace" you'll have to acknowledge that creators have no individual leverage when it comes to platforms with "take it or leave it" ToS.
The objectionable part is not the exclusive license. The objectionable part is the sublicense right, which lets Facebook sell creators works to third parties without paying the creators, and even after the underlying business relationship with the Creator has ended.
I know what some are thinking, these platforms are extremely successful. this is partially true, but they haven't thrived anywhere near I think they are capable of.
Both Apple and Google drop subscriptions to 15% after the first year.
I could see that happening given that you'd have a huge base of people with accounts already and it's a platform for sharing content.
Patreon is not that. At its heart, it's primarily a service for collecting donations. There is some content hosting, but that's kind of a secondary feature.
The 30% is a tithing to Apple for creating iPhone in the first place.
Patreon could sort of justify the same thing. Their real product is just the idea that anyone could be a monthly patron at all. That’s worth a LOT to creators. People didn’t think that way before Patreon.
I think people are just getting hung up on the number without thinking deeper on what it costs to make things sustainable.
5% of the 500 million Patreon claims to be able to process is 25 million. According to their team picture on their website (https://www.patreon.com/about), they have 74 employees. That amounts to $330000/employee. Halving that to account for benefits (chair, table, wifi, insurance, etc) leads to $165000/employee for salary which seems reasonable average for a senior employee in the Bay Area. Notice this doesn't account for infrastructure, taxes, outside counsel/contractors, etc. It's crazy that after working for 6 years and creating half a billion of value, a company can barely afford to keep the lights on, let alone make a profit. I agree 30% just makes sense for a platform - you need enough to hire properly, pay all expenses and make enough of a profit for this to make sense. The alternative is half a billion of value disappears to save on a few million which I think is incredibly myopic.
An high quality chair is, say, $500 amortized over 5 years. A table, $100 amortized over 5 years. Open office space (at 65 square feet per employee and $100 per square foot per year) is about $6,500. Insurance is about $7,000 a year per employee - total.
So, under 10% of that extra per-employeee revenue is what the actual costs for those "bonuses".
Then manufacturers and cell phone companies started realizing the money train they were on. They made billions by selling this same crap to people who didn't know how or have the time to customize their own phone.
As it turns out, billions of dollars tends to get people's attention. Now those same companies are locking down PC boots, taking out headphone jacks, and all sorts of other things to "help" us have better computers. Each of them will involve trying to keep those cash cows lying around, maybe grow the herd a bit.
My point is this: smart people caught on to this bullshit. Facebook, Patreon, and the other fan/audience aggregation systems are doing the same thing, just with a different platform. I'm not sure, but I think the folks are catching on faster this time around. We're going to end up with an internet where the tech elite use services that actually facilitate their lives while the rest of the world use various subscription and "helper" services that try to extract as much money as possible from them at every turn.
E-gads we live in a weird world
As Sir Tony Hoare lamented:
> At first I hoped that such a technically unsound project would collapse but I soon realized it was doomed to success. Almost anything in software can be implmented, sold, and even used given enough determination. There is nothing a mere scientist can say that will stand against the flood of a hundred million dollars.
I get the feeling that a lot of modern products are boondoggles on the merits but "doomed to success" because FAANG et. al. put them on a pedestal and the media is all too happy to go along with corporate marketing narratives if it grabs eyeballs (see e.g. the ridiculous amount of hype around foldable phones, which are sort of neat but hardly a revolutionary advance).
Yea what's going on with that nonsense? I can't wait until consumer electronics turn into appliances and all this tech messianism finally dies off. It's not like the newer stuff really is better anymore. People are just looking for their next hit in tech products.
Are they thinking that people will sign up for this because it gives them instant access to lots of people on FB, and that justifies the higher percentage? I'm guessing that creators will end up having to pay to get exposure, just like brands, which nullifies this potential benefit.
"Perpetual and irrevocable" means that it continues even after you stop using their service.
Welcome to walled gardens.
I work a tiring manual job for three days to pay bills and buy nice things. The rest of the week I have some time to take photos and write other content which I share freely online.
I don't expect or demand that anyone else pay for my hobbies.
A hundred years ago most people had vast swaths of their productive life that operated outside of the economy. Housewives cooking meals, people fixing their own cars. Dances in barns. Etc.
Many “regular” people still live that way, which is where your statement is false.
Over the last 100 years there has been a concerted effort by business owners to displace all of that activity and replace it with productized equivalents in the economy:
You don’t cook, you buy frozen dinners. You pay to have your complicated car fixed. You don’t walk your friends dog, you get paid to do dog walking gigs. You gramma doesn’t cook you soup, you get it delivered. People don’t meet up in a barn, you go to a club and pay a cover.
This is new. And I’m not even saying it’s fundamentally bad for us. But for some of us it is disorienting.
Note that someone who only works 40 hours but has to commute 1.5 hours to and from work because they can't live in the city where the jobs are and spends 2 hours taking text emails while not actually at work has committed 65.5 hours of their time.
half hour getting ready for work, 1.5 hours driving there, 4 hours on lunch for an hour, 4 hours on, 1.5 hours getting home.
People working multiple part time jobs are worse off. They may be "working" 60 hours and committing 80.
I lived/studied in Boston, MA number of years, and I used to meet up with my childhood friend who immigrated from Georgia roughly 8 years ago at his late teen years. He graduated from a very prestigious business school, and has a decent job but after the day was over he used to do some extra stuff, like driving someone from place to place, some screw driving job (I don't exactly know). It seemed crazy to me, I asked numerous times what are you doing dude? His response was extra $ is not a bad thing.
It might sound a bit bold and too generalized, no offense, I'm up for conversation - in the US people forgot what it means to rest properly.
Roughly a year ago, I was visiting my good friend in Germany, who immigrated 15 years ago. He was encouraged by another friend who lived in California to move to the US. We sat down and make a list of comparisons. Just to name a few:
Germany: 1. Workers Union protects employees. Pays a salary (70%+ of it) for 6 months if one looses a job. Also, a simple cold is good enough reason to take a week long leave and you're encouraged to do so. - US? no bro, you're on your own. It's a god damn pressure that makes people work unworkable hours and being in the endless state of anxiety.
2. Car insurance - he drives a new BMW and pays ~ 350 USD per year. We quoted the minimal package for insurance in MA for the same car, guess the number? 10fold: 3000 USD per year.
3. Education? - Free. US: 70$K per year.
4. Cost of food. Well, Germany is "notorious" even in EU for grocery affordability.
5. And Beer? German Hefeweizen 60 cents. Samuel Adams? no thank you. (half joking)
I did eventually left the US, although data science/engineering is the dream job generate money, but quality of life is no less important than the number of 0s at the end of bank acc. balance.
And that's what it is, as SatvikBeri has already said. People typically don't go to Patreon to find new content. They consume the content elsewhere (YouTube, Facebook, etc) and then go to Patreon. Facebook et al are packaging together a huge userbase as well as a very targeted marketing service amounts.
In the big scheme of things —because I'm sure some people do browse— Patreon is just the money processor.
Edit: Should also point out that YouTube has a similar system. Users can pay 100K-sub channels a fixed £4.99/month and Google keeps 30%. It's all about the point of contact. YouTube, Facebook, established app markets, etc all have near-monopoly access to people. That's why they can demand the big bucks.
Patreon not only collects money, it also provides a way to assign rewards, define goals and notify patrons (filtered by reward level) of new content.
It's not a publishing platform, but it's not just a payment processor, it's also a kind of marketing platform.
That said, the most appalling part of Facebook's "competitor" is not the 30% rate, it's that their ToS try to pull the same bullshit stunt they try to pull on their social platform: tricking you into believing you owe them perpetual transferable rights to everything you share via their platform. They know this isn't actually enforceable (at least not in all jurisdictions internationally) but they still try to trick people into believing they unknowingly agreed to it and are comfortable exploiting those in jurisdictions where this nonsense works and those who don't know any better.
That makes it kinda ridiculous.
$5 subscription.
30% to Apple: $1.5
30% to Facebook: $1.05 (of the remaining $3.50)
Leaving the creator with: $2.45
I assume it will be out of control of the content creator regarding how the subscriber chooses to pay/subscribe, so the margins could be all over the place.
Marginal tax rate - ~38%?
$5 subscription.
30% to Apple: $1.5
30% to Facebook: $1.05 (of the remaining $3.50)
38% to the Government: $.93 (of the remaining $2.45)
Leaving the creator with: $1.52
If the invoice you give your customer says "$5.00", isn't the tax taken from that? That's how things work in Europe, the gross income is taxed.
Alternatively, those costs are simply deductible from taxable business income, for the same result, even on individual returns. (In the US business income is taxed on a net basis.)
No doubt you'll need to sign up to Facebook to even view the content, so I'm out then.
Of course Facebook has enough loyal users that they might actually be able to make this work..
FYI, here's the current top comment in this very thread:
> 30% is the same cut that Apple and Google take for everything that goes through their app stores, including all in-app purchases. It's the same cut that Steam takes. It's the same cut that YouTube takes for channel membership. Twitch takes an even larger cut: 50% from subscriptions. It's extremely well-established that people are comfortable with platforms taking that large of a portion.
I'd say not that paranoid.
The point of this is OBVIOUSLY not just profit, it's about figuring out how to get more and more stuff to live in Facebook, be run by Facebook, and tracked by Facebook.
Zuck and Sandberg can't tolerate the idea that people are donating to things and they don't know about it. They want to know who donates to what and all the other details. And they'd like to eliminate the existence of any content that's outside of the Facebook ecosystem.
https://twitter.com/ericacbarnett/status/1100809443422302208
A significant fraction of creators will seek alternatives when they hear about the FB product, or after being burned by it.
Twitch streamers also use Patreon, but subscriptions and cheers on Twitch are more successful from what I can tell - it's closer to the content. If somebody is using FB as the primary way to release content, it's only natural to also do the donations/subscriptions on FB.
Looks on par with other providers.
all they'd have to do for this to be successful is to make reach for partnered pages the same as it used to be before they limited it. there are pages with 1million followers who have a reach of 10-100k right now coz of the new rules.imagine if facebook said "partner and you get 1 million back".
As a content creator that charges $25/mth, would you rather: 1. Patreon - 500 subs 25x500x.95=$12,500 rev 2. FB - 5K subs 25x5000x.70=$87,500 rev
10x growth doesn't seem unrealistic given FB's scale and $$ motivation to grow your audience