Overhauling the creative economy turns out to be quite tricky. Following massive backlash, Patreon is at least temporarily pausing its plan to change its payment processing fee structure on December 18th from charging creators 2-10 percent on the first of the next month to charging patrons 2.9 percent plus $0.35 per transaction upfront and on the monthly anniversary of their first pledge beyond the 5 percent Patreon takes. “We messed up. We’re sorry, and we’re not rolling out the fees change,” CEO Jack Conte writes. He tells me, “We got in the way of the creators and their fans.”
The subscription content crowdfunding company’s goal was to prevent patrons from being able to sign up and get access to exclusive content and then cancel their subscription before paying on the first of the next month, and to avoid users being charged immediately and then again on the first of the next month so they’d essentially be doubled billed if they pledged near the end of the month. Pro-rating wouldn’t work either since patrons could sign up for a big $100-a-month subscription, experience super-premium access to content, then cancel a day later having only paid $3.
Patreon CEO Jack Conte
But the problem with the fee change was that it prevented batching payments so patrons would pay just one processing fee for all their different pledges, and instead charged patrons the fee on every different campaign they support. This significantly boosted fees for patrons who only pledge a dollar or two per campaign, and ones that pledge to multiple campaigns and therefore get charged multiple fees. Patreon also admits it didn’t get enough direct feedback from creators and rushed a mere two-week timeline for implementing the change.
So after a painful week of calls with creators who said patrons had cancelled their subscriptions to avoid the higher fees, Patreon is halting the change until it can receive more feedback and find a better path forward. The retreat shows a level of maturity at the company, even if also some lack of foresight.
Patreon raised $60 million earlier this year at a $450 million valuation to build out more monetization tools for content creators, from video makers and comedians to illustrators and models. With $107 million in funding, many assumed Patreon was on stable enough financial footing to avoid having to change from its existing fee structure where it takes a mere 5 percent rake — compared to typical 30 percent charged by platforms like Apple and Google’s App Stores and 45 percent charged by Facebook and YouTube for ad revenue shares.
But “the system that my co-founder came up with 4 years ago in 25 days” needs to be updated. Patreon has to abide by credit card processing rules while keeping enough revenue to stay alive. Conte tells me Patreon still has a bunch of new premium tools in the works for creators, a storefront for selling merchandise for example, that will be unveiled in the coming year and will help it earn more money to keep the platform sustainable. But many creators surely construed the payment structure change as a way for Patreon to jack up fees.
The episode demonstrates just how tenuous it can be to alter the foundations of monetization systems that independent creators rely on. YouTube has had its own problems with creator backlash after pulling ads and demonetizing more videos and creators in order to appeal to family friendly advertisers. Conte tells me the plan going forward is to “work more with creators one-on-one, show them the problems that we’re trying to address, get more feedback earlier, give creators more lead time, do more qualitative research . . . and honor the idea of letting creators own their relationships and run their businesses the way they want to run them.”
After speaking at length with Conte, though, Patreon seems stuck between a rock and a hard place. Keeping the fee structure sustainable for the startup, preventing creators from having their content accessed without fair payment and avoiding overcharging patrons for processing fees or fractions of a month of access seems somewhat intractable, otherwise the company would have come in with a better solution than its first attempt. We’ll see if it can create something that works for everyone.
FAQs
So after a painful week of calls with creators who said patrons had cancelled their subscriptions to avoid the higher fees, Patreon is halting the change until it can receive more feedback and find a better path forward. The retreat shows a level of maturity at the company, even if also some lack of foresight.
Who actually pays for Patreon? ›
Monthly charge upfront
Charge upfront is a billing model where paid members pay upfront to join the creator's page, granting access to the creator's backlog of content on Patreon. After the first payment, members pay on the 1st of each month on PT for the month of access.
How much does Patreon cost? ›
It's free to list products on Patreon and you can do so even if you don't choose to offer paid memberships. We keep 5% of each transaction, plus payment processing, currency conversion, payout fees, and applicable taxes. Learn more about Commerce, along with pricing and feature details here.
Is Patreon profitable? ›
Patreon Revenue
Patreon currently takes between 8% and 12% of creator earnings (plus a payment processing fee), depending on the product plan chosen by the creator. Patreon generated an estimated revenue of $75-180 million in 2022. That's up from a revenue range between $60 million to $144 million in 2021.
What is better than Patreon? ›
Mighty Networks is the best Patreon alternative because it is a platform that allows creators to build powerful member-led businesses around their ideas. Here are a few features we love: Offer paid memberships.
How much does the average person make on Patreon? ›
How much does the average person make on Patreon? The amount of money a creator can make on Patreon depends on factors such as the number of patrons, the type of content, and the pricing of their membership tiers. Patreon creators typically earn between $315 and $1.575 monthly.
How to get Patreon Premium for free? ›
How it works. If your creator offers free trials on their page, you are able to explore a creator's membership benefits for a 7-day trial period without being charged. During this time, you can enjoy the perks and exclusive content a creator offers before deciding to continue as a paid member.
What is the lowest Patreon price? ›
The $1 minimum allows members to still support a creator even if they cannot join a higher priced tier or they're OK with not receiving a reward.
How to join Patreon without paying? ›
All fans can join for free if their creator has a free offering listed on their page. Some creators may only show their paid options prominently on their Patreon. You'll know a creator offers this option if you see a Join for free button on their page.
What is the Patreon controversy? ›
Since its inception, Patreon has been widely criticized for its approach on handling and removing child sexual abuse material either drawn, photographed, or filmed.
These issues with charges and refunds can be frustrating for users and may erode trust in the platform's payment system. High fees compared to other platforms: Several reviewers have expressed dissatisfaction with the fees charged by Patreon, stating that they are higher compared to other similar platforms.
Is Patreon losing money? ›
Patreon's valuation dropped 70% in the past year and its pricey deals with top TikTokers fell spectacularly flat, internal documents show. Patreon SVP Carlos Cabrera told staff in a September memo that the company's valuation had fallen 70%. Patreon was last publicly valued at $4 billion in April 2021.
Do Patreon creators get all the money? ›
With the Pro Plan, the most popular plan, Patreon will take 8% of your total earnings plus additional fees, such as payout fees and applicable taxes, which we will discuss later on. For example, if a fan pledges $100 to a creator, Patreon takes $8 as its service fee. The remaining $92 goes to the creator's account.
How do Patreon subscriptions show up on a bank statement? ›
What will the direct debit be listed as on my bank statement? When reviewing your statement, debited membership payments will be listed as "Patreon Membership." "PPRO Financial Limited" will be listed as the beneficiary.
Can you see Patreon for free? ›
All fans can join for free if their creator has a free offering listed on their page. Some creators may only show their paid options prominently on their Patreon. You'll know a creator offers this option if you see a Join for free button on their page.
What percentage does Patreon take from subscriptions? ›
As a creator, Patreon creators can charge per month or per creation. The platform fee (or the percentage of your earnings that Patreon takes) varies from 5% to 12% depending on the plan you pick. There is an additional payment processing fee of 2.9% + $0.30 for donations over $3. 5% + $0.10 for donations of $3 or less.
