I feel like we had a huge fight over microtransactions on this board almost fifteen years ago and how fees would prevent them from ever being truly viable. Is this just more evidence of that?
Yeah, if this happens, I’m out from Patreon.
I thinking along similar lines. I wanna see how it pans out for myself and my patrons once the changes are made. If these fees seem unfair and untenable, I’ll likely leave Patreon as well for something else.
Not at all. Small transactions are profitable, they’re just less profitable than larger ones, so they’re trying to gently nudge people to pledge higher. But of course the nature of how people use Patreon means that won’t work.
This outlines the problem with basing careers as third party users of these new social media platforms like Youtube or Patreon - your livelihood is at the whim of a black box tech company liable to make arbitrary decisions with no warning that could easily destroy your entire business model. It’s why this whole “Silicon Valley will save us” fantasyland of social media saving the world is just that.
Patreon doesn’t have any special sauce, there’s no secret algorithm that gives them an advantage. Anyone could easily rise up to compete with them. Paypal could do it trivially, as could Stripe or Square or any number of other payment processors. I could build a Patron clone myself with an initial investment of under $20k, pocket change.
If it’s really that easy and that profitable, someone will quickly seize on this opportunity. I guess we’re going to find out…?
Yea, definitely. But they have mindshare, and that’s nothing to sneeze at. But that’s also over business scale lengths of time. It doesn’t do you, as a creator, any good if three years from now the collapse of Patreon leaves an obviously better solution.
Exactly, Patreon’s primary advantage is that they were first.
They aren’t Uber, who has to build relationships with thousands of drivers and invest in technology for ride-sharing. All they do is put up a webpage and take payments.
And to be fair if their unannounced price increases weren’t bad enough, their stupid new logo is reason enough to burn it all down. I mean… they paid money for circle and line. Probably a lot of money.
We’ll see how they respond to user feedback. They’re small and should be agile enough to immediately backtrack. If not, I would be surprised if someone doesn’t pop up to take their lunch.
There are already tons of Patreon clones available, even vertical specific ones like PledgeX (for homegrown porn) and DreamPatron (for music). So far nobody has put a dent in Patreon because again, they were first.
You can also setup a Stripe account and take payments from them, they also charge 2.9% + 30 cents per transaction, but don’t take 5% off the top. They also support apple pay and android pay so users don’t even need to take out their credit cards.
I’ve been meaning to ask this question for a while, so maybe someone can enlighten me.
I have $10 a month set aside for Tom. Currently I send that money to Patreon. But I also know that Tom has other channels set up. I could subscribe to him for ten dollars (I think) on Twitch. Or I could send him ten dollars worth of cheers (or whatever they’re called) on Twitch. I don’t know if YouTube has something similar. Or, I could just PayPal him ten dollars each month.
Out of all of those options, which one actually puts the most money in Tom’s pocket? Who takes the smallest cut?
This is a good question.
Assuming you’re funding via a credit or debit card, Paypal charges the payer the standard 2.9% plus 30 cents and the payee gets the full amount. So if you send Tom $10 on Paypal every month, it will cost you $10.59 and he’ll get $10. If you have a Paypal balance already they don’t charge anything at all to move money around inside Paypal.
On Twitch, the streamer gets 1 cent per bit you cheer with, but bits cost you more than that, starting at 1.4 cents per bit and then dropping from there as you buy in bulk to a minimum of 1.23 cents per bit when you kick in $308.
Probably the best choice short of setting up your own payments with Stripe would be Square Cash, which charges zero fees for payments funded via debit card.
My issue is with the fact that they’re charging patrons a fee per project, instead of a fee per month.
Patreon already lumps together everything into one transaction each month. There’s no reason I can think of other than Patreon profit motives to charge 35 cents 10 times if you back 10 creators for $1 each.
I follow Tom Merritt of Daily Tech News Show and he’s pretty close with the people at Patreon. He’s talking with them directly about these changes and his worry about it severely cutting down on $1 backers.
Their merchant bank charges 2.9% plus 30 cents (or maybe, 35 cents for some reason) per transaction. That is their literal cost, which they are simply passing along.
But the merchant doesn’t know if I’m backing 10 projects at $1 each or 1 project at $10. It’s $10 all the same, and should be $10.35 charged to me if they want to pass on the fees directly, not $13.50. Or whatever it comes to with the percentage applied.
That’s not how it actually works, though. The merchant banks charge a per-transaction fee. Credit cards are typically 2.9% plus 30 cents. Patreon charges your credit card/paypal/whatever as soon as you click the button to subscribe/pay.
Patreon always charged those fees, but previously split it out as a “payment processing fee” which they charged the creator, and then different fees if you used Stripe or Paypal, who also charged a payout fee. Creators always made less money with a ton of small transactions versus a smaller number of larger ones, this just wasn’t exposed to their patrons.
I see your point though, you’re saying they should batch-up all of a user’s patronage to a single transaction to minimize fees. And yeah, that would be a nice innovation. And those fees should definitely be paid by the creator to avoid confusing the patrons.
The merchant banks do charge a per-transaction fee, but (AFAIK) all of the subscription payments happen at the same time each month. what LMN8R is suggesting is that all of the payments get bundled as one credit card transaction (which if that’s not how it works, Patreon is leaving a lot of money on the table, so it probably does) and the processing fees should be split instead of double- or triple- or whatever-charged depending on how many Patreons you subscribe to.
That said, it’d be annoying accounting for them, and it might be weird for the creators to get different amounts of money from each person depending on how many other things they subscribe to.
edited to add: stusser edited his response maybe five times within the time it took me to type this, so maybe my response is no longer necessary.
Yes, I have been known to do that.