Changes in processing fees - 95% income to the creators

Updates
21

Dear Patreon,

(Apologies for length of post, but break-ups are always hard.)

I’ve been on Patreon for just over three years. In that time, I’ve changed and dithered over the focus of my page a few times, and taken long breaks due to other work. Consequently, my patrons have only occasionally edged into double figures, and the highest monthly amount I’ve earned hasn’t even covered my broadband bill. So, unlike other people on here, while it’s been welcome, I’ve not really relied on the income that Patreon has generated.

That said, I have invested a great deal of time in this, and - having finally identified what I want to do - had over the past year started working it steadily. As I say, I don’t really rely on Patreon financially, but it was certainly my longterm ambition to build the page so that it eventually accomplished something that I think has drawn a lot of creators to this site: the dream of getting paid to follow your creative goals. These proposed changes - if in fact they do go ahead - put all this in jeopardy.

As the furore has unfolded, it’s become obvious that this is not a popular move (I believe this is called ‘understatement’). This cannot really have surprised Patreon - at least, it would surprise ME if they now held up their hands and said, ‘Hey! Sorry! We weren’t expecting all you folks to be so upset!’. Well, they might be surprised at the EXTENT of the upset, but must surely have realised that a lot of small creators (in a similar position to myself) would simply fold from the haemorrhaging of small-pledge patrons. I shall therefore do them the courtesy of not considering them incompetent and naive - which leaves only one other explanation: business.

I think many of us hoped - perhaps against our better judgement - that Patreon was different, that their self-proclaimed role as champion of creatives in the digital age was actually genuine, providing a way for the little people to get their voices heard, to get a foot on the ladder of self-fulfilment, was sincerely meant. The line we all bought was this: “Are YOUR creative dreams quashed by the merciless machine of commercialism? Is the struggle to make ends meet denying YOU the opportunity to follow your creative star? FEAR NOT! Patreon will provide a way for YOU - yes YOU, little pursuer of niche interests too marginal for traditional publishing portals to take notice! - to cultivate your own fanbase. A modest fanbase, perhaps - but that’s OK! Because, in some modest way, a drip feed at least keeps your dream alive, and even a dream on life support is better than a dead-end job that leaves you no time or energy to create.”

Anyway, that was the dream as I saw it. But it seems that the reality was very different.

One thing that’s bugged me for three years was why Patreon has not improved its ‘discover’ function. I used to think that it was a technical difficulty, or else that they were simply biding their time for the perfect system - I think Patreon support may even have told me this. Anyway, as a slew of changes and improvements came, I still wondered why a decent discover function was not among them. In fact, it is now WORSE than it used to be - it now only lists the 20 most successful creators, yet at one time, the creators who were featured were drawn from across a range - newcomers and modest earners rubbed shoulders with high fliers and superstars - I even made it onto the featured list in my own category, once. This was nice, and in-keeping with the spirit of Patreon (I thought), but was still unsatisfactory. It seemed obvious to me that Patreon was missing a trick: why not make it easy for already existing patrons to discover other creatives to support? You have a captive audience (those who had already ‘paid to get in’, and so had overcome the initial reluctance of would-be patrons), so why not maximise that? The poor, unfiltered search feature was a poor substitute. But no, like a cult, the emphasis has always been on fresh recruits; to bring in new people FROM OUTSIDE.

As time went by, I began to suspect therefore that this was not some oversight; that, actually, Patreon was DELIBERATELY trying to keep prospective patrons from exploring its nooks and corners. But why? Adult content? Was Patreon towers built upon an unacknowledged bedrock of ‘filth’ (no judgement intended)? Or maybe simply out of embarrassment? Like those high-end boutiques keen to shoo the homeless from the shelter of its doorways, lest it put off the more discerning clientele? Or maybe the pavement artists and buskers outside the big city cultural attraction - yes, that’s a better analogy.

Whatever the case, it seems obvious now that the reason Patreon has adopted a more hard-nosed, business-like approach is that it has realised that if it is to achieve the big leagues, if it is to sit at the content provider’s top table with Twitter and Youtube and Facebook, then it must make a few hard cuts. In light of this latest decision, it seems obvious that we can no longer interpret such policy decisions as the naively well-meaning slip-ups of fellow creator nerds. This is intentional. Even if Patreon backtracks on this, I feel now somehow soured by it, and starting to wonder whether I’m not better off picking up my busking cap and moving on to another pitch.

3 Likes
22

I’d like to say that I lost a lot of Patrons after they found out how much of their patronage has gone to fees. They are very dissatisfied with it. Thanks.

23

@michaelprescott Given the increase in revenue, are you still net plus?

24

@mpj I reckoned that - based on my pledges - I could lose 10% and still come out financially equivalent for the month of December. So far I’ve lost 8% and while the die-off is slowing down, it hasn’t quite stopped.

I expect another die-off when patrons who haven’t been as tightly clued-in to what’s happening get their bills on January 1. (A couple of days ago, a creator popped in wondering what was happening to their patrons, so the news has hardly reached everyone.)

As dumb as this sounds, at this point it’s not really about the money for me - it’s about the fact that Patreon has shown it’s willing to modify the creator-patreon agreement unilaterally. It created the market place that allowed the deals to be struck in the first place, but as I see it, it has no business monkeying around with my customer’s expectations.

2 Likes
25

I would agree if you said that Patreon could have communicated this better than been better at conveying that this was made in close collaboration with actual creators, but I think it’s really unreasonable to expect that Patreon would keep the creator-patreon agreement static. That would mean that either the agreement could never improve (or possibly that it could only grow in complexity of the offering, having a multitude of different payment models that eventually nobody could understand)

1 Like
26

Sorry, I typo’d. I 100% don’t mind Patreon changing the creator-patreon agreement, but I’m uncomfortable with them changing the creator-patron agreement.

I don’t see it as an ethical issue, just one about expectations. I selected Patreon as a tool that would help me fulfill my half of an arrangement I was proposing with my customers. I brought my customers over here, and we happily made use of it.

This new change prevents me from living up to my end of the bargains I made - I can’t do x for a $y payment, because Patreon has raised my prices for me. They’re unilaterally telling my customers, “Michael will now do this for slightly more money now.” Huh?

This is why (IMO) the overwhelming response has been:

  1. Please don’t do this.

  2. If you have to this (because your fees are going up or whatever), then let me eat the new fees instead of passing them on to my customers.

This leaves the control in the hands of the creators. Creators are already having to adjust pledge tiers in response to the upcoming changes; which is fine. Let them do that on their own schedule.

1 Like
27

Sorry, I typoed too, I actually meant the creator-patron relationship. They should of course do so very, very carefully, and communicate much better and earlier than they’ve done here, but a service cannot stay static for years and years and years, it needs to evolve.

Note that reading these comments on this forum is not a reliable indicator of sentiment. Working at Spotify, I learned that negative comments are overwhelming on forums like this even if the overall response to a change was positive or neutral. Positive of neutral customers don’t post on forums. I am personally of the opinion that it’s too early to tell if this change is bad or not - I have to do the math after the end of next month. Right now, I just have the “you moved my cheese” feeling which is something that I’ve learned to accept when dealing with platforms. It needs to evolve.

I’m not sure if people saying this actually want this, given that it might result in fees close to 30% with the anniversary model (that Patreon is moving to because creators overwhelmingly request it). Even if the people saying that the want to absorb the fees are being genuine, eating fees is not representative of what the Patreon userbase wants. It’s quite clear from the Patron blog post that the biggest reason for miscontent among creators is high fees, so I think it’s really sensible for them to pick the alternative that doesn’t result in creators having to absorb even more fees.

I still have not decided if I think that these changes are good for me or not, but I feel that Patreon’s reasoning here is pretty sound and in line with the interests of the majority of creators: Creators want anniversary model, which means higher fees, which creators has said ´that they hate absorbing, which made Patreon charge Patrons the service fee instead of letting creators include it in the price.

1 Like
28

You quote negative comments as being overstated.
Then you contradict yourself with this,
" because creators overwhelmingly request it".

Aren’t we talking about the same thing here? One is negative, and the other is also negative - an improvement is needed. The only difference is your context - negativity is rampant. Thus, you don’t apply the same criteria to fee reductions for creators because it’s a requested feature? Only by a different, and small select group.

I mentioned the creator making $11k a month and used that quote because I honestly don’t think the majority are requesting a reduction in fees - only those bringing in large sums seem to be worried about that. I find the current fee structure perfectly acceptable, and cost-effective. However, if you’re making $11k a month as a business/creator/artist/whatever, and the cost of processing payments and bank fees was only 10%, and you’re complaining that it’s too high, I’d say you need some perspective.

As a franchisee working a business that was making $22k a week, I was paying over $6k in just franchise fees alone. That didn’t include CC processing fees, bank fees, and more. Plus, I had to pay staff, inventory, repairs, etc. In short, _running a business is costly._If you can get away with only a 10% fee cost, you have no reason or right to complain.

So, I would assume that the reduction in fees complaint is not overwhelming, nor are the majority crying out for it. The majority response is either positive or neutral by your own logic and statement.

All I have to say is that if the cost of accepting transactions is only 10%, you’re getting off easy running a business with that low of an overhead cost. This also lends credence to my assumption that this is done for large sum creators, and for the purposes of corporately branding Patreon as a ‘Boutique Creator Subscription Service’.

29

Sorry for being unclear - I’m making a distinction between the data that Patreon say they are basing their decision on (supposedly surveys, the blog article is not clear) and forum comments. My experience working inside a product company makes the trust the former much more, because in my experience neutral and positive sentiment shows in survey data but tends to be near non-existant in forum comments.

30

I understand that, certainly.
But, you also have to apply the same metric from within as well, don’t you?
That a majority of those same feedback comments come from a select few that are willing to voice that concern. The rest are positive or neutral, as you state. And if they are positive or neutral, chances are, they will say nothing, not bother to participate in surveys, etc.

Even though they have internal data, and feedback, those same criteria apply (small vocal minority) to ALL feedback, regardless of where it comes from.

31

29 patrons lost, and counting.

32

I would probably give feature request emails the same scrutiny as forum comments, but NPS surveys are in my world different because they aren’t as self-selected. Forum comments and emails are completely self-selected, but voluntary NPS surveys that are sent out to a random sample of the userbase less so. Since they are voluntary they are still self-selected to a degree, of course, but less so.

33

@mpj You could be entirely right. I’m sympathetic to the ‘moved cheese’ view, I’m presiding over a lot of cheese-moving in my day job and it’s painful to get the flood of complaints when you think you’re making the best trade-off you can. And yes, people who support the change are unlikely just to silently acknowledge it and delete the email. It’s only the complainers who show up here.

For me, the value proposition of Patreon is as a system that helps me push purchases out to a subscriber base. I release about ten times a year to ~450 people with an average pledge of $1.03. I don’t have higher pledge tiers because there’s nothing higher margin for me to sell, and extra money doesn’t convert into extra time.

I can’t understand how some Creators’ fees are so high - mine are ~12%. Even if 100% of my Patrons were single-creator, $1 patrons paying by credit card, my fees would cap out around 36%. I think that’s a worst-case scenario (except maybe for grandfathered sub-$1 pledges?).

I’m also not sympathetic to all the nutty edge cases Patreon has incurred for itself by conflating revenue rates with actual revenue. Unlocking restricted content for people who have merely promised to pay $x for an unspecified amount of time is begging for edge cases.

Take ‘cheat pledges’ - these are only ‘cheating’ if you expected them to hang around for some minimum time, but that’s not a condition that Patreon requires of them, nor is it something Patreon lets creators trigger on. (You can’t, for instance, unlock rewards once a patron has paid you $x in total, which is something these threads have taught me that some of the more business-minded and spreadsheet-capable creators have implemented themselves.)

From where I sit, this basic design flaw is what has resulted in this sequence of issues - cheat pledges, pay up front, double-charges for late-in-the-month pledges, and now unbundling.

Unbundling is so staggeringly inefficient (Patreon goes from 85% efficiency to 69% efficiency for me, which is doubling its costs) that it’s hard for me to believe it’s both voluntary and sensible.

I feel like fee volatility could have been handled by a fee estimator and accompanying YouTube video. For example, imagine you have flaky patrons whose cards don’t go through at some 80%th worst-case percentile, and who all pay by the most fee-intensive method for their pledge, how much will you earn? Then Patreon could position anything over that as a bonus for reliable patrons.

But, there’s probably lots going on I can’t see from my perspective.

1 Like
34

Those are some great points @michaelprescott.

For me personally, I knew about the monthly cycle upfront and have designed my rewards around it, so anniversary cycle will just bring the same inefficiency as having my own system.

It might be possible that Patreon is listening to a subsegment of creators here that they shouldn’t be obeying - they say that the “top negative NPS comment is fees” but that is likely to always be the case - the important thing is that that most creators are happy with it. (As fees go I think Patreon is pretty good, and I suspect that many that think the fees are bad might be new to running a business and/or have not shopped around among the alternatives. I am a bloody programmer and I can build a Patreon for myself, but I found 5% to be cheap compared to that cost.)

In the same vein, just because something is a top requested feature doesn’t mean that you should go ahead and do it if it has negative repercussion a large chunk of your other userbase. I like your idea of education - that creators aren’t charging enough for their content might have been much better to solve with other means than forcing it on them, and that people are sending out rewards too soon is the same.

3 Likes
35

just because something is a top requested feature doesn’t mean that you should go ahead and do it if it has negative repercussion a large chunk of your other userbase

Yes, that’s a great point. An old saw from game playtesting is to pay close attention to what your playtesters’ problems are, but ignore their proposed solutions.

1 Like
36

that’s just lazy or junior-level product management.

37

I have almost 100 patrons that pledge under $1 per creation.

The average for the sub-$1 pledge is 27c per creation.

I post 9-10 creations per month. For easy math, let’s run this with 10 creations:

They are now paying 63c per creation so their monthly cost has gone up from $2.70 to $6.30 (a mere increase of 133%!), and my revenue from each of them has gone up from $2.43 to $2.56 (an increase of 5%).

Last month I brought in 90% of what they paid. Now I’ll bring in 40% of what they pay.

2 Likes
38

@DysonLogos I’m not sure I follow your math, what fees are you using for your pre-service fee example? If you have 100 pledges that are at 0.27 (I know it’s an average but) you might actually be doing a loss on those because you’re paying a transaction fee of 0.30 for each one. Patreon is aggregating the charges if they pledge to multiple ones, but I doubt that it gets it down to less than 0.20 on average at best.

39

@mpj - 100 pledges averaging at 27c PER CREATION and 10 creations per month = $2.70 per month. Currently I only get charged a service charge on the aggregate total per patron, so on the $2.70. For per creation campaigns we don’t pay the transaction fee per creation, but when the aggregate total is calculated at the end of the month. Effectively a 27c pledge to my campaign is the same as a $2.70 pledge to a monthly campaign. Definitely not a money-loser.

Until now. Now I don’t pay a transaction fee on it anymore. Instead my patron pays a transaction fee on each of the 10 releases that month. So in order to pledge that $2.70 to me, they are being charged $6.30 and I’m seeing an increase from them of what… 5%?

2 Likes
40

Ah, now I get it, forgot about the per-creation variant of payments. Yes, this is clearly a bad change for your kind of patrons and production flow.