Patreon CEO says the company’s generous business model is not sustainable | Hacker News Reader

Patreon CEO says the company’s generous business model is not sustainable

cnbc.com

25 pointsandygcook18 comments

Patreon:

You have too many employees. You are trying to do too much. You are not a tech company. Your business model should be that you facilitate transactions between multiple parties. To do this, you take a small cut, on top of the transaction fees the banks take that you pass on.

Stop being greedy.

> You are trying to do too much

What I'm trying to figure out is, what ARE they doing? From the patron end of things at least, I barely see any new features at all.

If they were adding like streaming support, their own patron chat (instead of just linking to Discord), video hosting (instead of everyone using unlisted YouTube videos), etc, then I'd agree they're trying to do too much, but I don't even know what they ARE doing?

I'm really just referring to their aspirations -- the thing justifying their funding, hiring and size.

I feel like you could run that whole company with 20 people.

You have clearly not worked in payments, just dealing with the fraud at that scale is more than 20 people.

That sounds like a great start up idea. Cloudflare of payment fraud.

It's called Sift https://sift.com/

Giving links early to unlisted videos to people who subscribe to that channel.

Surprised YouTube didn't kill them yet.

This. Patreons purpose is to make it possible for many to pay content creators, with some rewards the creators themselves make.

Patreon needs to understand that they have nothing unique other than their name, and will be replaced tomorrow if they can't optimize around their core functionality.

The company is also on track to pay out $500 million to content creators in 2019... 90 percent of funds are paid directly to content creators. Patreon takes 5 percent, and the remaining 5 percent covers transaction fees.

By my rough maths, that suggests Patreon runs on $25-$28 Million a year. I'd love to know what is costing them so much to be unsustainable (Customer support? Fraud department?)

An army of censors kicking off deplorables.

It seems odd that they would have profitability issues since they are just a wrapper around PayPal. They should be pocketing the 6-7% after PayPal’s cut and the payout to creators for 90%.

I thought that this was one of those 4-hour-work week businesses where it was just the founder registering domain names and planning marketing.

It also seems odd that creators don’t just use PayPal directly and ask for scheduled transactions.

> It also seems odd that creators don’t just use PayPal directly and ask for scheduled transactions

I'd love to see the breakdown of Patreon subscription amounts.

Personally, I support around 15 YouTubers each with $1/mo, meaning I pay $15/mo for my YouTube content. If I paid them individually with PayPal, the fees would be 30% and the creators would only get 66 cents. Since Patreon bundles the payments, the fee is only 5%, Patreon takes their cut and the creators get 90 cents.

To me, Patreon is basically a micro-transaction bundler.

I thought rewards at these amounts were entirely gobbled up by fees...

Maybe I'm missing something here but just taking a cut of the transaction I would think would make profitability pretty easy with some discipline...

I had such a good laugh that CNBC called them a crowdfunding site after I got admonished by Patreon for thinking they were a crowdfunding site. Internally, they've convinced themselves they're a membership site and they can't figure out why they have a messaging problem...

Not that long ago they started banning accounts that posted lewd art, even though half of the point of patreon is to be a paywall thing for lewd art.

What the hell are they doing with all that money??

Sure it is. Scale back.

Or, face competition.

And generous? Who is doing the work?

Notice the focus on all the money paid to content creators?

They need it.

So much always going to the top is not generally sustainable. Unrest is all over the place.

If we can't figure out how to pay working people enough to actually make it, this whole thing is going south.

Not just Patreon.

Frankly, Patreon was one of the ones I felt better about. Now I don't and will immediately find ways to contribute to content creators I support directly.

And doing that is just not that much work.

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