What’s the Deal?
I’m sure most of you have seen my promotion of the Patreon account that I set up for myself about half a year ago in order to help fund the development work that I do. Yesterday, out of the blue, Patreon sent an email to its creators to notify them of a big change that is coming soon:
In order to continue our mission of funding the creative class, we’re always looking for ways to do what’s best for you – creators.
With that, we’re writing to tell you of a change we’re making so that all Patreon creators take home exactly 95% of every pledge, with no additional fees.
Aside from Patreon’s existing 5% fee, you may notice that your income on Patreon varies because of processing fees every month. Your patrons may not even be aware that you actually take home a lower percentage of their intended pledges because of it. Our goal is to make your paycheck as predictable as possible, so we’re restructuring how these fees are paid.
A new service fee of 2.9% + $0.35 will be paid by patrons for each individual pledge starting on December 18th. This streamlines fees for both creators and patrons to ensure that you pay no more than 5%.;
As I wrote on a Patreon post, I do not want this change in the fee structure; I am in fact strenuously opposed to it. However, we creators were given no choice in the matter. Patreon claims they have tested this new fee schedule and received feedback from select creators. I haven’t seen one creator actually step up to say that they participated in this trial, so I have no idea how many were actually enlisted into this. Certainly, from the backlash I have seen on Twitter, the fee change has come under nearly universal condemnation from creators.
You Didn’t Agree To This
For its entire lifespan, until now, Patreon’s funding model was that when you pledged $1 to a creator, you paid $1. When you pledged $20, you paid $20. Of course, the payment processors have to get their fees and Patreon has to pay their expenses and make some money from the business, so there was a 5% cut for Patreon and a variable amount taken out for payment processing. All of that was deducted from the creators funds before they were disbursed, which is how nearly all businesses do things and how I believe it should be done.
Now, under the guise of giving more money to creators and stabilizing the amount of income a creator can count upon (which is a fallacy under this new system), the flat 5% is deducted from the creator’s funds from the “pledged” amount, and a 2.9% processing fee plus a fixed $0.35 are pushed onto the patron, on top of the amount of money they have pledged to the creator. There is no way to opt out of this new system and have the creator eat the cost of the fees so that a patron only pays what he agreed to pay.
All of my current patrons signed on under the model where they were making a once-per-month payment of whatever dollar amount they pledged, not a penny more. I wouldn’t dare think of trying to nickle-and-dime my generous patrons by asking them to eat my fee expenses, but Patreon corporate is forcing that upon us. My patrons pledged what they pledged because that’s what they budgeted for. Forcing a unilateral increase upon them in this type of funding situation feels incredibly scummy to me.
What’s worse is that it puts both we creators and the patrons in a bad place. Patreon pushed this change on us, but we have to manage the fallout (and they have shown no interest in dealing with it from what I have seen). Patrons now have to decide whether they want to suck it up and be forced to pay more in order to support the people that they like at the same level, cut out certain creators in order to stay within their budget, or drop the whole thing all together. I’m sure it doesn’t feel good for the ones dropping some support or cancelling accounts completely to leave the creators high and dry. But I don’t blame any patron for making that choice one bit.
You should be paying the amount that you pledged, not a penny more. Converting creator goodwill into monthly contributions is already a bit tricky, for understandable reasons. One of the great things about the old Patreon system is that it made the barrier to entry to supporting creators quite low; even more so once a person had established a patron account and was supporting their first creator. Offering a $1 pledge level (which I believe most creators used) gave people a low-risk way to showing support, which had the chance of being converted to a higher pledge level later if the patron liked what the creator was doing. Also, it is important to remember that Patreon used to brag about their system of bundling pledges into one monthly transaction in order to save fees.
But that’s gone now, because there is no $1 level any longer. The minimum amount that you’ll be able to ask for is $1, and then Patreon will add the 2.9% plus $0.35, or $0.38 to every $1 pledge. That doesn’t sound like a huge change, but the problem is that a lot of people like to spread the love around and support many creators with small pledges. This will become much less tenable under the new regime. As has been pointed out on Twitter, when you support one creator with a $10 pledge, your new out-of-pocket cost will now be a relatively modest increase to $10.64. On the other hand, if you support 10 creators with a $1 pledge each (not an uncommon scenario), your new out-of-pocket cost is going to be $13.80. That’s an awfully big jump.
The fact is that this new fee schedule is regressive because of the $0.35 fixed fee on every pledge. It is my understanding that the lower tier patrons are the lifeblood of most creators. Sure it’s nice to have a few big contributors, but by having a lot of smaller ones your funding has a wide and stable base. This fee change sticks it to those who don’t have a lot to contribute each month and erodes that stable base of support (to an extent that we don’t know yet, but I suspect isn’t insignificant).
Even more infuriating is how this would affect creators who supported other creators, which I imagine, is most of us. In the old system, once you got your pledge funds, Patreon would then use those to pay out to the creators that you support. But it sounds like those days are over.
Someone from @Patreon answered: they're basically not going to let us use our Patreon income for our pledges anymore, ensuring that we have to pay more fees and therefore keep less of our earnings. Which is silly (it's money they already have) and feels like a cash grab. pic.twitter.com/ESyYHLGPnL
— Alex Zandra 🐭 The Familiar Mouse (@zandravandra) December 7, 2017
Now they are going to get those payment processing fees from us creators as well, because they won’t let you use internal funds to pay other creators any longer. Oddly, I noticed that my credit card was charged for my pledges on 1 December, which doesn’t usually happen. At the time I chalked it up to a glitch and didn’t think much of it, until I saw that tweet. It seems they have already implemented that change under the radar.
For all of the PR spin that they were making these changes to help creators, the truth is that this only hurts us. The ecosystem of Patreon depends on creators supporting other creators, and they just made that more costly as well.
One of the most galling things to me is the way communications on this have been handled, and how Patreon has offloaded the worst of this work to we creators. This news was unceremoniously dumped on us a few weeks before Christmas, and they told us creators one day before notifying patrons. I felt is was only fair to notify my patrons immediately, as this change was going to have a large impact on them. It was coming so quickly, I had no time to consider a good way to deliver the news. I suspected this was going to cause concern, and potentially cause patrons to withdraw their support, and that’s exactly what happened. In one day I lost $11 out of the $65 that I was pledged monthly, a 17% decrease. Again, I don’t begrudge those decisions one bit. It makes sense to me.
The real slap in the face was that they expected us to carry the water for their PR department. In the Q&A document they linked, there is a section about patron concerns:
Q: What do I need to tell my patrons?
A: We are sending notification to patrons about the change so you do not need to send them additional communication. That said, patrons always want to hear from their creators. It can often be helpful for them to hear about the change from you as well. If a patron reaches out to you for more clarity, we’ve prepared a helpful statement you can share with them for more detail:
In the past, I was covering Patreon’s 5% fee and all of the processing fees in full for all of my patrons. This meant that every month I saw anywhere from 7-15% of my earnings taken out to cover those processing fees.
Starting December 18th, Patreon will apply a new service fee of 2.9% + $0.35 to each of your individual pledges. This service fee helps keep Patreon up and running and standardizes my processing fees to 5%.
This ensures that creators like me keep more earnings in order to continue creating high-quality content. I hope you understand and continue your pledges on Patreon. You can read even more about the service fee here.
So they were helpful enough to give us some canned talking points to assuage the anxiety about a huge change to the service terms that they themselves weren’t going to address until later, and try to sell it as a benefit. Thanks.
As of the time that I was wrapping up this post, I was notified that Patreon had posted an extended explanation on their original post:
We know creators and patrons want more information about our fee decision today — we’ve updated this article, going one level deeper for those interested:https://t.co/sBuCd5gcj9 pic.twitter.com/xhppTQO5aU
— Patreon (@Patreon) December 7, 2017
First off, I want to point out their response mostly ignores the complaint that everyone has: that pushing the fees onto patrons is just wrong and will hurt everyone. Also, look at the replies and you’ll get a palpable sense of the anger and frustration that Patreon is plowing ahead with this change while ignoring the big concern and only paying the slightest bit of lip service to the perception that there is even a problem at all.
To be honest, at first I thought that it was pure greed that was driving them to make this change. Why else would they charge a fee on literally every pledge? As it turns out from my reading of that update, it actually sounds like pure stupidity. In trying to fix the perceived problem, they are changing to a model where a patron is charged at multiple times per month, once for each pledge. Which apparently why that payment processing fee is being assessed for every pledge. What’s astounding is that this is literally the opposite of my understanding of Patreon’s founding business model. They bragged that they saved money by bundling payments, allowing you to spread around a lot of small-value pledges economically.
This is so gobsmacking to me I really don’t even know what else to say about it at this point.
Yesterday, I decided to wait before taking further action to see if they might reverse course. After seeing a huge negative backlash online, I held out hope that there may have been a chance that they would actually do it. But from what I have seen from the official Patreon updates and from Jack Conte (Patreon’s founder), I now have little hope they will listen to people and back out from this mess.
Regardless of whether they do or not, I’m done with them. They have lost my trust. On principle, I will not allow them to jack up the prices to my patrons, and therefore I will delete my account.
This is all quite disheartening for me, because I was finally getting to the point with my Patreon campaign where I felt like it was making a real difference in my life and not just giving me a few bucks to get a Dutch Bros coffee once a month. I don’t give this up lightly.
Apparently, there are some alternative options, but none of them really do everything that you could do on Patreon. One can receive one-off PayPal or Ko-Fi payments (and for now I decided to add a PayPal button on the blog sidebar), but that doesn’t cover recurring charges. Having a stable bit of monthly income is a big deal. I’ve heard mention of something I had never heard of before called Liberapay, which sounds perhaps the closest thing to Patreon currently available, but it still is quite different in funding structure and doesn’t support the content distribution part.
The best potential competitor to Patreon is something called Drip from Kickstarter. From the looks of it, it seems to function very similar to the old Patreon. The problem is that it’s currently in closed beta, which is no good for those looking to jump ship right now.
This brings up a larger problem. I could hold out and jump to Drip when it is public, but what’s to say they don’t take the same route of screwing their customers once they become significant? You still don’t have control over the terms there, and are hostage to their whims. The more well-established you are as a creator on their platform, the harder it is for you to break away when they crap on you (which is what I’m sure Patreon is counting on right now).
So ideally, I’d like to find a way to diversify my funding and use funding sources that are as decentralized as possible. It isn’t going to happen over night, but I need to be moving that direction. Because of those requirements, I’m intrigued about cryptocurrency solutions, and the first one I’m going to look into is the Basic Attention Token. Long story short is that this is a completely different funding model, and I recommend you look at that website (this may actually be a bit easier to understand). I’ve already applied to receive funding via that method. I have no idea if anything will come of it, but I believe it is worth trying.
In the mean time, I don’t know what I want to do to replace the recurring payments. I want to carefully consider things before jumping into another site such as Drip. I’d gladly listen to any suggestions below.
When I started Patreon, the payment model, ecosystem, and community were very attractive, but there was a nagging voice at the back of my head warning me about getting tangled up in a proprietary site (I think even some of my friends warned me outright :). I posted a fair bit of content on Patreon, and ended up not giving my own blog enough love. Perhaps this is a bit of a blessing in disguise, as I should now put more work back into this blog and look for a different funding model.
I am sorry to rant for so long that is probably inconsequential to most of my readers. I felt I owed an apology to those who were kind enough to donate to me in an ongoing fashion each month. And I was pretty steamed up about the matter, and wanted to get some things off my chest. Thanks for listening and thank you so very much to those who have supported me financially and otherwise over the years.