Patreon - new fee structure

Off-topic
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I wonder who else is using Patreon here.
Warning: A long rant follows.

With 2017-12-18 Patreon will change how payments are processed and how fees are handled.
Currently payments are collected monthly from patrons and transferred monthly to creators.

Those monthly payments were IMHO the killer feature of Patreon since it resulted in only one transaction fee per month for patrons.
Disadvantage for creators was that they didn’t get money immediatelly but only monthly, and their payment wasn’t predictable because transaction fees differ (they are split upon the creators for every patron)

Changes with 2017-12-18:

  1. Instead of creators patrons will now pay transaction fees (2.9% + $0.35 per transaction).
    That’s not the problem. I could even reduce my pledge amount so I pay the same as before and creators will receive about the same as before.
    Creators who don’t want to support this new fee structure could reduce their reward tiers accordingly (note: $1 is still the minimum).

  2. Pledges will be collected immediately and in advance (monthly pledges depending on the day you started supporting them; per post pledges when they are posted).
    This is nice for creators: they quickly get their money and the amount is predictable.
    Bad for patrons: A lot of transactions resulting in a lot of transaction fees.

For details you can read the blog post on Patreons website, but these two images say it all:

fees_today-1024x573.png1024×573 76.6 KB

fees_future-1024x573.png1024×573 88.6 KB

This means patrons like me who want to support more creators but only pay a low amount (e.g. $1 or $2) for each one are ∗beep∗ed.
e.g. if you pay $1 to 10 creators you now have to pay 35% more just because of those single transactions! (+2.9%)

On Reddit someone posted a table of how much you have to pay more in total: New Pledge Fee Discussion | Reddit

Quote from their blog post:

We want you to know that we approach every change with a creator-first mindset

That’s nice for the creators but somehow they forgot that the supporters are the ones paying the money. And the supporters are the ones now being screwed over with all those additional transactions.

Here is some strange diagram from the blog post:

patronpayfees-graphic-v5-1-1024x785a
patronpayfees-graphic-v5-1-1024x785a1024×384 32.3 KB

Look what’s 100% and what’s 5%. Then look at those 2…10%.
You can’t tell me this happened accidentally. What a bunch of ∗beep∗ers!

Btw. my assumption always was that there are more patrons pledging lower amounts of money. Them showing transaction fees with up to 10% IMHO confirms that.

Now the after-diagram:

patronpayfees-graphic-v5-1-1024x785b
patronpayfees-graphic-v5-1-1024x785b1024×401 89.3 KB

If this is a pledge with a $0.35 fee then the pledge amount (the 100% without service fee) are about $41.
Is this what they want to tell us what normal pledges are? I certainly cannot afford to shell out this amount of money to multiple creators.

Alternatives:

  • Using direct payments (e.g. PayPal)
  • Using other, similar platforms, like Liberapay (FAQ)
    Note: It doesn’t support rewards from itself (and isn’t meant to).

Bottom line: I will cancel all my Patreon pledges and track down individual payment possibilities for those creators I want to support (e.g. using yearly payments).

2 Likes
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There will be both negative consequences and positive ones and nobody is currently able to predict for sure if the positive aspects will prevail. Solution: let’s just run the new system for a few months so that we can collect DATA and base our next decisions on reality instead of opinions and hypothesis.

They also wrote: “While some patrons may leave in the short-term, we know this will help creators earn more money in the long term.”. So, yeah, an initial loss of patrons is expected and by design. Let’s see if either math is right or if they made mistakes in their calculations.

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When amazon prime raised their yearly subscribtion by about 20 euros, I theorized that it was that high not only because to make up for higher costs of their services but also to make up for a certain amount of subscribers they would loose due to the raised costs. That sounds like a similar situation, do you think that´s the way it worked?

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Yes. It’s just compensation.

The only subject who knows how many patrons will probably unsubscribe is Patreon. All these people who will decide to reduce the amount of creators to support or that will just use other services have been just intentionally sacrificed.

Patreon formulas probably contain even variables to cover the behavior of boycotting people. :stuck_out_tongue:

5

Are you talking from the perspective of Patreon? Because as supporter I know what it means for me, e.g. when I keep supporting a lot of creators with $1 I have to pay 35% more money which is more or less just lost.
I don’t need to collect data (and keep paying them money) to calculate my costs, I just calculate them.

This is a different situation. They are changing the way fees are handled, Patreon doesn’t get money from those fees.

  1. They are shifting the fees from creators to supporters so supporters pay more and creators get more (those 2…10%). Patreon still get the same 5% from the original pledge amount though!
  2. Those added fees (service fee) is about the fee which Patreon has to pay the payment services (PayPal etc.), Patreon doesn’t get really any of it. But due to the fixed amount of $0.35 per transaction and the sheer amount of transactions with the new system I would have to pay much more which neither Patreon nor the creators will get.

Point 1 is not a big problem, but point 2 is. I’m not donating money to PayPal&Co just for the heck of it. This monthly payment was the feature which was so great about Patreon.

Their goal is to make creators more happy and to subsequently reduce their own costs in support (creators asking/complaining about fees) and also reducing negative feedback in their NPS surveys (which they conveniently send to creators only).

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I think the new structure is crap and nothing but greed on Patrons side. I support a bunch of people and I want to cancel them all to send a message, but I also don’t want to screw the creators over. Some of them have alternate ways to fund, but others don’t.

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I’m talking from the perspective of both Patreon and creators, because overall and on the paper they should both benefit from the change. People who claim that the new system will overall screw creators should in my opinion just wait and see.

I know that, but what it means for you doesn’t necessarily represent what it will mean for the majority of patrons (for example, I’m the kind of patron who is not affected much by this change). Patrons who support several creators will have to pay a lot more but we have no idea if this class of supporters represents those who provide the largest quantity of money or not. Maybe patrons like you are just a minority and Patreon has decided that they can afford to loose this kind of user or to see them reducing the quantity of supported creators.

Regardless of how we comment the operation, they are asking the supporters for more money and Patreon is aware that some supporters will leave.

The situation is a bit similar from the perspective that they are asking for more money and the more money that they are asking will (probably in part) compensate for those patrons that will leave or will reduce the quantity of supported creators.

That would be a correct conclusion only if you assume that Patreon lied and they will take a share of the fees that they say will be used to cover transaction costs. On the other hand, if they didn’t lie, then their source of income will still be 5% and it wouldn’t be logical to accuse them of greediness.

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Then why make the change? Their whole press release stinks of corporate speak. Based on charts I’ve seen, PayPal is the big winner here. To quote The Wire: Follow the money.

This move completely screws backers who back $1 to many project.

I’m willing to say this was stupidity, rather then greed. How quickly they undo this will tell.

We need a true competitor to Patreon, then the free market can decide. But we don’t.

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They have explained why they made it. Supporters pay more so that creators stop paying transaction fees.

Yes, and Patreon seems aware of it.

Well, that would be an improvement in my opinion. :stuck_out_tongue:

If our way to react to a lack of information has to be to automatically assume something negative about people, then in my opinion it’s better to assume stupidity than a lack of moral values.

Competitors are always welcome!

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They are screwing the supporters.
Sure, how much this will affect Patreon and creators is open. But I’m neither Patreon nor a creator. I’m a supporter. I don’t like to be screwed.

In my experience they do. And it especially affects smaller creators, for example people creating small web-comics. They normally don’t have patrons giving them $100 per month but multiple smaller donations to often create free (for the rest of us) content. I would give multiple artists some few Dollars in the hope there are enough other people doing the same so he can be able to afford keep doing what he does.

I don’t think I’m the minority, but Patreon knows it for sure. Maybe they are hoping people not getting upset or they are speculating they aren’t properly reading their emails or checking those transactions, I don’t know.

Here is one example of a bigger creator: Zach Weinersmith (SMBC)

  • $6,811 per month from 3,184 patrons.
  • 2,089 are on the $1 tier and 838 patrons are on the $3 tier.
  • That’s 92% of patrons and more than 67% of the money ($4,603 minimum).

This more money they are asking for is just to compensate the fees from payment providers. Patreon cannot really use them for something else. In fact they may be even using a small part of their 5% to fully compensate the fees they have to pay overall.

Sure, they are speculating to get more creators (because those changes do make it more attractive for them) which means more money, also they may be able to lay off support staff because of those complex fees are a lot support work (according to their blog post) (= more money).

Exactly.

1 Like
11

I agree, but companies have proven over and over that they will fuck us over, unless we fight back. If a company is nice and considerate, it’s largely due to them realizing they can make more money that way. Patreon realized they could make more money (or were pressured to do so by investors). They might have miscalculated, but it will only be due to them realizing that it was a bad business decision or the bad PR outweighs the money.

It is naive to think anything else.

FWIW, I was very close to starting a Patreon, but I’ve canceled those plans now.

2 Likes
12

They do want to make it better for creators and of course this is business driven. I wouldn’t say greed too.

But can we call it stupidity?

I’ve posted pictures from their blog post, like this one:
patronpayfees-graphic-v5-1-1024x785.jpg
The first diagram is a blatant lie.
The second one is likely sugarcoated (I don’t think ~$41 is a typical pledge amount per creator).

Those two actually show their horrible change quite clearly:
fees_today-1024x573.png
fees_future-1024x573.png
So much more fees! But even here they have added a third fee in the first image which just isn’t the typical scenario. Typically you only have one fee per month unless you are constantly adding new creators.

Is this really stupidity? IMHO it’s leaning more towards malicious behaviour.

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Oh :frowning: I would have liked to support one. Until the 7th of December that is.

1 Like
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But of course. Patreon is asking for more money. Supporters will not like it no matter what.

But I’m talking about a different aspect: the fact that a creator receives a lot of very small donations tells us nothing about how many creators those patrons support, which is the key information that we don’t have and the main aspect that will motivate supporters to find other ways to give money to creators.

Yes, but if they have been smart that “2.9% + $0.35” figure has been calculated taking under consideration the quantity of patrons who will leave the platform or who will reduce the quantity of transactions. That’s why I have used the term “compensate”.

For me that’s OK, if creators benefit from it. Thanks to the change, the person who I’m supporting will get more money, which is the most important aspect for me.

Yes, the downside is that now the service is more expensive. That’s the bottom line.

What would you have created? :slight_smile:

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I guess you’ll never know now. Blame Patreon.

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NO! NO! NO! Patreon will be making more money. They get most of the fees (or PayPal does, an investor in Patreon?). If you think all this new money charged to backers is going to creators, you have fallen for their crap. Them give “a little” more money to the creators was a smoke screen to charging huge fees and making more money.

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This is true. But if I overcome the hurdle the start actually using such platform it’s likely I will support more than one project. They definitely make it easy to do so of course.

May I ask if you are supporting more than one creator?
Just supporting two creators means having to pay twice the transaction fees (assuming monthly or same number of posts).

A typical rate from PayPal and Stripe is 2.9% + $0.30.
It varies depending on the country and also there may be bulk rates (“we’re on track to pay $150 million to creators”!) but I don’t think they make that much money from those fees (“we ultimately chose the lowest service fee [of three tested ones] that would offset the third party costs in all likely scenarios”).

Not that I trust their words much but hey :slight_smile:

Creators get more because patrons have to pay more. This is true with the old system too!
In fact when people would pay the same using the old system what they would have to pay with the new one then creators would get even MORE money!
And that’s the problem with this new system.

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You really want to give us another reason to hate them :wink:

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If by “making more money” you mean “more revenues” then of course you are right: they are explicitly asking for more money and they will get more money.

If by “making more money” you mean “more profits” then it will be true only if they take the money collected for covering the transaction costs and use it to increase the profits. In other words, it’s true only if they lied.

Nobody would ever think that. What I’m saying is that it’s OK for me to pay for the transaction costs that until now were paid by the creators.

I support just one person, giving a quantity of money that probably is larger than the average donation. That’s why I said that the change doesn’t affect me very much nor will affect me significantly in the future, when I’ll donate to a few more people. I prefer to give more money to few people than $1 donations to many creators.

I agree but I also think that even just 5 cents can be used to partially cover for the loss of donations (due to patrons reducing the quantity of supported creators or patrons moving to other services to support creators).

This is interesting. Where can I read the calculation that led to this conclusion?

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