Patreon ups its revenue cut, but grandfathers in old creators
techcrunch.com
techcrunch.com
Instead of realizing just one of these things, they are escalating headcount, exploding costs, manufacturing imaginary growth and squeezing their captive audience for absurd "revenue cuts". Only to wake up one day and realize their audience has left, pivot, straggle and fail.
It’s unbelievable how slow Patreon is, given that “website that shows images” is a well-solved problem. Couple that with the all-dynamic-all-the-time, continuous-scroll-all-the-things UX, and it’s one of the worst websites I use. There must be serious network effects, if nobody has risen to eat their lunch.
The complaint is about forced inefficiencies that Patreon then foists onto its customers. They are balancing their books by upping their fees, not streamlining their business and they can only do this (in the short term) because they have a fairly captive audience.
We are about to see a whole sea of Patreon competitors.
I really hope so! I had been using Patreon as a "poor man's microtransactions" with $1 subscriptions (contingent on actually producing content, if possible) on something like 40 creators. I moved over to SubscribeStar, but they don't have the default $1 option.
A web app could aggregate charges to me, and aggregate payments out to content creators. Obviously. That's what Patreon was doing. Others could do it too. (If the allegations of collusion with payment processing are true, this would explain why this isn't done more.)
YouTuberLaw was working on a complaint to the FTC. There was allegedly some sort of collusion against their competitor SubscribeStar during a recent controversy, where SubscribeStar suddenly lost their payment processing.
During that event, people were trying to unsubscribe so they could delete their accounts, but Patreon was removing the pages with the unsubscribe control! (Looked like incompetence, not malice to me.) Based on what I've seen Jack Conte and other Patreon people say online, I don't think the officers of the company have very good control over what employees are actually doing. They actively contradict each other at times.
A “controversial” Patreon-account was banned over content not posted on Patreon.
A Patreon-representative leaked in a tweet that this was done on the request of MasterCard and that there was nothing they could do.
As a result he moved to SubscribeStar and asked his followers to move over (which seemed to work).
Now this is where things get interesting...
SubscribeStar uses PayPal for payment processing.
A former paypaler moved to patreon.
This person may have called some contacts/favors, because SubscribeStar suddenly found their entire PayPal account locked down and no longer received any payments from or for any accounts. Their business was effectively dead.
It’s not a smoking gun, but certainly enough to cause warranted speculation.
At best it’s PayPal not having good routines (and we know that already, right?), at worst it’s companies like MasterCard now policing what kind of internet-business or internet-content they will allow to be profitable, globally, unchallenged.
Either way, the situation leaves a lot to be desired.
Edit: This was actually discussed on HN until flagged (like too many interesting discussions). All I can find now is this link:
https://www.jihadwatch.org/2018/08/patreon-and-mastercard-ba...
To be fair, he does try to be controversial, and he says some hair-raising things. Basically, imagine that you went into a den of literal neo-Nazis, and you were trying your best to say things to shock and insult them. I don't think that's very smart of him to do.
Edit: This was actually discussed on HN until flagged (like too many interesting discussions).
This does seem to be a pattern around here of late. There's a lot of pushing of narratives all across the Internet, which amount to "this person is [something horrible] don't even read their material." Much of that is false. At the same time there are genuine [something horrible] going around in much larger numbers in the past few years than the decades before.
I think the real target is rational discourse itself.
But is it known that a competitor can kill your business with one short phone to PayPal without you having done anything to violate their TOS?
That seems like it could be the issue here.
If you ever have to go to the Patreon website after having become a patron to your desired creator, you're doing something wrong or they are. There is no reason in the world you should be leaning on patreon to serve content.
You're the patron, your creator is your content maker who should be using other means to communicate the content to you (youtube? other web hosting? soundcloud? There are many ways, I use all of those) and your pledge is the product: the creator is the customer, not you.
I truly don't care how silly the website is when they pay me my revenue like clockwork without issue. Patreon is not a web hosting service. Patreon collects subscriptions from patrons and manages that stuff, as well as anything else I've used.
If all they're doing is collecting and forwarding money then they're one of the most poorly run businesses and massively overbuilt even with their subpar product.
If I subscribe to a creator, then one of the first things I want to do is go through that creator’s content. Patreon makes this exceedingly painful.
Sending you the money is the niche use-case. Viewing the content is core to the UX of most Patreon users.
The difference is, on Patreon I can also give the content away to all and sundry, open-source it, and spend zero time or attention trying to police the digital copying of it.
People only being interested in Patreon as a mechanism to send me the money is 99% of my entire userbase, and everybody else's that has a significant revenue from Patreon. That mechanism is NOT as easy or trivial as people make it out to be on Hacker News, and I value it. But you've got it totally backwards, and your type of expectation is what's damaging Patreon and getting them to have dozens of managers and marketing staff. A lot of that headcount is about getting them to do the unwanted, unneccesary and unhelpful.
Anecdotally, I agree with this. Getting people to donate to stuff is hard. If they have to sign up for a brand new service and share payment information with them to do it, they won't do it. So as a creator, you're incentivized to put proportional amounts of work into proportional platforms.
As a user, part of the point of Patreon is to more efficiently distribute micro-payments. There really aren't any good ways to do micro-payments online. Pretty much everything either has fixed fees that make donations of <1$ incredibly inefficient, or it's just a pain to support. So as a user, you're highly incentivized to group as much of your donations as possible onto a single platform so they can be batch processed.
If there was a universal, protocol-based way to send someone micro-payments online that didn't come with any fees, I don't believe Patreon would be able to continue existing. It would be so easy for anyone to outcompete them on everything else.
But I dunno how close we are to something like that. Even in a magic world where bitcoin becomes stable, cryptocurrency still wouldn't solve that problem -- you still have fees associated with payments that make it advantageous to group payments together. Zelle? Maybe? There was an article a while back about cities starting to ban cashless stores, and while I'm normally fairly libertarian, I looked at that and thought, "wow, we should probably have at least one nationalized digital payment system."
- "They are already a monopoly" False. Youtube is pretty big. And there are more.
- absurd "revenue cuts" - break down the costs. The human cost of doing email support and in some cases phone support. Legal, trust and safety, legal, etc. Now add the product development costs of a web service service in San Francisco. And finally add the % for the credit card processors, which isn't small.
YouTube has their own Patreon-like payment system, but only for YouTube and built into their app.
Why did you list legal twice? Sounds like a way to save money right there. Anyways, the point is that the service is very minimal given the money raised and there's no reason they had to build this in San Francisco.
It's definitely a classic case of something that could be wildly profitable but now will never be sustainable because of taking on too much VC.
For 2019 they're projecting 25 million in revenue in addition to their 5% transaction fee. I have no idea how they can't build a business out of that.
I think the GP has it right. Patreon can easily be a 100-200 million dollar kind of company with steady 10% returns. Since they've raised money at a big valuation that's not good enough. They have to be a billion dollar company for the VCs to get the return they want.
Also, note that when they express a desire to migrate to another similar service, they know full well that such a migration would involve losing a significant fraction of their patrons who don't go with them for a range of reasons. So in a very real sense, they are willing to pay to move off of Patreon, if only they could find somewhere to move to.
Like it or not getting sustainable patronage like that requires that the donor get something in return to capture audiences the way Patreon does. It doesn't necessarily have to be what Patreon gives you - usually exclusive posts on the Patreon page, maybe recurring rewards that cost a lot less than the pledge tier - but independently implementing that outside of the website would be at best expensive and at worst ineffective because Patreon has the patronage "mindshare" and people "trust" it now.
https://www.businessinsider.com/jordan-peterson-says-hell-la...
In effect, they’ve stopped accepting donations on purely ideological ground.
While that’s certainly admirable, they are well off enough to be able to afford it.
Most patreon-based content creators probably aren’t.
So until that is all sorted out, content-creators are stuck with what they have.
Reminder that SubscribeStar is back up and running. They are a good alternative, at least in the interim, if your supporters are leaving Patreon.
I wish he understood that he could do the Amazon model. Go 'screw you, investors: we own the entire sector and that will be your return, to have a piece of the only game in town'. I don't know if he can be that arrogant but we need him to be.
Moving from a regular payment processor to Patreon involved knocking a decimal place off my revenue and slowly recovering (in a way that was more predictable and consistent). These proposed changes in commission don't alter that underlying fact: the business model is better for an independent creator than much higher but spikier revenue off direct sales. Doing a migration throws all that away.
I don't even want to switch to an alternative. I want Patreon to be the Amazon of frictionless-caring-through-money, and my patrons do NOT come from Patreon anyway so there isn't anything really to lose.
If they pull a 'Kagi' and blow up, vanishing one day and owing me hundreds or thousands of dollars, that's when I'll be pissed. So far they have not done that and I'm not convinced they will. They don't have to: they're earning shitloads of money quite legitimately. It is only investor logic that has ANYBODY saying they are doomed, and you could have said the same about Amazon all this time.
They're Amazon for indie creators. Deal with it.
Patreon wants to be a politically/culturally aware brand-crafted payment platform for "the creative class." It doesn't quite want to be "the Amazon of frictionless-caring-through-money."
What if someone else was trying hard and executing well on being "the Amazon of frictionless-caring-through-money?" Would you switch?
It's extremely easy to create a website, add a PayPal button, and ask your supporters to donate that way. A lot of people have been doing just that after Patreon's recent deplatforms.
Or, there is also SubscribeStar.
Patreon are just a middleman, but their arrogance of thinking they are more and their crazy spending will make them go bankrupt pretty soon.
A lot of people for decades have tried self-hosted websites with Paypal, Bitcoin, Ko-fi in recent years, etc links. They might even have perks the way Patreon does. But Patreon has mindshare and network effects now and in the same way the only place to get video ad revenue is on Youtube the only place to find recurring sponsors is on Patreon.
Those effects are probably not as strong because people aren't looking for things to sponsor on Patreon, they find projects with Patreons and pledge through that, but the familiarity of Patreon versus unfamiliar alternatives dissuades enough contributors to make most alternatives nonviable or at best extremely risky to try.
They have the potential to make way more than a lifestyle business at scale. The idea that they can't is either disingenuous (i.e. greedy) on their part or complete incompetence.
When I went to Patrecon and asked Conte "so what happens if the VC decides it wants a return on its investment" and I think the tl;dr of his reply was "our VC is a bunch of wonderful supporters of the arts who are perfectly fine with not making big bucks off us". I felt like he was blowing sunshine up my ass then and I kinda feel like that even more now.
I wonder what's going on with Kickstarter, Drip, and KS's handing Drip off to XOXO. I would be a lot more comfortable using a membership site that's run by a Public Benefit Corporation instead of a corporation that's got VC to pay back.
I'd love to get your input as a creator and hear your thoughts. If interested, send me an email at yaniv@mynexus.io.
Getting such a co-op into a position to actually be preferable to everyone involved might sometimes, in some cases and scenarions, work out to be less pleasing and wonderful.
The question is, would Patreon have succeeded had they not taken in $2 million in seed funding or would they have been beaten by someone who did? Since the second they took seed funding they were no longer on the path of a lifestyle business.
Do the creators on Patreon get access to an email list of their "patreons"? Obviously they could blast out a new payment site on their YouTube channel, but I'm just curious what an exfiltration would look like.
I do think you're probably right that if Patreon oversteps and upsets their creators, those people will move to another service (and I'm sure someone will be waiting to offer the same thing cheaper).
I don't see why even Kickstarter or Gofundme couldn't offer this very service without much work. It looks like YouTube already is experimenting with paid channel subscriptions.
I think their cut is many times that of Patreon's, though.
I've seen at least one creator that I support do exactly this, moving to Ko-Fi. I followed them, but I don't think Ko-Fi publicly shows the total monthly donations a person receives, so I have no idea what the attrition rate was on the migration.
Not entirely true. Moving, as of now, involves shedding a significant fraction of your users. More people are on Patreon, because more people have been on Patreon, and they are the company more potential subscribers are familiar with.
That said, it's not a very strong network effect. Patreon seems keen to do exactly what it takes to start bleeding subscribers and creators to other platforms, for solid economic and first principles reasons.
Recently the one "creator" that I funded on the platform moved to allowing direct bank transfers. I was glad to make the change: my bank is a platform that I really am already familiar with, way more than Patreon.
And the creator did not have to belong to the same bank as me.
Taking direct bank transfers from random strangers is a good way to get your accounts closed for fraud and banned from all banks.
If just one of your supporters pays from a hacked bank account, or with North Korean/Iran etc money, your account will be marked as the receiver of stolen funds. Your bank will close the account, and they put your name on a register of people never to deal with again. They publish that register to other banks, so you'll never be able to bank anywhere with the same identity documents.
There is no route of appeal, and they can't even give you info on the supposed bad transaction(s) because that would reveal how their fraud detection works. "I'm sorry sir, we can't open you a checking account, and we aren't allowed to tell you why".
Taking money by credit/debit card protects you from that it seems - they are designed for taking money from strangers.
The $64,000 is - would they have reached this position without the initial venture capital?
I assume they burned a lot of money to get initial mindshare/awareness amongst creators.
Without that, they may have died on the vine (or had a competitor swoop in to cut their lunch).
Most creators that make big bucks on Patreon do not use it for donations. They simply use it to sell stuff. Like https://www.patreon.com/PokeGo20 who have 62k "patreons" paying for a "fake my Pokemon Go position" software. Or https://www.patreon.com/chapotraphouse who make over $100k/month by selling access to their premium content.
Patreon is needed because selling on the net is such a hassle. Nobody wants to fiddle with their credit card unless it is important. Nobody wants to give it to "someone on the internet".
It's funny, because it would be so totally easy to create something like cash on the web. It just needs someone to start a business of selling tokens for $1.10 and buying them back from whoever comes first for $1. Voila - internet cash. Sell sealed tokens in stores (over the counter or via a machine that eats coins) - voila! anonymous internet cash.
You're right that we do not have the equivalent of cash, but we do have the equivalent of monopoly money - and it works well enough that users are willing to pay sky-high transaction fees in order to exchange it!
The reason we can't have nice abstractions involving money is basically because it attracts criminals. Any business dealing with money has to figure out how to deal with fraud or they don't last long.
figure out how to deal with fraud
1: Sell tokens for $1.10 each 2: Buy them back for $1.00 each
Done. No fraud issues.
That could be from a charge back, bounced check, or because the cash was determined to be counterfeit when deposited.
A big problem is the costs involved may be 10% at scale, but are certainly more than ten cents per transaction, so you need to get a deposit, but I'm not buying $50 worth of flooz to pay someone $1, because I don't know when flooz is going to stop working. Anyway, it's not that hard for someone to run a PayPal shop, as long as the product fits PayPal's tos and doesn't look suspicious.
What does your token issuer do
when the purchase of a token is revoked?
When Joe buys an apple from you with a dollar note and you bring that note to your bank - what does the bank do when Joe returns the apple to you? Nothing.
The token issuer sells a box of 100 tokens to a store. And charges the store $110. Just like a chewing gum merchant sells a box of 100 chewing gums to a store.
Last time I checked, there was chewing gum in stores.
Do I go down to my local store, and buy tokens from them, that they've purchased from the issuer? How is that very much different than a prepaid visa/mastercard/amex gift card that I can get today; maybe that it's easier to spend the money with people who can't get a credit card merchant account?
How much margin is the merchant going to add on top of what you're charging them?
How do you deal with anti-money laundering laws, etc?
The question isn't whether there is crime or not, but how much and whether it's worth the cost and risk. Merchants do have to spend time and effort fighting it. It's a significant cost of business.
So now all you're proposing is just a different currency with these tokens. This solves absolutely nothing. Nobody needs to use tokens when they already have real currency to use along with various transfer services to move money physically and digitally.
So, lots of fraud, probably, but if it doesn't affect your profits, you don't care, right? But the government cares and they will come shut you down.
> The economics of drug dealing make it cost-effective to pay 5% to 10% to betting shops to launder the illicit profits.
https://www.theguardian.com/uk-news/2013/nov/08/gambling-mac...
it didn't shake out that way because
most people ended up "investing"
- They want you to put a fu..... app on your phone. People hate that.
- Then they want you to send fiat to some company involved in crypto. So your bank might mark you as a criminal.
- Then they want you to guess some transaction fee that will get your payments through.
- Then they make you wait an undefined amount of time before the transaction counts.
The reason for this mess is that all the crypto currencies used Bitcoin as their blueprint for their design. And only made minor adjustments to how it works. Bitcoin has a lot of interesting properties. But they are not needed for every day transactions. Yet, it pays an insanely high price (in terms of complexity, usability and performance) to achieve those.
If you really think it's that simple then I encourage you to start your journey to becoming a billionaire, but you'll quickly find out that very smart people have already worked on this and what we have today is the best given the vast complexities and regulations around money transfer.
> It just needs someone to start a business of selling tokens for $1.10 and buying them back from whoever comes first for $1.
You just described what patreon, paypal and other exchange services already do, but with even higher fees.
Too bad there's not an internationally standard way of sending or requesting e-transfers.
Patreon has over leveraged themselves via VC investment and they have nowhere to go but up.
Creators are not wedded to middlemen, especially those who provide little value.
Other companies such as BitPatreon, SubscribeStar, etc have recently started to gain marketshare, albeit a small one. It continues to grow.
Princess Leia said it best: "The more you tighten your grip, Patreon, the more creators will slip through your fingers."
We need to look more closely at business models like this, where a new technology starts gaining traction and insane amounts of money piles in to squash competition before it even begins. It's anti-competitive/anti-capitalistic and ends up hurting consumers in the long run as they force them to pay for the privilege of having nowhere else to go.
See also Grubhub.
What they can't now do, is what they should be doing - which is staying where they are.
[0]: https://bitpatron.co
I conjecture the reason for the ridiculous headcount is that outside investment requires it, in order to be able to continue to sell a story of explosive growth.
I've seen this dynamic with rivals in the bookmarking space, where a project that would have killed Pinboard dead with 3-5 engineers safely bloats itself into failure by taking ambitious outside funding. Patreon is a good example of an excellent mid-sized idea crippled by grandiosity, a recurring dynamic in computerland.
I'm also working on helping creators monetize their audiences (but bootstrapped), and it often feels like Patreon is either going to vacuum up all the creators or explode in a VC-funded blaze of glory.
Start: https://techcrunch.com/2012/06/14/yc-backed-kippt-goes-colla...
Finish: http://blog.kippt.com/next-chapter/
Something similar happened to trunk.ly, which had a lot of momentum and then got harmlessly acquihired away by a lavishly funded competitor, AVOS systems, who cratered so hard a few years later that I was able to buy the remains of Delicious, my original VC-funded competitor, from them with my Pinboard profits. Sic transit gloria fundi.
Compare both to historio.us, which has been chugging along for about as long as Pinboard without VC funding and hopefully makes StavrosK some money.
But, once again, they spin. From the FAQ: "Why the new plans?[...]The new plans better serve new creators by offering options, including more powerful tools for those that are ready for them. And they allow us to develop new features like Team Accounts and Merch for creators who really want them. We want to be around serving creators for decades to come. These changes set us on a solid path toward that goal, and will fuel investments in core product quality to improve the experience for all creators."
But this is nonsense. None of this is new save for team accounts and merchandise. They keep trying to pretend nothing has changed, but everything has. They want to become a full-service membership site tool while acting like they're still the tip jar/bonus content thing it started as. Just own what you want to be and become it without this corporate spin every time you make a small change in this direction.
Pivot or get off the gimbal.
I think the VC and Silicon Valley influence on Patreon may kill it.
edit: Also, why is it always a percentage? A transaction is a transaction, independent of the amount. A fixed cost. I'm probably ignorant, but sounds like greed.
There will be alternative solutions that exist after Patreon sunsets, simple solutions.
There are alternate solutions that exist now.
The only truly hard part of creating a Patreon clone is getting the approval to accept credit cards, charge them on a recurring basis, and dealing with the red tape around that. Probably the entire rest of the site is comparable to that in complexity. It's not the legendary "replicate in the weekend" project beloved by HN readers, because that whole credit card thing is nontrivial, but it's no "create a new distributed database backend from scratch and pass the Jepsen suite" either.
One-click install of your own wordpress-based paypal-coupled panhandling site.
I don't understand why paypal doesn't just jump on this directly and kill off Patreon though.
> Liberapay currently receives €154.65 per week, they need your help to reach their funding goal (€700.00 per week).
That's only about $9000 USD / year, without accounting for any of the payment processing fees.
You can strengthen your argument more: When Patreon didn't exist, most creators didn't get any donations, or very minimal ones.
However, the name of the service doesn't particularly have to be "Patreon", and speaking for myself, I'm not finding it a particular problem to be on 3 of them at once, so I don't see Patreon as having much of a moat here. Over the course of the last couple of years it seems like my creators have been somewhat unstable as Patreon has provided multiple reasons for people to seek competitors out. It's far from disastrous but it also hasn't been as smooth as it should be.
As a customer, I have a certain idea of what a well run web app looks like. Patreon never fit that, but I tolerated them because they were the only viable option. As a company, they give me the impression of being half-competent at most. As a customer, I'm champing at the bit for better competitors to come about!
"Simple" is worth a lot of money to a lot of people. Patreon is simple.
I have foregone donating to a project because they didn't go to Patreon, because the extra hassle was enough that I didn't want to. They noted specifically why they weren't using Patreon even though they got constant requests, and their reasons have merit. But that decision also caused enough friction that I never donated, and I would have been happy to send them money monthly if I didn't feel like it was yet another random monthly transaction that I might forget about that I see years later and wonder why I've been paying.
Patreon allows you to support 20 creators at $1 each, and only make a single transaction of $20. Not to mention ease of use - it's a lot easier to click "pledge $1" for someone whose content you're enjoying than it is to go sign up for some new service or enter your credit card info. Paypal could offer something similar but they don't. Effectively, the value add is network effects.
As for the flat fee vs % cut, you're probably right - in terms of costs to the business, transaction costs are a flat fee. That said, a crucial part of their model is making it easy to sign up and get a couple of people backing you for a few dollars each. And it therefore makes sense to effectively subsidise your small users by charging more to your large users who can most afford it (and who are getting the most value out of your service).
> Is Patreon still using shared patronage between creators to combine transactions and give creators a break on transaction fees?
> Founding creators will still experience the same reduction in payment processing fees from shared patronage. For future creators we will no longer offer savings for shared patronage because it lacks transparency and it’s not equitable. Some creators save money and some don't, depending on a number of factors including how many patrons you share with others. As a new way to create savings for creators that is more fair and transparent, we are introducing the new low micro-transaction rate for pledges under $3.
I don't understand why they're so bullish on this. They've tried to get rid of the single-transaction model before. I just don't get it. All they're going to do is give more money to paypal, at the expense of the creators and themselves.
How many support requests about this, and arguments that have to get into very specific details on accounts which bring in $40 a month in donations does it take before any gains are lost? Or if not lost, highly variable and cause support personnel staff needs to fluctuate (which I imagine is harder to plan for and scale quickly than hardware/servers)?
The ability to make a single large charge, and then dole out that charge with only your own recordkeeping to track how it got spent seems like it would be ripe for money laundering.
Costs are not always marginal. Imagine growing a company to the point of needing to onboard an HR representative or an accountant: the actual cost of the service would increase. But a percentage gives margin to operate.
Also, generally bigger customers generally demand a lot more resources. A percentage seems pretty fair. It also lets small accounts which may not have anything to their name scale up without having to have capital.
I guess they could charge per-transaction, but then again, that would penalize creators who have a lot of low cost patrons. They would also have to nickel and dime on any extra features they offer.
It is not just about Patreon btw.
https://techcrunch.com/wp-content/uploads/2019/03/Patreon-Co...
We live in a middleman economy. This forum is a middleman, since HN doesn't actually put out their own content. Uber, Facebook, Google, ... all middlemen.
> Also, why is it always a percentage?
More payouts more risk. Looking at it another way, because people are fine with paying a fee based on percentage.
We're already seeing services like YouTube implementing these low cost, support a creator type subscriptions natively.
Sometimes it’s the network effects tied to a feature that make it succeed. That seems to be the case here.
I know I don’t want to subscribe to 5 different sites that do this kind of thing.
Patreon's appeal is being independent of YouTube's whims. Of course, now content creators are subject to Patreon's whims.
Companies really should strive on being focused on stability for users. My own product is modeled more on Salesforce API that has multiple versions available concurrently. Users will not lose features even if they are no longer profitable to support.
1) The transfer counts as an expense or gift under tax law.
2) Whether Patreon will cut you off when they find that's what you're doing.
3) Whether you can trust the person to user their donation link and that they'll correctly forward the money that's intended for you.
Much like social media accounts, which are bought and sold regularly, there's now a market for patreon accounts.
you have a lot of people still thinking its novel to buy followers, when its much more effective to buy accounts
I've run a lot of companies/product launches this way and there are decent escrow services now. People really shouldn't waste their lives attempting social media any other way. The cheapening factor will probably reduce their dopamine addition to social media as well.
A lot of fraud (between the buyer and seller) can be prevented if the platforms helped people sell and escrow accounts, taking a cut there too. Instagram, Patreon, Youtube could be making a lot of money from this.
A good example of a company doing this and finding it's footing is classpass. The initial plans were quite the value to consumers, but also many studios that were part of ClassPass felt the extra burden without really getting much revenue. So they needed to update their pricing and they made some hard decisions and saw that users fell into two camps. Those that barely went, and those that went a lot so they ended up with a new pricing structure which raised rates to consumers, caused a huge public outcry, but ultimately allowed the company to settle into a good footing.
Here Patreon seems to definitely be raising rates as a response to the VC dollars raised and the need to continue to grow their revenue. The challenge for them was that when the initially raised, their valuation was far outrunning their actual revenue. While the platform had many users, the actual revenue that ended up in their company after paying creators didn't justify the valuation or anything close to it.
So now they have to raise rates a second time, after going through this process in late 2017. At the time there was a huge out cry publicly and the company stated that they would not make such large moves without consulting with their creators first, but obviously with something like this unless a ton of creators are publicly saying, wow this is great, exactly what I needed, it means going to the creators wouldn't work as they don't need these new plans.
Certainly getting on the VC train is a huge decision and one that ties your business to ever increasing returns and a scale that is challenging for many companies to meet.
They could have raised a smaller round, from more long term investors, that weren't only interested in the VC cycle, given themselves some extra cash, built out features, and continued to support their community, but obviously they chose a different route.
Very likely that if this doesn't go well there will be another large announcement in a 12-18 month window.
https://www.patreon.com/RobertElderSoftware
If you've ever seen my blog posts show up here on hn and you'd like to see more of them, then this is one way to make that happen more often :)
I give them 2 years.
They handle payments for creators. They keep the list of patrons and what tier they're in, and they have some integrations so you can automate some types of rewards for your patrons.
Their premium service adds some new stuff, like handling merchandise.
Patreon is just a website and database with a blog. I read once they have 300 engineers, and can't figure out why...
Patreon is basically a blog that requires readers to be logged in and pay for access to each blog. Creators usually use Patreon in conjunction with another public content distribution platform, like YouTube.
They're not, but apparently they're trying to so they have a justification for increasing their cut.
Patreon started as a way to tip / nanofund artists whose content you enjoy, because subbing a buck of 5 to a writer or drawer/painter is easy.
Is the idea that everyone competes with everyone for every dollar and the ultimately capitalism will be a pile of dead bodies with a confused Taco Bell employee sitting on top?
Do you have any proof of this? Everything you are saying SOUNDS like it would be correct but it also sounds like a lot of wishful thinking too.
I have seen price increases rolled out to the base of several large businesses and customers will gruble a bit but the vast majority of them are fine with the change (businesses NOT consumers) after talking to them about why you are increasing the price and what they can expect from it.
Netflix does it almost yearly and people seem to still love them!
Github is another example.
Not proof beyond my own example, but that's one case for, and none against that I know of. I expect that at a bare minimum, it will help retain customers through the period where the pricing is new, and at the point you eventually move them to new pricing (perpetual grandfathered pricing is stupid, I'm not going to argue for that), it may help with the reception.
A lot of how we perceive our reality is influenced by the narrative it's housed in. That's why it's easy for the internet to blow up every couple months, but if you revisit the issue a while afterwards, there's often a different, more nuanced story that was lost.[1][2]
In a reality where the narrative can run wildly out of control to your detriment, there is some benefit to being able to delay or protect your customers from that. I'm not sure whether the benefit is always worth it, but I'm sure it's a tool I would rather have to call on than not.
As a simple example, Netflix's price change in 2014 was widely publicized, as it was one of the first major price changes they had done (a 25% increase of the base cost), but they grandfathered in the people that were paying the lower price previously (37% of their customer base).[2] The previous time the changed pricing (by splitting our DVD service but keeping streaming only the same price.... so a price change for some), there was mass outrage and cancellations.[3][4]
So, the question is, did Netflix's differing strategy of grandfathering customers avoid the cancellations because people stayed loyal, or because not enough customers felt affected enough to contribute to the narrative that time, or because the change was purely pricing and less complicated, or just because the narrative didn't take hold for unrelated reasons?
1: https://apnews.com/90c35b0e3b1f41abbcb28eef7cf4bd9a
2: https://www.pastemagazine.com/articles/2016/04/netflix-is-in...
3: https://gigaom.com/2014/05/09/the-netflix-price-increase-is-...
"We're no longer bundling payments because we don't wanna, so now you get to pay more and it all goes to Visa" is the most ridiculous thing.