Patreon’s Silence Is Destroying Their Two Greatest Successes

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Last Wednesday and Thursday, Patreon told their creators and patrons they were changing their fee structureIt’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

8 COMMENTS

  1. I reworked what I had been giving to Beat to the handful of others I support, but it is irritating, and I would have missed it if there hadn’t been information coming out like this. I would have just noticed bigger holes in my pocket until I got outraged. Which no doubt some will.

  2. It they continue down this path, I would expect significant backer drops after the next couple credit card statements are looked at. And if people start getting 4-5 separate and higher charges, which is what it sounds like the mechanics would be, that’s going to draw plenty of attention to anyone paying attention to their bill.

  3. I feel like they hired a bunch of silicon valley execs from other tech companies who sold them that snake oil about “innovation”, “disruption”, “pivot”, “design thinking” and “persona’s” and have developed some kind of business strategy that takes a dump on what actually made them successful. It really smells like they are trying to get acquired in the next year and are trying to boost profitability as fast as possible.

    They could be out of business in less than a year if one of their smaller competitors came in and offered the big whale accounts a nice offer to switch. The fans would follow these creators. And by offer i mean assurances on paper about favorable pricing structures for their backers.

  4. This is the turning point for most people especially after they changed the Patreon logo to something stupid compared to the original. The company has lost the trust of the public and thus people will be looking for the next replacement… if Drip (Patreon-like site by Kickstarter) works out and goes into open beta, then creators will flock to it.

  5. There are two components to this equation though.
    per pledge costs
    and supposed charge up front, dont aggregate/consolidate all payments to one charge (and thus minimize the fees) part.

    Take a pick of person who supports 10 people at 1 dollar each, pledge+fees+charges are now 13.80
    if that all was charged as one sum, as before, it’d be 10..66 (10×1.029+0.35)
    that only multiplies the difference the more pledges you have.

    Also out of all I’ve seen people mention, only Tipeee claims to support aggregated charges, Drip does not. (and so it’s fee’s are in the end, pretty equal to planned for Patreon)

  6. New Patreon fees

    This is how it works out for me:
    14 $1.00 per month pledges, so $14 -> $19.32
    4 $2.00 per month pledges, so $8 -> $9.64
    3 $3.00 per month pledges, so $9 -> $10.32
    1 $5.00 per month pledges, so $5 -> $5.50

    Total: $36 -> $44.78.

    24% increase. Unacceptable. Deleting all pledges and supporting creators on new platforms.

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