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.
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.
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).
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.
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."
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 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.