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The Wrong Right Way

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44 pointsmuglug22 comments

>> "Ultimately, we couldn’t find a way to make the business viable. We explored a number of different options—voluntary subscriptions from users, premium features, increased fees—but the resources required to support a high number of lower-volume creators always outpaced our revenue."

I wonder if Patreon ran into a similar problem trying to stay afloat without handing more control over to VCs.

Can someone help me understand, honestly, how a business gets started and funded without the answer to "how to make it viable" being answered already?

Sure,

1) The founder makes the case that if they reach a critical mass of "X users," or "Y Transaction volume," or another relevant metric there will be a windfall to be shared.

2) The investor evaluates the viability of the plan based on macro factors and the track record of the founders.

Every startup pitch has a certain amount of uncertainty. In this case, the market for a Patreon-like service was well-understood. The risk in this deal was whether or not the team could actually execute. There's no definitive way to tell if a team will be able to execute or not until you invest.

It turns out that this team has a strong pedigree in community-building, but perhaps less in the day-to-day operation of a market place in a market with an entrenched competitor. They also seemed to be focused as much on achieving ideological milestones as financial ones (which is fine!).

The outcome is unfortunate, but that doesn't mean the bet was bad when it was made.

Did they get funded? They mention explicitely that they didn't follow the VC route because they couldn't answer how to make it viable.

Anyway, Facebook, Twitter and etc started and grown a lot only with the promise that they would be viable someday. It worked out in a big way for Facebook at least.

Because Google and Facebook and several others got started that way. VCs know that the biggest wins often emerge in unexpected ways. And they can pay for a lot of stupid ideas.

Google and Facebook both had technology that was obviously monetizable from the start. They just needed time to build the product and build the monetization features.

This is a rosy way to look at things after-the-fact, but, as far as I understand, the way Google monetized their search (by showing only relevant ads) was still a fairly new business practice at the time. And Adsense wasn't well tested either. Both were bets that ended up transforming the entire online Ad industry...

It was Overture that started doing pay per click ads on their search engine. Google copied that business model and actually got sued for it.

I think a lot of Patreon's controversial decisions, e.g. raising fees, have come largely because they gave VCs control.

I have no inside knowledge, but Patreon seems to be straining to meet the needs of its creators while also reaching the scale its investors expect.

Patreon has already been starting to call their own business unsustainable lately: https://www.cnbc.com/2019/01/23/crowd-funding-platform-patre...

Didn't they just lay off a significant percentage of their staff?

If they did, I can't find any information on it. Where did you hear about this?

Bunch on Twitter, this is an example:

https://twitter.com/EricaJoy/status/1136061641441681408

I feel like these platforms are catering to a very particular kind of artist, an artist who has an audience that is willing to pay for content and not just consume it. How do you make people pay for something they never paid for in the past?

Most interesting works of art are not acknowledged monetarily at least initially. Money means making compromises and artists really don’t like making those. I suppose the Drip or Patreon artist is something YouTube helped create. An artist created by the audience for the audience. I just wonder how this all fits into the current needs of artists that are not musicians or YouTube stars.

Artists primarily need funding and space. They need a free studio to work in and work relief so that they have time to focus on their art. In Europe this often happens through government backed grants. Of course in the US there’s a lack of funded for artists. What if these companies used their position and money to lobby for arts funding from the government? Obviously this would be hard in the current administration but maybe this could also be done privately. Imagine if the government or a bunch of tech companies were paying artists a living wage to create public works or art, teach in schools, and design our cities.

Companies can fund art directly (and many do, such as Google/YouTube), instead of wastefully routing it through government.

Government can provide UBI and healthcare to the whole population instead of picking politically connected artists to make government approved art.

Sure there’s Google or Facebook residency, etc but they are specifically looking for artists that are using technology in their art or at least aren't questioning the companies / private interests that are funding them. There’s so many artists that don’t use computers to make their work. I mean a program that supports all artists. I also don’t think government programs like the WPA were a waste.

I'd agree that UBI and healthcare could be one part of this. It's incredible that these aren't a given at this point.

I guess I just feel like Drip and Patreon are creating a commodity where there shouldn't be one. Funding an artist only when they have an audience that has the means to pay them monthly is a sure way of making some bad art.

I agree with this problematic way of focusing on only a particular kind of artist. It is also my beef with the word 'creator' as used online, which is, designers and graphic artists with a spattering of Youtubers.

Would be really interesting to hear what exactly makes a business like this not viable with, quote, increasingly insurmountable odds. In my observer naivety I'd expect growth / profitability to be hard, but not unsustainable operation from the start.

curious as well, seems cryptic!

i've appreciated andy & andy's choices for stepping up and doing what is right, even if it were unpopular or counteracted the "norm".

I'm a little unclear if they launched but didn't see engagement or traction or if the projections didn't match the cost to develop it. Anyone else has a clearer idea?

I'm also curious if this was Patreon + Discovery or a different direction.

Does CASH Music do the same thing but gratis and FLOSS?

https://github.com/cashmusic

EDIT: Nah, not really. CASH Music gives a platform, Drip is for connecting platforms.

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