This market segment might support a cooperative model, similar to Stocksy United (https://www.stocksy.com/), where the artists collectively own the monetization platform. Stocksy bootstrapped with a 1M investment loan (not equity) which is now paid off. Now Stocksy is fully owned by artist-members.
The viability of co-op depends on what content creators want from a patronage/crowdfunding platform:
scenario 1: If artists just want a straight monetary passthrough, then artists-owned entity like ASCAP (collects music royalties) may be workable. ASCAP is "boring", but it does what it needs to do.
scenario 2: However, if artists want a payment platform that evolves towards a combination of Facebook+Medium+Ticketmaster+Slack+Youtube+cdn+etc, a co-op model will be underfunded. (In this scenario, you'd have to imagine that there would be future features that artists don't even know they want.)
In the marketplace of ideas, it's possible for both business models to be offered. E.g. artists sign up for co-op platform because it's 2% fee instead of VC-backed Patreon for 5% fee. However, it's possible for artists en-masse to abandon the co-op business for the VC-funded business because its enriched platform gives them ability to earn more which overshadows the higher 5% fee.
Since venture subsidizes losses till critical mass is achieved, perhaps it is more likely that a VC-funded platform will initially be much less expensive compared to a revenue financed cooperative.
They have a fee of 5%. Let's assume they have a price/earnings ratio of 20, that means they expect people to spend something like $450m/year on Patreon.
According to Wikipedia they are at around $150m/year already. I think it is totally feasible that they could increase that to $450m/year and not have to increase their 5% fee.
I'm a relatively heavy Patreon user; I donate ~$100/month to ~12 different people. The PayPal donate button doesn't solve the problems that Patreon solves for me. Those include: providing long-term support, managing my ongoing support in one place, finding out what the people I support are up to, and getting a notion of how much support they're receiving.
I still do an occasional one-off donation to somebody who doesn't use Patreon, but as far as recurring billing for long-term support, this is all I use now.
If you don't have your own website (like the many, many YouTube content creators), it's much easier to promote a Patreon link and get people to support you on a regular basis than it is to drive people to donate with PayPal. Patreon also offers novel ways to support creators, like tiered donations and per-creation donations. This level of nuance (and the management that comes with it) is hard to replicate on your own.
Are they structured as a payfac? If they are facilitating $100M in payments they probably pull in a couple million in revenue just from processing (assuming they charge for processing, I'm not sure)
I use Patreon on a lot, and I don't have any expectation that they are doing it for free. If they were doing it for free, then that would mean to me that the service would be unstable and would disappear some random month without recourse when its unpaid developer gets a job somewhere else, or someone files some light lawsuit against them and that's enough to take the whole thing down.
A bigger problem than that they take a cut is probably some expectations management on why, what that cut does for everyone, and what it would mean to not have it.
"I use Patreon on a lot, and I don't have any expectation that they are doing it for free."
That's not really the criticism you're responding to though. It's not "People will be upset Patreon makes money", it is "people will be upset that Patreon will have to take SO MUCH MONEY from people giving it to others to justify their valuation."
I would only be concerned if Patreon didn't have a business model. But they clearly do. I'm seeing Patreon everywhere and I've seen plenty of people making $50k/month... they have a far better opportunity to generate revenue than the majority of tech startups.
All they have to do is maintain growth. They don't have to make any weird sacrifices for revenue like a lot of social startups that raised billions under the pretext of making money later.
Well, again, I think people get confused between the idea of "rapacious" profits and just profits in general. Contra the general attitude, profits aren't bad; profits are where the strength comes from. Your favorite Mom & Pop coffee shops go under not just because the big bad corporations come in and steal all their customers, but because their model didn't have enough profit built into it to sustain any headwinds. (Though in their defense, there isn't a lot of evidence that such a model exists. But that doesn't mean they still don't suffer the consequences of lack of profitability.)
I think this space is going to be sufficiently competitive over the next few years that I don't expect Patreon to be able to just run away with people's money without consequences. In fact I'm racking my brain here to come up with what Patreon would want to do as a moat and I'm not coming up with anything. (Anything sensible, anyhow. The frequent suggestion that they could do their own YouTube would build a moat, alright, but the evidence is that it would build a moat around a cash flow model in which you guarantee that you'll never make any money, and, well, those don't really need moats very much....)
It will be interesting to see how their board changes as a result. I think VCs may be trying to get a grip on controlling the content allowed, in addition to the profitability and scaling potential.
If Patreon gets winner-take-all huge, the BoD could literally steer culture by drawing the boundary lines on acceptable content. High amount of intangible value there.
There's not a whole lot of reason to limit the content allowed.
Most internet sites run into conflicts with content because they're trying to make a profit through ad revenue. Mainstream advertisers don't want their ad next to porn/controversial things, and may not want to advertise on even the non-controversial part of the site if the site is associated with porn/controversial things in the minds of the public.
Patreon's business model doesn't really run into that issue.
Well luckily for them they don’t have to take no money in order to be the good guys here. They only need to take less than the other methods of monetizing videos (youtube). I’d imagine they’ve expored what kind cut they will need to take to be profitable and how that will affect the decisions of the people paying in.
Not really. Youtube is indirect monetization thorugh advertisers. The audiences (that the respective companies care about) are completely different. Patreon wants creators and their fans on their platform moving money through them so they can take their fees. Youtube doesn't care at all about content creators or viewers but about advertisers - as long as advertisers are happy Youtube would cripple the user or creator experience.
So the people giving Patreon money are not necessarily satisfied with 1% less fees than Youtube advertisers pay because they aren't advertisers and advertisers aren't using Patreon to fund creators.
I remember the first time I saw a music video by Jack Conte on YouTube, way before he started Patreon. He did a bunch of cool music videos (example https://youtu.be/lBUUOJpFg9Y) . Also, his work with Pomplamoose was pretty awesome.
I remember hearing him talk about his idea for Patreon on some of those YouTube videos. He seems like a pretty nice guy, so I am super excited for him to hear that Patreon has been such a great success!!
Let's hope they can continue their mission and keep taking it to positive places from here!
Yeah, it's really bizarre that YouTube is content to constantly struggle with ad revenue, when most of their top users are making orders of magnitude more money through patreon.
There's precedent too since twitch has had this exact model for years now.
YouTube is trying things like tips (superchat), but their cut is enormous, something like 30%, plus processing. I'm glad YouTube isn't the one solving this though, because it means that I get to support folks who YouTube is screwing over, when I watch their content on vid.me and bitchute.
One of the reasons Youtubers are moving to Patreon is a lack of trust in Google to provide a platform that generates a stable income, due to their demonetizing of accounts,arbitrary tweaks in the algorithm, refusal to defend Fair Use, etc.
If I were a big successful Youtuber, which I'm not and will never be, I wouldn't go near a patron service provided by the same company whose practices were driving me away from them to begin with.
Or just because ads is not viable before reaching 5M views a month. While convincing 1000 fans to give you 5$/month is easier. Patreon allow people with small community of dedicated fans to make a living while YT allows people that make crap watched by millions of people to make money. So they are complementary.
Then assuming the growth rate doesn't slow (remember, growth rates usually get slower over time), $18 million in net revenue in 2018, and $43 million in net revenue in 2019.
I'd not be surprised if their growth this year is even bigger than last year. 2017 is the year of the Youtube Adpocalypse and more and more creators are looking for alternate, more stable, revenue streams.
There is still a lot of potential of revenue coming in from existing big content creators switching to the platform. When Philip DeFrance started his Patreon a few months ago he became the #2 most sponsored creator in Patreon in a few days, and his channel is "only" ranked ~350th by number of subscribers.
Is there a porn angle here? Seems like from Googling there's a decent amount of sexual content. I wonder if this is like Tumblr with a seedy underside of adult oriented growth.
I've never seen anything more effective at enabling content that is routinely censored by credit card companies. [...] Patreon is a layer of abstraction that has enabled a startling opening up of opportunity for censored content, and that's shown in the NSFW side of Patreon.
Well, YouTube seems to be punishing any mildly controversial topic, so the positive side is that Nazis and other crazy people can't use it as a viable platform, but on the flip side you can't really talk about anything really serious without getting your ad revenue cut.
By "Nazis" you mean Jordan Peterson? Because it's the likes of him that are getting banned - in his case temporarily, thank god, but non-ultra-leftists without large social following are doomed.
>but non-ultra-leftists without large social following are doomed
Completely false, "left" YouTube channels I know of: like Philosophy Tube and Contrapoints are having serious problems with their videos being demonetised and removed. Videos which even mildly critisize capitalism are being demonetised, it's pretty much impossible to run a left wing YouTube channel without Patreon. Virtually all political videos are demonetized.
For example, PhilosophyTube wanted to make a relatively straightforward series on the history of Liberalism, but even before uploading the videos was told by YouTube(when he contacted them) that under the new rules videos like that wouldn't qualify for ads(https://twitter.com/PhilosophyTube/status/898261400786657280)
So you're displaying a huge persecution complex if you think this doesn't apply to the left even more, since Google and advertisers are large corporations, which means they are de facto fine with pro-capitalist content while obviously against helping spread or advertising on anti-capitalist content.
Capitalism doesn't own the idea of "markets", "sales", etc. Rather, the distinction between capitalism and most other economic theories relates to the ownership of organizations and the splitting of the revenues from sales between different economic factions, eg capital and labor.
Capitalism is the position that ultimately, capital should own the organization, while things like socialism argue that the people who perform the work should have the ownership.
In almost all systems, it makes sense to monetize a video, so the owners of the organization that produced it can get some of the value they created returned to them.
Isn't saying "capital should own things," not so much an ideological perspective but rather just a rephrasing of "things have costs"?
Things having costs is a fundamental fact of nature.
There is nothing in the current system that prohibits people performing work from owning the fruits of that work.
How does socialism supersede capitalism's benefit of promoting the transfer of economic value in the form of currency, or capital, from one creative realm to another which has immense creative potential over a less abstracted approach?
Are you saying that socialism basically boils down to prohibition of people owning anything that they did not make with their own hands? And I guess handmade goods can be traded? Do they lose trade potential after they've left the hands of their original creator?
I've generally seen capitalism, not as some sort of cause that emerged from some Magnum Opus and was subsequently cheered on by ideologues in the way of socialism/marxism/communism, but rather as essentially an outgrowth of fundamentally true aspects of nature. Things have costs, energy is cycled and exchanged, etc.
Not to say societies shouldn't have laws and regulations, but when you try to impose laws and regulations that run counter to natural orders and fundamental truths you inevitably run into trouble.
> Isn't saying "capital should own things," not so much an ideological perspective but rather just a rephrasing of "things have costs"? Things having costs is a fundamental fact of nature.
Not at all. In fact, so far not at all I'm actually confused how you think that's true.
Could you elaborate on why you do? It seems important for understanding the rest of your post.
> How does socialism supersede capitalism's benefit of promoting the transfer of economic value in the form of currency, or capital, from one creative realm to another which has immense creative potential over a less abstracted approach?
Socialism is perfectly capable of that process as well -- the difference is who makes the allocation decisions, people who own capital or people who produce things via work. There are arguments for why either side might be better at that task (and in practice, a mix of the two strategies seems to work well).
> Are you saying that socialism basically boils down to prohibition of people owning anything that they did not make with their own hands? And I guess handmade goods can be traded? Do they lose trade potential after they've left the hands of their original creator?
Nope, not even close. Again, to the point I'm confused how you got that impression.
Socialism is just the idea that corporations should be co-ops of their workers rather than property of their shareholders. (Well, okay, there's some fiddly details in particular models, but that's the gist of the difference between capitalism and socialism -- if you structure society around corporations owned by investors or owned by workers.)
> I've generally seen capitalism, not as some sort of cause that emerged from some Magnum Opus
Have you heard of our lord and savior Adam Smith?
The rest of that comment is based on the misunderstanding I pointed out at the top -- all economic theories deal with things like the cost of producing goods and the circulation of goods within the economy. Capitalism is far and away from being "objective" in that regard or the only way to organize activities around that. Capitalism in just as opinionated as Marxism (with just as outspoken of supporters, if not more so), it simply has different opinions.
> when you try to impose laws and regulations that run counter to natural orders and fundamental truths you inevitably run into trouble
Capitalism is none of those things, thankfully.
In many places, you seem to conflate "capitalism" with the notion of economics in general.
If we understand "cost"/"exchange" as transfer of energy from one component of a system to another anytime a "thing" occurs, the results of this thing occurring are what is now owned by the entities party to the exchange.
A hypothetical object in motion under no external forces will remain in motion until a force acts on it, upon this acting, energy will be transferred, thus a cost.
In our more familiar world, a ball rolling down a trail will continue rolling until the friction of the dirt provides sufficient cost/exchange of energy, or the ball encounters a change in grade on the trail such that a gravitational force extracts enough of a cost on the kinetic energy of the system to cause it to stop. For the ball to regain motion some other force must be applied to the ball at an energetic cost to the entity exerting the force.
We can see these costs/exchanges and any change of state in a system as equivalent because the total energy in the system remains the same. Anytime there is a change, there is a cost.
A "thing" is something that is identifiably different from other things. What causes differences to arise is fluctuation of energy in the system. A thing is a fluctuation, a fluctuation is an exchange, and exchange is a cost, things have/are costs.
At a less cerebral level, anytime you do a "thing" it comes at the cost of other "things" you could do. So whatever thing you're doing has this opportunity cost.
We've mapped the abstraction of money onto many types of costs, but costs can be at a level other than monetary.
"Capital should own things" because capital is the name we've given to the unit of energy in economic systems, and as we've seen above "things have costs," all things have costs. And as we've also seen above, "ownership" is the name given to the new state assumed following an exchange. The ball owns "at rest" after the exchange with the dirt.
It's not really "capital" that owns things, but the spenders/deployers of capital[0]. Just like it's not friction that owns the at rest state, friction was just a name for energy exchanged. The ball and the dirt conducted a transaction in friction, the ball got "at rest" and the dirt got "increased heat."
[0]So I guess at this point you'd say, in Socialism we'd prescribe that you can't spend money on things that confer ownership of future exchanges for money, or things that increase in value. But here is where the nature of reality is critically important, the universe is not perfectly flat, there are always going to be peaks and troughs in the distribution of energy so long as the universe is the one we recognize today. Not every cost will dissipate in it's returns because the total amount of energy in system is conserved. So if there are some costs that are net losses some must be net gains. And there must be variation in results of exchanges because otherwise we wouldn't see anything around us, we see things around us because of fluctuations in energy.
While Piketty's equation might need to be addressed, not understanding the reality from which it arises doesn't help in addressing it.
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II
You may have a broader understanding of this than me, but isn't "capitalism" simply the name we've given to the dominant economic system we've found that came to be through emergent processes of human social interaction stretching back thousands of years? Nobody ever said I'm going to start Capitalism!
Yes, there were some abstraction layers added on with the development of capital/share markets and limited liability corporations around 1400-1500AD, but it seems to me what we call capitalism is simply the name given to the economic system we've deduced to be present wherever we find things like coinage and contracts/exchange agreements in history. Were the ancient Greeks "capitalists"?
Adam Smith was for the most part describing what he saw around him and what already existed, was he not? I don't believe he was prescribing whole new systems of being.
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III
So you're saying Socialism is simply a restricted form of Capitalism?
Because the characteristics you give for Socialism, workers owning what they produce and co-ops, are not only possible in our capitalist system, but they are present in significant number.
In fact, in capitalism everyone owns the fruits of their labor. Were that not true, it would be more appropriately called slavery.
A computer programmer may or may not take home his code at the end of the day, depending on if he is employed by someone else and the agreements made between him and whoever may employ him, but he still owns what he has created even if he doesn't take the bytes home. He has just agreed to exchange it for something else upon creating it, most likely capital/currency.
So you're saying things would be better if such agreements were restricted by law?
That's actually just propaganda phrasing without deep insight, laying claim to a shared heritage as a claim to legitimacy while pretending that your mere opinions are theorems derived from facts.
It's no more insightful than Christians and Muslims debating if Moses was a Christian or a Muslim, because clearly all historic leaders were members of the one true faith.
> Yes, there were some abstraction layers added on with the development of capital/share markets and limited liability corporations around 1400-1500AD, but it seems to me what we call capitalism is simply the name given to the economic system we've deduced to be present wherever we find things like coinage and contracts/exchange agreements in history. Were the ancient Greeks "capitalists"?
This is a perfect example, because it's not true. The features of a modern system (of which capitalism is one) are very much a modern invention, precisely because they require that modern notion of social structure/corporate ownership.
Those "arbitrary layers" are what defines capitalism as a thing distinct from socialism or mere economics. Conflating capitalism with the "physics" and not the arbitrary layers is precisely the conflation between capitalism and economics I was calling out earlier, and seems to be rooted in capitalism having been the dominant economic model of your society -- you seem to have a hard time delineating and separating that choice from the nature of economics vis-a-vis physical constraints and their impact on all viable models.
> Because the characteristics you give for Socialism, workers owning what they produce and co-ops, are not only possible in our capitalist system, but they are present in significant number.
Our system isn't strictly capitalist.
You can look at, eg taxes to fund social projects as an example of that. The public is the ultimate owner of the nation, and retains a portion of any value created by investments of capital there, which is then used to benefit the public. That this distribution of wealth to the public instead of capitalists tends to create several dollars more wealth from the induced spending is actually a socialist benefit, not a capitalist one.
But also, you're correct that our legal system doesn't mandate capitalist economics for corporations. It's just the dominant model.
> In fact, in capitalism everyone owns the fruits of their labor.
Only the immediate fruits of their labor, that is, what they can charge for that piece of labor.
That's not what we're concerned with here. We're talking about the method by which we allocate the generated value when you scale up via corporations (or other mechanisms). That is, how we handle collective allocation and management.
Socialism is an attempt to allocate those benefits more evenly between capital and labor (or in the more radical cases, entirely to labor) in an effort to combat the social harm from "cogification" of labor, in which a corporation has many laborers perform a basic, easily replaceable task so that most of the value added by the collective labor can be extracted by capital.
> So you're saying things would be better if such agreements were restricted by law?
Such agreements are restricted by law, eg you can't select your programmer based on if they're male or female and you must pay them at least somewhat over $7/hr it takes them to create it, etc.
However, the ultimate argument between the two is this: is it better to aggregate wealth around points so that it can be coherently deployed even if these economic eddies decrease overall economic volume?
In practice, "top-down" control is a failure and capitalism in terms of efficiency of dollar to dollar spending can't compete with market-based socialism, and so (because of the physical demand for efficiency!) we see practically every major economy in the world (including the US) function as a mix of socialism and capitalism.
We would be better off if we stopped listening to greedy people and nudged it more socialist.
What about being the change you want to see in the world?
Has anyone even formulated and proposed any notionally viable alternatives? Apart from the vastly destructive and murderous attempts of communism in the past century.
Not saying the implementation of the current system is optimal, of course, but I think over time things tend to converge on that which does the most good for the most people.
It's perfectly possible to run the channel. You're just not going to make any money from it.
Can't really blame advertisers for not wanting to associate their brands with political content, especially if it's as toxic as a Jordan Peterson rant on gender, and can question the motives of anyone whose decision on whether to critique capitalism or not is based on whether they can get enough juicy ad dollars for doing so.
Peterson gained a lot of attention and an entirely new YouTube following for refusing to call transgendered students by their preferred pronoun on the basis it was "mouthing Marxist words" and directly linking it to gulags and mass slaughters
Lest one think that this might be an unfortunate bit of hyperbole taken out of context in what must be an unusual situation for an outspoken middle-aged religious intellectual to face, he's doubled down on it with an angry lecture series on the subject and other crackpot theories like "the idea that women were discriminated against across the course of history is appalling" and actually it's all a myth caused by the birth control pill making modern women hostile towards masculine men. I wish I was parodying that argument; I'm merely summarising it.
I doubt advertisers were upset by his studies on the Bible
It does more harm than good to the individual and society to entertain the delusions of mental health conditions.
The condition of gender dysphoria is a personal issue best dealt with between the affected individual and their health care provider.
But the key driver for Peterson was that pronouncements on these issues have absolutely no place in the Canadian constitution.
I think it was only with this issue(legislative lunacy) that he started discussing this, and it wasn't out of some contempt or animosity for people inclined to dress and behave a particular way, but rather because when societies start legislating what people are and aren't allowed to say and think, things tend to go real bad, real quick.
Peterson felt a strong duty to take a stand here due to his long study of the horrors and atrocities of communism the 20th century that often stemmed from mandates imposed on acceptable speech and thought.
I think those that follow the alt-right overestimate how much others care that they are banned. I remember when loads of them left Twitter for Gab, pronouncing that Twitter was doomed without them. And yet, Twitter hasn't really seen any negative effects of them leaving.
"People are moving all their eggs from Youtube to Patreon."
That's less of a concern though, because Patreon is easier to replace than YouTube. The problem with YouTube is that, at least as long as the Internet chatter I hear is still accurate, YouTube itself is still losing money, so replacing YouTube involves being able to immediately hugely subsidize people watching lots of video, and to be willing to do so when it is demonstrated that even the market leader who gets all the good ad contracts is losing money, so there's no payday if you win. That's a tough sell.
Patreon can't literally be replaced in the legendary "HN denizen claims to be able to replace $X in a weekend", because dealing with taking payments takes longer than that. But it's feasible down in that range, and said replacement at least has a cash flow and a clear path to ramen profitability. It's gonna be a competitive field and Patreon has all the name advantage right now, but it's a feasible plan for a "true startup" of just a few people in a garage in a way that "let's replace YouTube!" isn't.
In fact there's at least three competing services I've heard of that already exist, and I have no reason to believe I've heard of them all.
> Patreon can't literally be replaced in the legendary "HN denizen claims to be able to replace $X in a weekend", because dealing with taking payments takes longer than that.
I observe that "Stripe Connect" does not have a "click here to purchase" button but a "Contact Sales" button.
I think if you dedicated an entire weekend to the task of being ready to accept credit cards through your website on a subscription basis that you would not be accepting cash on Monday. I seriously doubt that this is just a click-through exercise. I seriously hope this is not just a click-through exercise.
I have used connect a number of years ago. I think it may take a week or so to get approved. (relatively painless process) Once approved it took me maybe a week to get the payment functionality working. I was a much lesser developer then as it was essentially one of my first forays into api's and web development.
After approval a skilled developer could absolutely bang out the core functionality in a weekend.
Using regular stripe for direct payments is even easier and you can have a fully functional payment system / shopping cart in a few hours.
My above statements though in no way reduces what Patreon has done, they excelled at execution and driving traffic to their service as well as excellent usability. No small feat and not easily reproducible. Much the same as the way Facebook succeeded and myspace and friendster failed. Vision and incredible execution.
You're missing the network effect. With Patreon you can see who your friends are supporting and use the network effect to influence or signal to your friends who you're supporting, kind of like Kickstarter. Conversion rates are higher too because chances are your would be supporters already have an account on Patreon.
It's like anyone could write a Facebook clone, the hard part is cloning the community.
Network effect is overrated. I don't look at any of my friends on Patreon. I don't even think I have any Patreon friends. Its just a more simple way for me to Paypal people I want to support.
My understanding is that many YouTubers use Patreon not only to supplement their income, but also as insurance against their videos getting demonetized over issues they may not have control over. Don't put all your eggs in one basket, as the saying goes.
The bet being made, I think, is that when Patreon is doing several times current revenue, Google will want the paying users and their credit card numbers and will be happy to pay for them by acquiring Patreon.
Even though Google could recreate the whole Patreon system, they'd be forced to start with a customer base of zero and risk pissing off Patreon's customers and creators by trying to get in between them.
Also, as others have pointed out, Patreon is not just Youtube. Google tried to clone a product and a network before, with Google+, so they know how difficult that can be.
Doesn't seem like Youtube was particularly good at copying established business models in the past (streaming, video on demand, etc.). But you knows, at least for the video-producing crowd (what fraction of Patreon users is that even?) raising money through Youtube donations might be an alternative.
Youtube is still secondary to Twitch when it comes to serious online gaming streams. I guess Youtube has a big "Lets play" audience, but that hasn't really eaten into Twitch's core audience.
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The thing about Patreon is that its multi-medium. I've seen good video games, webcomics, books, AND yes, Youtube Channels, which are funded through Patreon.
Unless people start selling their Art, Video Games, Books, Webcomics and so forth on Youtube, I think Patreon will be fine.
Patreon changed the really quirky but cool logo on the front of their building to one that's considerably more boring. I wonder if it signals significant internal changes. Why bother changing such a thing?
That’s a lot of VC money. Ugh. I hope the folks I pay on patreon move to another site because I’m not interested in paying VC vultures. 450m for god sakes.
They probably have the biggest platform for paying creatives, I wonder when they'll ditch YouTube to get more control over their user base and increase their 5% margin.
I fail to see any advantage in ditching YouTube? On private videos for Patreon subscribers Youtube supplies free video hosting with a decent and familiar experience for the content creator. For public videos (or videos that become public after a delay), Youtube offers free hosting and lots of discoverability.
In both cases I only see Patreon having additional cost with little to no upside by ditching Youtube (especially since Youtube policies are already very lenient on non-monetized non-public videos).
There are a lot of patreon people that don't have a strong youtube presence, and a lot of that content ends up being cross hosted by youtube. You have people that are working with a pre-payout budget of a few thousand a month- it's possible that they are trying to build out more pay-to-use features that increase the 5% slice they are taking.
Private video hosting for supporters that isn't rigged to youtube settings is something that could actually be a boon. Just because youtube is easier doesn't mean delivering on a non-youtube service couldn't help delivering the rewards.
I can see how they can upsell a lot of other services though around delivering rewards. If I have 10000 people who need stickers for that 5$ support level is it worth the time to hand-stuff all those envelopes? Or is it worth an extra 20c a letter to have someone else stuff it for you?
The more I think about it the more I think that they can actually provide legitimate services in the same frames as vistaprint, teespring and others for these physical deliverables and just providing that fulfillment. Videos that I can schedule to release on patreon might just be worth it to some people.
Something with merchandise will likely happen. Quote from the article:
>Deeper pockets could also allow Patreon to build out its suite of bonus tools for creators, some of which it could charge extra for. “There’s going to be new opportunities to build revenue streams into the product” Conte has promised me. He suggested that could include selling event tickets or merchandise, or better helping creators understand and communicate with fans.
With them having a partnership with a livestreaming platform, I wouldn't put it past them to do something to replace private YouTube videos. But I think shipping postcards or stickers or art prints is a much more direct way to more revenue, and could be relatively cheap to set up with the right partnerships.
I keep seeing this idea that they should ditch YouTube. Why? Video Distribution is expensive at any meaningful scale, YouTune charges them nothing to use their platform, and it's almost impossible at this point to build a better video platform than YouTube. Why burn millions of dollars trying to build a YouTube clone?
Patreon is purely for gathering a fanbase with open communication between fans and creators and the ability to share content in exchange for support of the creators.
So a musician might link to private music videos on youtube with the financial supporters on Patreon first. Or they might provide a special .mp3 that is only available there.
As far as I know, Patreon doesn't actually have the capability to host videos itself (I could be wrong since I haven't looked at it in a while).
Patreon is more like Kickstarter but for ongoing projects/support (e.g. web comics, YouTube channels, etc.). People can set up accounts to charge per item produced/released (e.g. per comic page or per video) or on a straight monthly basis.
Oh god, now they're trapped in the endless useless growth demand cycle. Too bad, I enjoy supporting a few artists on there and it's just a matter of time until this hurts them.
The problem is not if Patreon is making enough profit to satisfy investors. The problem is if they don't. The reasoning goes as follows: VCs are chasing the next Google, and if Patreon cannot grow enough there is a real risk that it will die/resort to shady business practices by trying too desperately to achieve this growth. Without VCs it could remain a healthy, profitable, medium-sized company...
Exactly. It's the devil's bargain that you make when you take venture capital. VC is a hits-driven business. If it looks like you'll only be a moderate success, they will push you to take risks and spend more money in hopes of being giant. That will push up your odds of total failure and worse.
Like, okay, Patreon has a staff of so many people for development, so many people for admin/moderation, and they have offices, and hosting, and whatever other costs I'm not thinking of. And all of those things need to be paid. I'm quite happy to give them a few bucks for every page of comics I draw in exchange for them making this lovely system to funnel money to myself and other creators, and keeping it running.
But the core mission of Patreon is "nothing short of helping every creator in the world achieve sustainable income. We’re making this happen by building the best platform for creators to make money, run their creative businesses, and connect with the fans who matter most." (Taken from their careers page, https://www.patreon.com/careers)
Once all those above costs are met by skimming off a small percentage of the money going through their setup, what do they do with that money? Do they start lowering their cut? Do they start donating it to charities? Fund other weird business ideas? Or just pay back the people they've borrowed money from, who won't be satisfied by anything but huge returns?
I know Kickstarter's built itself into a "public benefit corporation", which makes it explicitly bound to consider things aside from "how much money will this make regardless of other costs"; Patreon makes similar noises but I don't believe they've taken the step of formalizing this yet. And I would be delighted to find out I'm wrong on that.
They should make whatever profit they can; but the concern is that they will be pressured by external investors to make more profit that they can sustain.
It's the Tiger Woods problem, also known as Focus on Your Core: TW gets video game endorsements and makes ungodly piles of money because he's a great golfer. When he focuses on making new games and supermodels instead of golfing, his game suffers and all the perks that came because of the good golf game go away.
...Like how he hasn't had his name on a golf video game in years.
Essentially: pursuit of profit when it undermines your core competency is shortsighted.
I'm fine with them making enough money to keep the thing running and play around with new improvements (although honestly it works pretty fine for me and a lot of other creators I know as is). I'm not so happy about them having big piles of money that need to be paid back to investors who only care about profit.
It's not just like Kickstarter. Patreon has a business model built on recurring monthly revenue stream. Kickstarter makes money off of one-off events. It's a totally different business.
I think the point was that Patreon has a lot of competing services in the same space, just like Kickstarter has in it's. Note that I have no idea if that's true, but that's my interpretation.
If you took a few minutes to write out a few sentences, like Patreon's recent actions of X, Y, and Z run counter to the sort of values we should promote in a free and open society...
It would likely get your point across better and might spur some useful discussion. With the type of info asymmetry inherent in most discussions, people lacking your knowledge on this subject are likely to quickly dismiss statements like this.
Currency exchange is too high of a barrier for supporters.
A large portion of Patreon is artists asking for support for content they offer for free, with only token benefits for the supporters. Making the act of giving money as simple and convenient as possible is key in that scenario. Using a crypto-currency is pretty much the opposite.
No, I mean one crypto-currency specifically designed for what Patreon does.
Instead of paying Patreon with a credit card, you'd pay to buy this crypto currency. And then distribute it micropayment-style to all kinds of things.
Isn't anyone doing that? IMHO the hardest part is the Coinbase thing - collecting credit cards and dealing with chargebacks etc. in a compliant way in many countries.
The other stuff is easy - such as localization in many languages.
You know who does this also? Kickstarter. They just launched in Japan!
But aren't you then stuck with either one platform which does that, offering you no advantage over what Patreon offers today, or loosing a lot of the miscellaneous Patreon features for keeping Patreons and creators in touch in exchange for gaining censorship resistance?
It's certainly doable, but I think it would be a hard sell compared to Patreon or any regular centralized Patreon alternative.
That'd still end up dealing with currency conversions. People still buy food and pay rent in their local currencies.
If you're talking about something that's only usable on Patreon, then why a crypto-currency? It could much easier just be like gems in a clicker game. But then, they'd get some bad press for basically making people use casino chips.
I hope this is sarcasm, because if I had to pay 5% to make any other transaction I'd be fuming. With a marginal cost of facilitating a new patron near zero, I don't think creators or patrons will suffer this as Patreon grows.
If Patreon was doing nothing but a processing payments, I would agree with you. But it's also a platform for delivering the content that patrons are paying for, providing a space for discussion among patrons and creators, and other features that facilitate building a community. I have no idea if the actual costs of developing and maintaining that infrastructure actually approach 5% of total patron contributions, but I find it acceptable that 95 cents of my dollar goes to the creator and 5 cents goes to maintaining the infrastructure that makes the whole thing possible.
Yes, you could technically use Patreon as nothing more than a payment processor by hosting all your stuff elsewhere and just linking to it from Patreon. But you still have to pay for that hosting, either directly or indirectly via ads. And part of the point of Patreon is to move away from ad-supported funding models. Of course, you currently have no choice but to use external hosting for some types of content, like videos, that Patreon can't host directly. But even then you still get all the community-building benefits of Patreon (and with YouTube comments being notoriously bad, providing a separate comment section might be a significant value-add). I wouldn't be surprised if Patreon added video hosting in some form in the future, probably via a partnership as they have done with streaming video.
Apple takes 30%. So does Google. Kickstarter takes 5%. Many online stock trading firms take somewhere around 10-15%. That fairly well justifies the qualifier of "tiny" in today's world.
Given that the basic cost for processing credit cards and other such minutia is already around 2%, the benefit of not having to worry about chargebacks, fraud, or PCI compliance... worth that extra 3% IMO.
Which stock trading firms do you use? Most I've seen are 5-10$ per trade and small % for currency exchange transactions. Paying 10-15% for a stock trade could easily cost $10s of 1000 in commisions which is clearly not the case. Also for small trading Robinhood has free trades.
They essentially have a monopoly on App sales on their respective platforms.
At least in Google's case, antitrust-lawsuits in Europe and Russia are slowly working on making it possible to create viable competition to Google's Play Store. Maybe we'll see prices fall in the next decade or so.
Creators accept Patreon's high transaction cost because they don't many other options. If you, for example, are a youtuber, chances are that Google will screw you out of video monetization because their subpar AI raises more flags than a signalman on acid. Other payment solutions like Pay Pal are a goddamn nightmare to set up and handle for micro businesses [0]. Patreon also acts like a landing page and even CMS for content creators, so you're paying for that too.
[0] Holy shit is Pay Pal the most dysfunctional organization I've ever dealt with. Just verifying my identity as a business owner has meant weeks of me sending countless copies of my bank statements, phone bills and photo ID to Pay Pal staff because apparently comparing the address on the submitted documents with the one on file is too difficult a task. In the end it was easier to change my address on file so it matches the one of the submitted documents character by character (yay security theater). Of course when they finally verified my address I got an email that the copy of the photo ID I submitted suddenly was "too pale and is illegible as a result" and now I can't even access the verification process page...
