If you follow a podcast, read a webcomic, or otherwise patronize the arts on the internet, you’ve probably heard of Patreon. The site has a simple model: Sign up for a creator’s page and donate a small amount every month. Some artists will offer exclusive content to their patrons. It’s hardly a perfect system, but it does let artists get paid, a rare achievement in a world that seems dedicated to demanding artists work for exposure, not money. And just how imperfect was shown in a user revolt that forced Patreon to back away from a major fee change.
- Why did users revolt? Simple, really: The cost of supporting artists was about to skyrocket. Say you throw a podcast you enjoy a dollar. Under the old fee structure, you paid, well, a dollar: Patreon took 5%, sort of like a merchant fee. Under its new structure, Patreon was going to take 2.9%, but tack on a .35 cent surcharge, so now, instead of paying a dollar, you’re paying $1.35. If this doesn’t sound like a big deal, any consumer psychologist will tell you it is. Quite a few creators made it clear that if their fees rose, their followers said they were going to bail.
- To creators, that meant they were getting paid less out of the overall pot: The math is simple. Creators, who formerly got 95 cents on the dollar, would get 97. Patreon, formerly getting a nickel, would now get 38 cents. To a lot of creators, Patreon was knocking the math out of whack in their favor, and there was nothing creators could do.
- So why would Patreon do this? Money, of course. In September, Patreon closed a round of venture capital funding that valued at $450 million, despite the fact that Patreon only makes about $7.5 million a year. So Patreon, many theorized, was under pressure to boost revenues fast.
To say it backfired was an understatement: In announcing the fees, Patreon immediately saw a backlash. Patrons quit, creators freaked out, and even the announcement they were cancelling the change wasn’t exactly met with joy:
That’s left both creators and Patreon asking what’s next. Just the announcement of a fee change knocked a lot of creators off financial balance, and recovering from that is going to be a long hard road for some of them. Patreon may financially be back to where it was, at least for users, but it’s lost a substantial amount of trust among its community. At the same time, it’s not clear what alternatives might be out there. Patreon has a lot of work to do to please its community, and it also finds itself facing investors who want their money to grow. Wherever it goes from here, it’s likely to be a hard journey.