Last Wednesday and Thursday, Patreon told their creators and patrons they were changing their fee structure. It’s been a fiasco. They’ve been silent since updating their blog post on the fee changes and it’s a very real possibility that the silence will cost them dearly.
Patreon has succeeded wildly in two things:
1. It elevated the tip jar concept to something like a cross between an NPR pledge and a subscription. And it made it fashionable.
If you stop and think about it, prior to Patreon, artists either had something akin to a “Like this? Buy me a cup of coffee” tip jar link (usually to a PayPal account) on their website. Yes, some artists did get a LITTLE action on that from time to time, but nothing to the magnitude Patreon created by making that support cool and the whole process a lot more professional-looking.
In the current crisis, they’re not getting enough credit for that.
2. They created a wide enough network to aggregate payments across multiple creators. OK, let me rephrase that in non-geek. With micropayments, the payment processing fee usually has 2 components: a percentage of the transaction and then an additional flat fee per transaction. As everyone’s been repeating for a week, Patreon’s is 2.9% + $0.35. If a patron is backing 5 different creators on Patreon, that $0.35 fee is more like $0.07 from the creator perspective. This is the difference between getting 80% of the pledge and 90% of the pledge for many creators. It’s a good deal and you need a big network for it to work.
And what’s happened in the last week? Patreon is methodically trying to burn that payment aggregation to the ground and call it a feature. They’re discontinuing it on purpose. IF few enough backers flee, the new fees would increase the take home pay for creators, but that’s a big IF and it will probably take through February or March for all the cancellations to sort out with any degree of certainty.
As for making paying creators fashionable and cool… well, go look at Twitter. People are angry. The brand equity is shrinking. Every day that Patreon remains silent on the changes undercuts that coolness a little more. They’re losing credibility.
As fiascos go, this really is one for the books. You don’t see a company un-self-aware enough to so actively try to destroy their value proposition very often.
If Patreon had said “yes, this was a bad idea. We’re not going through with it,” on Friday, there’d have been a few lost pledges, but everyone would have taken a deep breath and moved forward.
It’s Tuesday afternoon, and practically all we’ve heard is that co-founder Jack Conte has been contacting some of the creators with larger accounts and telling them that the fees are there stay. The silence is making thing worse and leading to speculation on why everyone is so quiet.
It’s now an open question how much of this self-inflicted damage is fixable. Trust is a fragile thing.
Are they just hoping that at the end of the month, they’ll be able to tell their largest accounts they were right and despite some backers leaving, those creators have a slightly large amount of money to deposit?
(See how all this silence lends itself to speculation?)
Want to learn more about how comics publishing and digital comics work? Try Todd’s book, Economics of Digital Comics
Todd Allen wears a lot of hats. At various times he’s been (alphabetically), a bouncer, college professor, humor columnist, Internet producer and an NBA/WNBA Beat Writer, among other things. He’s the author of Economics of Digital Comics. You should probably read it.