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Comment by Deimorz | Hacker News Reader

I don't understand why people are acting like this is ridiculous and will obviously fail. 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.

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...

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Disclaimer: I'm working on a platform that allows you to contribute to open source as a whole and which distributes your money proportionally to how much you care about various projects. I'm thinking of taking 30% as well.

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.

Common, as a VC-backed company Patreon doesn't even pursue a sustainable business model. Most of those 74 employees are for anything, but sustainability. When they first started they had like a few people and pretty much the same service as they do today.

If you're charging 30% then donors and the projects they support are better off leaving you out of it and just interacting directly with each other as you don't appear to be providing any significant value to either side.

$165,000 for a chair, a table, wifi, and insurance... is a really outlandish assumption about per-employee costs.

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".

Apple and Google provide significant added value in their app stores: distribution, discoverability, licensing, testing (at least in Apple's case)... etc.

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.

What content can you host on Patreon? I only really have experience with authors and text is cheap to host. Can you host video?

Nope, Patreon doesn't host video. Generally I think people upload their Patreon-exclusive videos to YouTube as unlisted and use that as a free hosting service.

Video no, but you can host audio. They have functionality that lets you set up a patron-exclusive podcast for example

Text and images. It's pretty basic, mostly meant as a way for project creators to provide updates on what they've been doing.

Patreon is actually largely a paywall-service. It's about collecting donations AND tying that to accessing paywalled stuff.

I seriously doubt Apple’s cost to administer the App Store is double digit percentages of revenue.

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.

Yes, but Apple and Google have monopolies.

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!

Steam is, despite there being a lot of competition, the de facto one stop shop for digitally distributed PC video games (and is in itself a kind of DRM protection). I think that a large proportion of gamers would be happy for almost all of the competition to disappear in favor of getting everything on the Steam platform.

> I think that a large proportion of gamers would be happy for almost all of the competition to disappear in favor of getting everything on the Steam platform.

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.)

> There's probably some economical theory around this that I don't know ... competition is good for the consumer when ...

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.

That's because Steam's community features are second to none.

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.

Steam functions as an OpenID provider, so external vendors could (theoretically) use Steam logins for their platforms.

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.

Keeping Valve in check is worth the friction. Today they might be benevolent now but when Gabe Newell is gone they will have same problems as Apple because Steve Jobs is gone. There is a high risk a new CEO will just be a paperclip maximizer.

valve is different (not sure if for better or worse) in that it's privately held.

eBay takes 15% plus some listing fees and that doesn't include the PayPal fees.

The alternative is always to offer your content from your own website, and take 100%.

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)

You will be taking 100% of nothing… Because no traffic will visit your page versus Google's or Apple's traffic.

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.

Exactly! And then people complain that the prices of real estate on 5th Avenue are outrageous.

Valve cut their fees to 15% recently for games that sell well, and reduced the normal fee from 30% iirc. Epic Games has brought serious competition to the industry, offering a broadly used game distribution channel for a low price.

No, the normal fee is still 30%, and the reduction is only for extremely high-sales games and never goes below 20%:

> 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.

I think you underestimate Fortnite. It is a game played mostly by kids and teenagers. Often, they don't have a Steam account. So if Epic catches them, Steam won't get them.

It should be mentioned that Steam's monopoly is assulted by new players like Epic with a 12% cut.

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.

It is not even close to assaulted. It is not inertia, but network effects and completeness of package offered by Steam, as well as resale deals.

Inertia is also a thing. No way am I leaving 150 titles behind or splitting a collection of a game between different platforms (eg Far Cry 1 -> Far Cry 6).

Steam is a platform for video games and is by far the leader in this market. They do have some competition, and their take is 30%

About the only places I'd call actual competitors... Are none. Nobody is close to 10% of Steam sales and specialized in video games. They are a monopoly and will push the price. They cannot push it too much or a cheaper small store might overtake them, but competition is not the force setting the price. The cost of switching is. The network effect strength are.

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...

Gog recently announced that they'll allow third party stores to resell gog keys (mobile, so no link). I really hope that shakes the market up a bit (and I generally really like gog and always prefer then when there is price parity)

The problem isn't the %. It's the perpetual IP license, which grants Facebook complete non exclusive rights to the Creator's IP, including licensing it to third parties without further pay to the Creator.

Patreon requires you to grant them an extremely similar license:

> 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.

(from https://www.patreon.com/legal)

but... sublicensable?

I don't know what you're asking. It says "sublicensable" in there, yes.

I think he means that's the most unacceptable from the bunch

I think it makes sense if the business relationship is actually artist <--> patreon <---> consumer. The client pays patreon, so patreon must sublicense the content to him. Otherwise I'm lost.

Sublicensing is what legally enables things like rich media link previews (the kind you see on Facebook and Twitter) or APIs to exist. Yeah, theoretically they could use that to sell content, but in practice it's generally used to make the web more interoperable.

It also states that it's for the purpose of promoting the creator's content on Patreon. For example, showing a thumbnail image of your video on another page as a recommendation would count as a 'derivative work.' Without this right, it would be virtually impossible to get permission from the creator for every instance in which Patreon wants to promote content in a new way. Also, it seems that the creator on Patreon would continue to benefit when Patreon earns value on the content.

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).

It states clearly that it's also "to allow us to operate Patreon, promote Patreon, ...".

So if your content would make a good ad for Patreon, you've given them permission to use it without compensating you.

This boilerplate exists in literally every site that hosts user-created content in some form and displays it to other people. If it didn't exist, the site would immediately be violating your copyright if they showed your content to anyone other than you

That doesn’t explain why it needs to stay in effect after you terminate your relationship with them.

Backups. Why commit to reliable destruction of data when you don't have to?

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 issue with facebook is not that they simply hold a copy of your data after your relationship ends, but that they have permission to continue using it. Few content creators would object to Facebook keeping a random copy of their content on a tape drive. It's like a book publisher keeping your a copy of a rejected manuscript in a warehouse somewhere.

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)

> Backups. Why commit to reliable destruction of data when you don't have to?

That argument makes no sense if you're talking about publishing, AKA making something available to the public.

I disagree. By default, the copyright holder reserves all rights. For the website to display that content, they need a license. When the owner deletes the content, it disappears from the website, so no license is required. This is a "happy path" that allows an agreement like "when you delete your account, you revoke our license to distribute your content, and we will comply with our legal obligations".

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.

Well thank god the GDPR already killed that old scapegoat (unless your creative content backups are guaranteed 100% PII free).

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.

I love when non lawyers try to claim that two completely different things are actually the same...

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 truly believe its these excessively large cuts that make it impossible for these platforms to really grow, grow to something actually substantial.

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.

Those cuts are egregiously large, IMHO. Those platforms should be hacked into pieces until competition forces them to fall (or have their pricing regulated like a utility's).

Their billion users seem pretty content to use them in spite of the numerous alternatives.

I have a mac app which is exclusively available on the App Store, so I pay 30% of my revenue to Apple. I could spin up my own system but then I have to build out payments (credit card processing fees), distribution, updates, beta testing, and figure out discoverability. In the end, my app isn't big enough to build these things out myself, but at least if I wanted to I could. Different story on iOS.

> beta testing, and figure out discoverability

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?

Oh yea, I get beta testing from hockeyapp since testflight isn't out for the mac.

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.

I'm not saying those platforms don't provide value and that they shouldn't charge anything, I'm just saying that 30% is egregiously high. I don't know what Apple's App-Store operation costs are, but my gut feel is 5-10% would be more realistic rate to charge.

30% is high, I agree. And I also pay over 30% to the government for taxes after that too.

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.

> 30% is the same cut that Apple and Google take for everything that goes through their app stores, including all in-app purchases.

Both Apple and Google drop subscriptions to 15% after the first year.

One thing that helps justify it to creators for all these services (including Facebook) over Patreon is that they at least provide hosting, usually of bandwidth-heavy video files or live streaming. Patreon just hosts the equivalent of a Twitter feed linking to YouTube videos.

I don't use patreon but isn't there often 'patron-exclusive" content? I thought that content was hosted on patreon itself.

I’m not actually sure if Patreon hosts video, but the one creator I subscribe to, AvE, posts videos a early for patrons as unlisted YouTube videos. After a week or so, they go public.

All the patreon-exclusive videos I've seen (5+ channels) have been unlisted YouTube videos. I've never seen a video hosted on patreon.

To add to this, while the cut is 6 times larger, you only need a 40% larger audience to make up for the cost.

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.

I would be more concerned about platform censorship with both of them.

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